Providers Are Smarter Than Insurance Companies
But you already knew that didn’t you? I usually disagree with Steffie Woodhandler and David Himmelstein but (like a stopped clock) they are occasionally correct. This is their view on why pay-for-performance doesn’t work:
Intensive coding — that is, embellishing diagnoses to maximize payment under per case or risk adjusted capitation schemes — also makes patients seem sicker on paper, and hence boosts risk adjusted quality scores. Under US Medicare’s DRG (diagnosis related groups) hospital payment system, recoding a diagnosis as “aspiration pneumonia with acute or chronic systolic heart failure” rather than simply “pneumonia with chronic heart failure” triples the payment and increases the risk score. Such “upcoding” is endemic among private health maintenance organizations that contract with Medicare for risk adjusted capitation payments, as well as among hospitals.
HT: Sarah Kliff.
I was not aware that upcoding was such a problem. Interesting read.
You really can’t blame the providers.
There are consultancies whose job it is to advise doctors and hospitals on how to maximize against reimbursement. These consultants even audit the hospital charges looking for items that could have been missed. The Harvard folks idea is to pay a global budget requiring hospitals to care for all patients that are admitted. Hospitals refusing the global budget would find that business plummets when there are no other payers except if allowed) only cash-paying patients (if allowed) because a single-payer system bans insurers. The problem with this is: hospitals will still game the reimbursement system. If hospitals are not paid more for doing more; if they are paid a fixed amount of money, they will do as little as possible in order to retain as much of the money as possible. There are many ways to achieve this. One is to discourage discharges, where sick but stable patients are ordinarily moved to lower-cost facilities to convalesce. A bed taken by a low-cost (bed blocker) patient is one that cannot be filled by another patient needing expensive services.
In any game players try to maximize their advantage within the rules. This coding system is only getting more complex. The only ones making out well are the ones who own the system. Care to guess who that is? They supported Obamacare.
Giving a specific diagnosis is not a bad thing. The problem seems to be in the reimbursement and risk formulas.
Interesting. At the very least, I would hope this upcoding practice is of benefit to the patients.
It’s things like the American public misses. It is a huge business to teach providers to upcode to get reimbursement higher. So many things like this contribute to rising costs but it’s easier to blame the insurers.
Devon Herrik’s post is very insightful about what actually goes on in Canada, which does have global budgets for hospitals.
However, global budgets are about the only proven method for reducing the cost of government health programs. Paul Ryan’s proposed block grants for Medicaid are
similar in their general approach.
So from a policy point of view, we have a tough choice —
a. pay hospitals on a per-case basis, and watch Medicare eat up the federal budget like Pac-man;
or
b. impose global budgets but get crummier hospital care for the very ill.
If America is hit with a real fiscal crisis like Spain or Italy or Greece, then option B
is really the only choice.
Just recently, I heard a case of a family member that went to see the doctor for a fractured toe, got treated with a cast on his leg and pain medication… nothing else…later on his insurance provider was charged for a surgery. How do you go from a broken toe to a surgery? Not sure..
Just another case of doctors and hospitals trying to unethically squeeze dollars out of their patients.
Fraudulent coding should be dealt with accordingly, but trust me, it is a game and also there are honest mistakes. When you see just how convoluted the system is and know it is getting worse, it is a wonder billing is ever done right.
I knew of an ENT surgeon who intentionally always under coded for one common procedure to make thing more simple and was fined.
A global budget system could sweep out all the coding fraud and coding confusion in about ten minutes, at least in the hospital sector.
Hospitals would be paid a lump sum every January based on the population that they serve. If they served a city of 20,000, they would get a check for $40 million or whatever the formula called for.
No claims, no bills to patients, no debt collectors, no coding other than for internal accounting systems.
All doctors in these hospitals would be hospital employees, paid salaries out of the lump sum.
As Devon says, these may not be good hospitals.
But they will be affordable. That is the tradeoff.
Australia has public hospitals that operate this way, plus a selection of private hospitals that are paid by user fees and private insurance.
codi