By Lambert Strether of Corrente.
I had a recent conversation with a friend who gave an exhaustive, blow-by-blow description of her recent encounter with the best health care system in the world — it was bad, very bad — and she pointed out to me that while I’ve written in some detail on ObamaCare and health insurance companies, I haven’t really ever taken a look at doctors and hospitals, and they’re also part of the problem. But those are big topics; health care was, after all, 17.1% of GDP in 2014 (13.1% in 1995).
So I thought I would try to limit my scope, and take a look at medical coding, partly because I know something of taxonomies, but also because the medical coding dataflow unites patients, providers (doctors, hospitals), and payers (health insurance companies, and government), so medical coding is a vantage point from which to view the entire horrid, lethal system.
First, I’ll refresh readers’ memories on phishing equilibria, then provide with a potted history of medical coding, including a classification of medical coding errors (?) in the United States today, examine consumer-driven (non-)solutions to fix coding errors, and conclude.
From my review of Akerlof and Shiller’s Phishing for Phools, November 25, 2015:
As businesspeople choose what line of business to undertake — as well as where they expand, or contract, their existing business — they (like customers approaching checkout) pick off the best opportunities. This too creates an equilibrium. Any opportunities for unusual profits are quickly taken off the table, leading to a situation where such opportunities are hard to find. This principle, with the concept of equilibrium it entails, lies at the heart of economics.
The principle also applies to phishing for phools. That means that . Among all those business persons figuratively arriving at the checkout counter, looking around, and deciding where to spend their investment dollars, some will look to see if there are unusual profits from phishing us for phools. And if they see such an opportunity for profit, that will (again figuratively) be the “checkout lane” they choose.
And economies will have a “phishing equilibrium,” in which every chance for profit more than the ordinary will be taken up.
We might summarize Akerlof and Shiller as “If a system enables fraud, fraud will happen,” or, in stronger form, “If a system enables fraud, fraud will already have happened.” And as we shall see, plenty of “opportunities for unusual profits” exist in medical coding.
Medical Coding from the Black Death to the Present Day
Medical coding is said to have begun in England as a way of tracking (and avoiding) epidemics, especially the Black Death. Here is a weekly “Bill of Mortality” from that time:
The London Bills of Mortality were published weekly, and as of 1629 included the cause of death. Information was collected by parish clerks in various geographical areas. In order to determine which areas had the most cases of plague, Londoners purchased copies of the Bills and tracked the spread of the disease from one parish to another in order to avoid it.
Causes of death found in the Bills include diseases recognized today, such as jaundice, smallpox, rickets, spotted fever and plague. Other conditions have creative descriptions like “griping in the guts,” “rising of the lights” (croup), “teeth,” “king’s evil” (tubercular infection), “bit with a mad dog,” and “fall from the belfry.”
“Griping in the guts.” I get that one a lot. Fast forward to the 21st century, where we use a far more complicated classification system, the International Statistical Classification of Diseases and Related Health Problems (ICD-10), focused on morbidity instead of mortality. The ICD is maintained by WHO:
ICD is used by physicians, nurses, other providers, researchers, health information managers and coders, health information technology workers, policy-makers, insurers and patient organizations to classify diseases and other health problems recorded on many types of health and vital records, including death certificates and health records. In addition to enabling the storage and retrieval of diagnostic information for clinical, epidemiological and quality purposes, these records also provide the basis for the compilation of national mortality and morbidity statistics by WHO Member States.
Right here in WHO’s genteel prose we can see the potential for phishing. Why? Because some of the players (nurses, researchers, patient organizations) are not motivated by profit, while others (insurance companies) are, and still others (doctors, coders, information technology workers, policy makers) may be, or may not be. Medical coding is, in other words, conflicted at its core, because it serves players driven by profit, and players not driven by profit. How will the balance be struck? Surgeon Martin Makary answers:
“Incidence rates for deaths directly attributable to medical care gone awry haven’t been recognized in any standardized method for collecting national statistics,” says Martin Makary, professor of surgery at Johns Hopkins University School of Medicine. “The medical coding system was designed to maximize billing for physician services, not to collect national health statistics, as it is currently being used,” Makary says.
Beyond its conflicted role, medical coding in the United States is enormous and complex:
The International version of ICD should not be confused with national modifications of ICD that frequently include much more detail, and sometimes have separate sections for procedures. The US ICD-10 Clinical Modification (ICD-10-CM), for instance, has some codes. The US also has the ICD-10 Procedure Coding System (ICD-10-PCS), a coding system that contains procedure codes that is not used by other countries.
(By comparison, the North American Industry Classification System (NAICS), used to classify all forms of business, contains only 2196 codes (from 11, “Agriculture, Forestry, Fishing and Hunting,” through 928120, “International Affairs.”)
