The U.S. medical claims payment system was designed by Kafka and implemented by Monty Python. Its inefficiency and high error rate are exacerbated by a disappointing volume of straight up fraud.
Who has not become exasperated trying to match what was submitted to his insurance carrier with the services he received from a "pay-for-CPT" provider? Why is this so hard? Because the claims system is corrupt! I use that word in its broad sense, encompassing both inadvertent message garbling as well as deliberate acts of dishonesty. Behold, an example.A few months ago, I lacerated a finger in one of those western states where they have lots of horizon. After trying folk remedies (mainly shouting special words), I surrendered to a local ED for a stitch and a tetanus shot. This was not your dusty Fort Elsewhere medical/veterinary clinic and general store, but a multihundred bed, level II facility that was the latest showplace of WowAreWeBig Hospital Corp., a national franchise. The care I received was technically excellent and the staff competent and friendly.
Nevertheless, I won two bets with my wife when the explanation of benefits arrived from my insurance carrier. Not only (among the legitimate charges) had the hospital billed me for several medical services and durable goods that they had not provided, but my insurance carrier had paid its inflated share without a blink. I contacted my carrier, and was told, "If you point out the discrepancy, the hospital will probably submit an amended claim." In your dreams. I called the hospital business office and was told, politely, "Pay up, or be sent to collections."
There cannot be an adult in the United States who believes this "error" was an isolated, clerical oversight. Please. I have worked for more than 30 years in this racket, and have earned my black belt in how procedure coding and payment works from both sides. It's an enterprise flawed in ways that would bewilder an Enron accountant. In my case, the hospital simply padded the bill. My next call was to the state attorney general.
Honest mistakes, of course, occur by the millions. The complexities of medical billing and payment spawn massive numbers of honest errors and misunderstandings in both directions. But lying, cheating, and stealing occur in a shadow market behind the background blunder rate, and constitute a pervasive pattern of misconduct that is widely tolerated in the industry. It's possible for a system to operate so poorly that even honest people shrug in despair.
Disclaimer: I understand the fallacy of spreading tar with a wide brush, so I will declare right here that the preceding statement does not characterize every health care facility in the United States, every billing clerk, coder and office manager, or every payment department in an insurance company. OK? Now let's move on. We've got a problem, and, there is no simple solution.
The U.S. system for medical billing and payment, at least where it depends on coding of medical procedures using CPT, ICD-9, HCPC and similar taxonomies, is an unworkable and unsustainable mess. If clinical errors were as common as clerical ones, nobody would leave a hospital alive.
Honest employees encounter baffling inconsistencies along their data streams. On the claims side, providers may not know how to encrypt the services they actually provided into codes recognized by payers. Sometimes this is because necessary codes don't exist, or because their billing systems aren't programmed to submit them. Often, it's because coders do not understand the rules, or may not have access to accurate records. Coders may apply policies wrongly to individual cases, or may have been incorrectly instructed in coding by their superiors — or instructed to code falsely. Hospitals, because of the volume and technical complexity of their claims, are the most egregious offenders. Moreover, the magnitude of the sums they handle makes them tempting environments, in some cases, for criminal activity. The confusion of the billing process, and its impenetrability to patients, serves to hide wolves among the sheep.
The payment workflow is even harder to manage. Incoming claims need to be matched against labyrinthine provider contracts that may contain obsolete or contradictory provisions, or terms that are impossible to administer. These may be erroneously programmed into information systems maintained by technicians not versed in the vagaries of reimbursement logic.
Claims need to be filtered against payment policies designed to capture duplicates, reject invalid codes, flag contradictory procedures (like Pap tests for males), deny claims that violate unfathomable sets of rules and exceptions (and exceptions to exceptions), and identify blatant fakes and frauds. Payment logic is so complicated that it is impossible to program a system for "auto adjudication" without human intervention.
Unfortunately, human intervention is subject to the same failings on the payment side as on the submission side. Add to this the effects of periodic updates and arbitrary managerial improvisations, and you have a lesson in chaos theory.
Honest inaccuracies arise from the multiplicity of payment contracts, theories, interpretations, and policies, and the unwieldiness of the coding process. Then, dishonest abusers exploit holes in a system that operates like a medieval bazaar.
The system fosters gaming and arbitrage, rewards cheating, punishes diligence, and shelters villains. Worse, its ponderous fragility, like a tower of goblets awaiting a stream of champagne, causes panic whenever someone attempts to adjust it. Its structure is sustained only by a mixture of anxiety and precisely balanced antagonisms.
This state of affairs has frequently been cited as the rationale for creating a single-payer system. I'm not convinced. The problem isn't too many payers, it's too many sets of rules. Who cares how many payers there are? Let Darwin sort them out. The benefit the system gets from having lots of payers is that we can study different models. It would be foolish to discard all these experiments — particularly when we have yet to see one that is clearly superior. (I hope we don't consider Medicare as the answer to all our prayers.)
My solution is to impose a national, Uniform Claims Payment Policy (to be expanded upon in an upcoming column) upon organizations who use "pay-for-procedures" methodologies. The optimistically labeled, "Correct Coding Initiative" (because it is not enforced for nongovernmental payers), is not effective for this purpose. Granted, eliminating variations will sacrifice potentially superior procedural payment schemes and regress them all to a mean. (Maybe it will reduce the popularity of pay-for-procedures in favor of other models, like prospective payment and pay-for-performance.)
This compromise preserves the value of having multiple payers in competition, while eliminating some of the inefficiencies in a system suffering from too many standards.
Outright dishonest behavior is in some ways merely a side effect arising from our too messy system. Standards won't eliminate criminals, but they should make them have to work harder. I often drive past the Air Force Academy, and am reminded of its honor code: "We will not lie, steal, or cheat, nor tolerate among us anyone who does." Right now, that would set an impossibly high bar for the medical billing industry.