Medical billing in general is pretty easy stuff. These days, most bills go out automatically, priced and coded. Where problems occur is when the coding is off; it either delays bills going out or it causes insurance companies to reject them, which affects cash collection.

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Incorrect coding crosses many borders. It could be medical records; it could be the charge master. It could be physicians or certain ancillary (revenue generating) departments.

I’ve previously written about claims not being paid for other reasons, and I’ve touched upon coding issues but without going into any detail. This time I’m naming five issues I know occur most often that most billing departments aren’t often taught, thus never know to look at when claims get denied.

1. Endoscopic charges

Endoscopy is one of the toughest areas to capture properly. The problem is because way too often what’s recorded in the medical record isn’t what the physician either did or didn’t do. This causes an issue with medical records because by law they have to code what’s in the record and thus there are different codes for almost the same thing.

That’s because endoscopic procedures can be performed many different ways and there are often confusing charge descriptions that may not match up with the proper codes. Medical records doesn’t see charge codes, so they don’t know they’re not matching up unless the billing department is sharp and brings it to their attention… after the claim has been denied.

2. Lab services

Everyone has had lab services performed on them. Many lab bills end up getting denied because the procedures physicians request don’t match up with the diagnosis codes they’re sending over. Sometimes the issue is a physician requesting a procedure that’s part of a panel they’ve already requested. Sometimes they’re looking for multiple things but only send a diagnosis code for one of them. Some insurance companies will pay a portion of a claim while denying the rest, while others will deny the entire claim and leave billing trying to figure out what’s wrong.

3. Insufficient coding

I’ve seen different ways this one affects billing and patients getting their claims paid properly… if at all.

One way I’ve seen it is when physicians don’t code a claim describing what’s going on with a patient as opposed to coding just the procedure. There are many procedures that insurance companies believe are cosmetic when there’s actually a pain or dangerous component regarding the need for the service, and they deny coverage of the procedure.

This one personally happened to me when I had to have breast surgery to remove a painful lump and the initial procedure code made it look like it was a cosmetic procedure. I called the insurance company and explained that it was to relieve pain after a number of years and I was given two secondary codes to pass on to the physician so it would be covered in full; whew!

Another thing I’ve seen is when medical records doesn’t code claims showing all the diagnosis codes that a patient has, even if it seems to have nothing to do with the reason they’re an inpatient in the hospital. Since hospitals are paid based on diagnosis, sometimes reimbursement is reduced because the medical record doesn’t specifically link the reason a person is in the hospital to a pre-existing condition, even though the two things are medically linked.

The final thing I’ll mention is that there are procedures performed where the insurance company is expecting a secondary component to the procedure that’s missing. It could be a time component; it could be missing supplies; or it could be missing pharmaceuticals. These are items that will either get claims paid less or denied outright.

4. Diagnosis/revenue codes don’t match the patient or medical record

These are outright errors in coding that, because bills automatically go out electronically, gets missed more often than you’d expect. Things like men coded for pregnancy and women coded for prostate cancer are mistakes that cause reimbursement delays.

Other issues include charges with time components not recorded in the medical record, insufficient physicians notes, mixed records because of similar names or dates of birth, and of course procedure codes selected for billing not going through the computer correctly based on description, proper department or revenue codes.

5. Not updating charge master to new procedure codes

Every year there are updated charges along with new charges and discontinued charges. Sometimes the changes are subtle; other times there’s a drastic change that’s taken place. It’s been estimated that hospitals without a person whose main job is taking care of their charge master only review it every 5 to 7 years; can you imagine how much lost revenue and reimbursement that type of thing can cause?

A good example is what happened to some radiology codes in 2017. An entire range of angiography codes, from 75791 – 75978, were deleted and moved into the surgical code area and recoded from 36901 to 36906. These procedures were always up for grabs between radiology and the surgical area so having them finally solidified isn’t all that shocking, but if hospitals haven’t picked up on the change they’re not only losing reimbursement but could indirectly be accused of billing fraud; talk about scary!

