Overcharging is an enormous problem in our health system. According to a study done by NerdWallet, more than 90 percent of the hospital bills contain billing errors and the problem is that, most of these errors go unnoticed and they are usually in favour of the hospital.
The process of reimbursement is complex, but let us focus on the points where the overcharging occurs. A patient visits their doctor, the doctor jotts down all the relevant information – the history, the diagnosis, procedure performed, treatment etc. All of this information is logged into a document called an electronic medical record (EMR), this sheet is then sent to the medical coders, who code everything and fix the prices from the pricing list or the hospital chargemaster. Now, the thing to keep in mind is that in large hospitals and now increasingly smaller hospitals, this is usually done by a third-party vendor, who does not know you nor your physician. All they see are EMRs they assign code and value from the price list. Now the problem occurs, when some medical billing companies charge a percentage of the total amount charged to the patient. So, when they bill more, they make more. This means that the charge becomes more. On the other hand, medical coding is extremely complex. There are three standards ICD (70,000 different codes – used for diagnostics), CPT (over 10,000 different codes, used for services rendered) , and HCPCS (used for procedures). Now all of this is handled in such a way that speed is prioritized, because as mentioned earlier, when they bill more, they earn more.
So, now we know that:
- The people responsible for billing never actually talk to the people who create a medical record
- Medical coding is an incredibly complex process
- Everyone is aiming for the incentive, which they get when they bill the most amount of money possible.
Although it is not clear that if this is exactly why the Tennessee Health insurance plan approved $17.6M in provider overcharges, it does provide you a picture of how frequent and how dangerous of a problem this is. Also, ClaimInformatics, the company that did the internal review and found the overcharges said, “Primarily the result of inaccurate and incorrect coding of service codes due to unbundling (which is also known as fragmentation”.
Key Insights
“These real results were discovered by flagging payments made out of compliance with each carrier’s own coding policies”, ClaimInformatics wrote in their presentation to state officials on June, 9th. “These findings relate to individual claims and are not a sampling with extrapolation. Further, given we are only one week into the project, the results by no means represent the entire universe of overcharges that will be identified as we have more time to conduct further analysis.”
Rep. Martin Daniel, a Knoxville Republican, co-chair of the General Assembly’s Fiscal Review Committee, says, “At least $17.5 million dollars — rock solid, actionable claims — have been paid erroneously under our state health care plan over the past three years. That is way in excess of the average, the average is about 60% [of emergency room visits] being in that four or five code. Hopefully we’re going to have a full audit of the state health care plan and performance of the third party administrators under the state health care plan very soon.”
It is our hope that this egregious error is soon rectified and justice is done. BillingParadise, is a trusted third party vendor that specialises in medical billing and coding services along with being one of the leading RCM service providers. We avoid errors like this by ensuring that once coding is done, it will be reviewed and reverified multiple times. There are several checks and balances in place to ensure that we do not surprise bill your patients or produce overcharges of any kind.
