A Solution for Coding Complexity?

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The last two weeks, I have written about the money-and-time-wasting complexities of hospital billing and inpatient provider billing. Are there solutions?

Remember, first, that to identify a solution to a problem, you have to accurately diagnose the cause of the problem. So we should back up and talk about that first.

I should give a disclaimer and say that, while I’ve read a variety of book chapters and articles talking about how our billing system evolved, I am no expert on this subject. Nor do I want to try to go into the deep billing history here. But maybe a big-picture summary will suffice.

Why would people design such a complicated system? On the provider side, the two reasons that stick out are as follows:

  1. To make sure providers are actually delivering enough care to warrant getting paid their fee. It’s trying to prevent that small minority of “innovative” providers who would cut corners in a way that isn’t necessary illegal but that would enable them to generate way more RVUs per hour than good, thoughtful, conscientious care would allow.
  2. To try to quantify differences in complexity, especially so that providers are rewarded for doing more difficult things.

On the hospital side, those same two reasons also apply, although the second one is much more relevant. There are, though, issues with the first reason as well, which is why 30-day readmission rules have cropped up.

So there you have at least a start to an understanding of why these complicated systems have evolved to what they are today. And your mind is probably brimming with solutions already based on that short explanation. For example, if most providers end up billing about the same average complexity, why not just simplify things by only having a single complexity level and trust that things will average out? Some providers will take a pay cut and some will get a raise, but most will still make the same amount of money and will save a lot of time and expense (less overhead dedicated to paying for coders to review charts, etc.). Or why not have fewer modifiers that change what DRG a patient gets assigned to? Or, heck, just fewer DRGs in general? Better yet, just have a closed integrated provider-insurer organization that can make whatever billing rules make the most sense to everyone in that organization?

We could easily come up with lots of other solutions. But remember I’m interested in fixing the whole healthcare system? Would any of these help us make progress toward actual and significant big-picture value improvements in our healthcare system? Or might they risk creating more barriers to getting to the real solutions?

Remember that my explanation of how to fix healthcare (as detailed in my Healthcare Incentives Framework) is to enable more people to identify and then choose higher-value providers and insurers. This means people need to know price and quality beforehand. (This isn’t always possible, but it is possible in more circumstances than people realize.) And when people start to know provider quality beforehand and then choose them based on that information, the issue of corner cutting by providers is greatly reduced. This would obviate the need for complicated billing requirements that are designed to make sure providers are really doing what they are supposed to do to provide good care.

But how would all those complicated documentation rules actually go away? Well, if providers start to shift to making their own prices (and insurers allow it because patients are paying most or all of the differential between provider prices), this would mean that those rules no longer apply because the providers are the ones in charge of determining how much they get paid rather than having to adhere to arcane insurer rules that dictate their fee for them.

This is probably a topic that requires further exploration another day. But my point is that all aspects of the healthcare system would change if we get more patients to make value-sensitive decisions when choosing providers and insurers.

(As a sidenote, I am sometimes asked by coworkers, “Would your solution to healthcare fix [insert specific issue here]?” And often my answer is, “Not directly.” And then I usually leave it at that because I know they don’t want 15 minutes of explanation about financial incentives and value-sensitive decisions and different types of pricing arrangements. Billing complexity is one of those issues that wouldn’t directly get “fixed,” but it would sure get better!)

In summary, the targeted easy-to-think-of solutions to all these expense-inducing coding complexities we’ve been talking about would make a difference in the problem they’re designed to solve, but remember to keep the big-picture solutions in mind to make sure any new policy doesn’t create additional barriers or detours to getting to that final destination.

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