A reporter from the Weekly Standard, of all places, gives a sense of the training (see Appendix) required to even understand the codes:
On a foggy Thursday morning in early January, 30 medical coders gathered in a nondescript meeting room on the third floor of the downtown Hyatt Regency in Jacksonville. They paid between $585 and $985 each to attend a two-day “boot camp” on the new codes taught by Annie Boynton, from the American Academy of Professional Coders. On the black cloth covering each table were the day’s necessities: a Hyatt Regency pad of paper and pen, a coffee cup and saucer, a jar full of hard candy, a glass and a sweating metal pitcher filled with ice water. At each place, students found a thin spiral book—the “ICD-10-CD General Code Set Manual” for 2014—and a six-pound, phone-book-thick “ICD-10 Complete Draft Code Set.”
The reporter also gives a reason why our coding is exceptionally complex:
Other developed countries began their implementation of ICD-10 some 20 years ago, after the World Health Organ-ization released its basic version of the new code set. But their versions of ICD-10 won’t be nearly as complicated as the U.S. version. Boynton says that only 10 other countries use the codes for reimbursements—one of the main functions of ICD-10 in the United States. And payment systems elsewhere are far less complicated, in part because there is usually just one payer: the government.
The multiplicity of payers in the U.S. system partly explains why ICD-10 will be vastly more complicated here. But, paradoxically, if government explains the simplicity of ICD-10 codes elsewhere, government largely explains the complexity of the ICD-10 codes here. And those codes are complex.
So, yet again, the United States pays an exceptionally high price for its fealty to neoliberal, markets uber alles, ideology.
Medical Coding and Phishing Equilibria
Here is the medical coding process, from the coders perspective, as described by MB-Guide, a site for aspiring medical coders:
Successful medical coders learn and follow coding guidelines and use them to their benefit. Often if a claim is denied incorrectly, medical coders and billers use coding guidelines as a way to appeal the denial and get the claim paid.
Hmm. “Their” benefit. Here are the guidelines:
The specificity of the diagnosis code: Each diagnosis code has to be coded to the highest , so the insurance company knows exactly what the patient’s diagnosis was.
The correct reporting of procedure codes: There are too many rules and regulations to go into here. There are , which help identify the service that was provided to the patient.
Reasonable and customary charges: Regulating bodies also suggest that providers charge only rates for their services. This prevents over-inflation of medical fees.
Procedure code modifiers: When certain procedure codes are sent on the same claim form, they sometimes require medical billing , which help differentiate between the codes that were charged on the date of service.
I’ve helpfully underlined places where an “unusual opportunity for profit” might be spotted and amplified; after all, it’s not the coder’s job to set policy in borderline cases; that’s for management.
I can think of three coding decisions where phishing equilibria might settle in: Impedance mismatch, miscoding, and upcoding.
An “impedance mismatch” would happen when one coding system has to be mapped to another. Before there was ICD-10, there was ICD-9, and millions of records (presumably) were recoded, in a process of data conversion. The problem:
Given the significant expansion and details in ICD-10 codes, it is not always possible to find a unique ICD-10 code to match exactly an ICD-9 code. In about 20% of cases, there are multiple ICD-10 codes for one ICD-9 code, or multiple ICD-9 codes for one ICD-10 code, or there is simply no exact match between the two systems.
So how was the judgement call made? Clearly, an opportunity for a phishing equilibrium.
“Miscoding” is the equivalent of a typo or a copy editing error. The Denver Post gives a horrific example:
Miscoding Fictions, frauds found to abound in medical bills
A pair of transposed digits in a medical identification number was the difference between insurance coverage for Mike Dziedzic and the seemingly never-ending hounding for payment by the hospitals that cared for his dying wife.
The astute eye of a medical billing advocate who Dziedzic hired for help caught the innocuous mistake — the sole reason his insurance company had refused to pay more than $100,000 in claims that had piled up and why collectors were now at his doorstep.
Had it remained unnoticed — as often happens to patients faced with daunting medical debt — Dziedzic said, he most surely would have lost his Rifle home, his way of life and had little choice but to live in bankruptcy.
Finally, there’s “upcoding,” and if you are reminded of “upselling” you are exactly right. The Center for Public Integrity:
But the Center’s analysis of Medicare claims from 2001 through 2010 shows that over time, thousands of providers turned to more expensive Medicare billing codes, while spurning use of cheaper ones. They did so despite little evidence that Medicare patients as a whole are older or sicker than in past years, or that the amount of time doctors spent treating them on average was rising.
More than 7,500 physicians billed the two top paying codes for three out of four office visits in 2008, a sharp rise from the numbers of doctors who did so at the start of the decade. Officials said such changes in billing can signal overcharges occurring on a broad scale. Medical groups deny that.
