Code Creep

The Washington Post has an article about an urgent problem related to Medicare billing: Code Creep (http://www.washingtonpost.com/national/health-science/doctors-others-bil...). Excerpts:

Thousands of doctors and other medical professionals have billed Medicare for increasingly complicated and costly treatments over the past decade, adding $11 billion or more to their fees — and signaling a possible rise in medical billing abuse, according to an investigation by the Center for Public Integrity.

Between 2001 and 2010, doctors increasingly moved to higher-paying codes for billing Medicare for office visits while cutting back on lower-paying ones, according to a year-long examination of about 362 million claims. In 2001, the two highest codes were listed on about 25 percent of the doctor-visit claims; in 2010, they were on 40 percent.

Similarly, hospitals sharply stepped up the use of the highest codes for emergency room visits while cutting back on the lowest codes.

Medical groups say the shift to higher codes reflects the fact that seniors have gotten older and sicker, requiring more complex care. . .The Center for Public Integrity’s analysis shows no increase in the average age of patients during the decade. Medicare billing data do not indicate that patients are getting more infirm, as their reasons for visiting their doctors were essentially unchanged over time. And annual surveys by the federal Centers for Disease Control and Prevention have found little increase in the amount of time physicians spend with patients.

That suggests that at least part of the shift to higher codes is due to “upcoding” — also known as “code creep” — a form of bill-padding in which doctors and others bill Medicare for more expensive services than were actually delivered, according to health experts and the data analysis by the center.

Doctors, hospital emergency rooms and many other providers are paid by Medicare based on a series of billing codes that are designed to reflect the complexity of the treatments delivered and the time required. For doctor visits, the lowest code, which pays about $20, is for minimal problems requiring a few minutes’ time. The highest code, which pays about $140, is for more serious cases that typically require 40 minutes of face-to-face contact.

To conduct its analysis, the center examined a representative 5 percent sample of Medicare patients and their claims submitted by more than 400,000 medical practitioners and 7,000 hospitals and clinics, starting with 2001. It found that the move up the coding scale by doctors and other medical professionals cost Medicare $11 billion, adjusted for inflation.

Medicare officials declined numerous requests for interviews. However, in an e-mail response to written questions, officials said that while they believe most doctors and hospitals are “honest and try to bill Medicare correctly,” they are also “keenly aware that certain Medicare providers and suppliers seek to defraud the program.”

Many doctors and hospitals say that computerized medical records encourage the move to higher codes because the software makes it easier for providers to quickly create documentation for charges. One electronic medical records company predicts on its Web site that its product will result in an increase of one coding level for each patient visit, potentially adding $225,000 in new revenue in a year.

Like doctors, hospitals have moved to higher-paying codes, bolstering revenue in the process. From 2001 through 2008, the use of the two most-expensive codes for Medicare ER visits nearly doubled to 45 percent. That increase added at least $1 billion to Medicare’s costs, according to the center’s analysis.

CMS acting Administrator Marilyn Tavenner said in a May report that the agency planned to contact as many as 5,000 doctors who have been identified as billing outside normal ranges, but said that it might cost the agency more to investigate suspicious claims than it could collect. The agency, Tavenner wrote, “must take into account” the “return on investment of medical review activities.”

Hospitals, like doctors, say some of the rise in reimbursements could be the result of treating sicker patients in their ERs.

But Dr. Stephen Pitts, an ER physician who has studied the issue, disputes that. Pitts, an associate professor in the Emory University School of Medicine, examined data from the CDC’s National Hospital Ambulatory Medical Care Survey, a well-established nationally representative survey of emergency department visits. He found that between 2001 and 2008, emergency patients did not appear to be getting sicker.

“It’s total nonsense,” he said of hospital claims that the patients were sicker.

One of 700 comments made on the WP website:

An $11 billion problem in a $500 billion system does not seem to me to be an out-of-control problem, especially if most of the $11 billion is justified or "honest mistakes" in billing. On the other hand fraud should be pursued vigorously by CMS even if the amount recovered is a wash. The "fear-of-God" effect serves as a deterrent to would-be upcoders.

But perhaps Berwick is right. Hospitals and other providers have learned to play the game and the uptick in coding reflects an adjustment after years of undercoding. The coding system itself is the problem with all of its perverse incentives to over-screen, over-diagnose, and over-treat. Better to toss out this dysfunctional system and replace it with global budgeting in my opinion.

My comment:

Let's keep this issue in context, as noted above. Medicare fraud exists, but it is a minor fraction of the overall cost problem. We have a health care financing system which rewards doing more to get paid more, and so doctors and hospitals do more. Inappropriate care (doing more for various reasons than clinical science actually supports) is a major problem, and not just for Medicare. Private health insurers are even less able to hold the line on health care costs. The hard work of refusing to pay for inappropriate care will be difficult (I think impossible) at the federal level. The massive size of our national health care delivery system is beyond what any one person can manage. This is an argument for encouraging state solutions to our health care spending problems. Outliers will be more obvious at a more local level of supervision. And creativity in responding to "Code Creep" can flourish better if 50 different efforts are being made to corral the creep.

Dr. Joe Jarvis