The most lucrative codes are billed two to three times more often in some cities than in others, costly variations government officials said they could not explain or justify. In some instances, higher billing rates appear to be associated with the burgeoning use of electronic medical records and billing software.
Now, I’ll be the first to admit that I can’t quantify the impedance mismatches, the miscoding, and the upcoding. Regardless, medical coding is the key dataflow in the healthcare system:
“Roughly $250 billion is moving through those codes,” [says Steve Parente, professor of finance at the Carlson School of Management at the University of Minnesota]. On top of that, about 80% of medical bills contain errors, according to Christie Hudson, vice president of Medical Billing Advocates of America, making already-expensive bills higher. Today’s complex medical-billing system, guided by hundreds of pages of procedure codes, allows fraud, abuse and human error to go undetected, Hudson says. “Until the fraud is detected in these bills … the cost of health care is just going to increase. It’s not accidental. We’ve been fighting these overcharges…they continue to happen and we continue to get them removed from bills.” These errors, which are hard to detect because medical bills are written in a mysterious code, can result in overcharges that run from a few dollars to tens of thousands.
That “mysterious code” is (now) ICD-10, and it’s the mystery plus the profit motive that creates the phishing equilibrium. Kaiser Health News quotes the Denver Post:
Experts say there are tens of thousands more like Dziedzic across the country with strangling medical debts. Medical Billing Advocates of America, a trade group in Salem, Va., says that eight of 10 bills its members have audited from hospitals and health care providers contain errors. It’s estimated that at least 3 percent of all health care spending – roughly $68 billion – is lost to fraud and billing errors annually. Some say new reform laws will only make things worse.” Others say that errors occur largely because of “the complexity of deciphering bills and claims weighted down by complex codes.”
Accounts of medical billing errors vary widely. While the American Medical Association estimated that 7.1 percent of paid claims in 2013 contained an error, a 2014 NerdWallet study found mistakes in 49 percent of Medicare claims. Groups that review bills on patients’ behalf, including Medical Billing Advocates of America and CoPatient, put the error rate closer to 75 or 80 percent.
Gee, I wonder if the errors are randomly distributed?
Neoliberal “Consumer”-Driven Solutions
My guts have started to gripe, so I won’t go into detail about how you too, the
citizen consumer, can learn medical billing codes if you want to dispute your bill. See this cheery post from NerdWallet on “How to Read Your Medical Bill:
Once you have the itemized medical bill for your care, you’re ready to analyze it for mistakes and overcharges.
Your medical bill is going to be chock-full of codes and words you may not understand, so the first step is gathering resources that will translate them into plain English.
Nerdwallet also includes this helpful image of a medical bill:
At this point, we recall that professionals paid between $585 and $985 to “gather resources,” one of which was telephone book-sized documentation. That’s quite a “tax on time.” (This FOX article also includes a good checklist of ways to dispute your bill: “The No.1 rule that we tell individuals is never pay the summary bill.”)
Wouldn’t it be nice if we had single payer? A much unappreciated universal benefit of Medicare for All is that none of us would have to learn medical coding to successfully dispute a bill! And an entity with some clout — the state — would be doing the disputing for us, on our behalf. Readers, have any of you had experience with this process? Either as a
citizen consumer, or — even better! — as a coder, yourself?
 There are more forms of phishing than fraud, but this crude summary will do for our purposes now.
 Reader TheBellTolls points out the column of codes is HCPCs/CPTs (procedure coding), not ICD10. The point remains, indeed is implified (especially impedance mismatch).
 Yes, I know Medicare suffers from a neoliberal infestation. But we have to start somewhere…
When I was researching this article, I searched on “medical coding.” Most of the first page of Google’s search results was taken up ads for medical coding training. From MB-Guide.org:
Considering a career change? Have you thought about the medical billing and coding field?
These industries helps millions of medical professionals and patients each year, and offer secure employment.
Medical billers and coders handle the complicated world of insurance claims for healthcare professionals. Without a constant stream of insurance claim revenue, healthcare facilities would quickly stop working. Billers and coders play a vital role in keeping things ticking.
Salary data from AAPC reveals that the more AAPC credentials an individual carries, the higher their annual salary. The average annual salary in 2015 of members with:
1 credential (any credential) was $46,899
2+ credentials (any credentials) was $58,399
3+ credentials (any credentials) was $65,643
And it’s interesting what there are credentials for, and what there are not credentials for:
The little-known field of medical-billing [patient] advocacy remains in its infancy, largely because there are no specific certifications or schooling necessary. MBAA offers in-home study courses and Sarah Lawrence College in Bronxville, N.Y., offers a masters program in health advocacy — there are even courses to learn the special coding necessary for medical billing — but just about anyone can hang a shingle and say he or she is an advocate.
Probably because it’s better to become a single payer advocate than a medical billing advocate.