There are lots more errors but these are some of the biggest that, if corrected, will get the biggest bang for your buck.

Do you believe hospital prices are too high? What about fees from physician offices?

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If so, you’re not alone. Everyone has had to deal with a hospital or physician bill at some point in their life, whether for themselves or family members. Most people talk about how the cost of health care keeps going up, and they place the blame on hospitals, with physicians a close second.

I’m here to tell you that you’re blaming the wrong entities. Sure, some hospitals are gouging patients with what they charge, but that’s not actually the majority.

Health care providers conduct business differently than any other type of organization has to deal with. You go to a store because you want to go; no one ever wants to go to the hospital except maybe to see newborn babies. Otherwise, unless they’re employees, no one ever wants to be in a hospital willingly.

You go to hospitals or physicians most of the time because you don’t feel well. In every other business you have to pay your bill up front when you buy products or services. Most health care providers only charge you for co-pays or deductibles up front, then have to wait at least 30 days, sometimes much longer, to get paid.

The amounts they’re paid aren’t all that good either; let’s look at physicians first.

Imagine you had to go to medical school for 8 years, then do internships for a couple more, all the while having to take out big loans to finance everything. Finally, you’re ready to be a physician, where your malpractice can run anywhere from $30,000 to $350,000 a year, depending upon specialty and what state you live in. Add to that the cost of renting an office, hiring staff (you must have some staff by law), paying for the costs of services such as billing services, cleaning services, pharmaceuticals in some cases, etc,… it all adds up.

What about hospitals? Malpractice insurance is much higher because most physicians aren’t actually paid staff, but you’re liable for things they do within the facility. Hospitals still have to cover all the liabilities for the specialties the facility offers such as lab, radiology, physical therapy, etc. Add to that having to pay all the staff, pay for all the supplies, cleaning services, pharmaceuticals, utilities, etc. And then add to that mandatory, money-losing areas such as emergency room services, and hospitals aren’t making the money you believe they are.

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That plus the majority of hospitals are not for profit (82%), which means their profits must go back into the hospital or hospital system, along with having to offer charity care discounts, belonging to and accepting all Medicare and Medicaid patients, and can’t send any patients to collections until they’ve waited 120 days. After waiting for insurance to pay some accounts can take up to 2 years for payment and still not get all they’re allowed to collect. Every other business would close within a few weeks.

Would it be fair if hospitals just charged you high fees without any regard for how it impacts patients? Not at all, and for the most part it doesn’t happen. The rules are different for not for profit versus for profit hospitals, but things don’t change that drastically. I’m going to tell you how most of it works, hopefully in a way you’ll understand it.

Health care providers set charge rates based on one of two principles. The first is based on hospital costs; the second is based on reimbursements from specific insurance carriers, mainly Medicare. Let’s talk about cost based charging first, because it’s the most complicated.

Basically, what this means is that medical providers have to figure out what their costs are in all the departments of the facility as well as areas they have to worry about otherwise such as waiting rooms, the cafeteria, salaries etc, and then base their rates off that. For physicians, this is easier to do, because they only have so many employees, rent is what it is, and supplies are easier to keep under control.

For hospitals, it’s a lot more complicated to do based on the fact that many departments actually don’t know how much everything costs. This doesn’t mean there aren’t facilities to try to do it, first determining what those costs are, and then marking charges up anywhere from 200 – 4000% (the 4000% is an extreme I’ve seen, and it’s something I try to get hospitals I work with not to do).

These are average figures by the way. Some areas have items such as inexpensive supplies marked up higher, and some very expensive items such as pacemakers increased much lower.

All of this is legal, but is it right? Sure it is; how much do you think your hardware store actually pays for screws and nails you buy from them? Don’t even get me started on large retail conglomerates!

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Now let’s look at the second way. Many facilities and physicians base their prices on what they theoretically get paid by some of the insurance companies that pay them. One reason Medicare is a good one to use is because Medicare’s one of the few insurances that shares its reimbursement rates with everyone (who knows where to find it), whereas almost no other insurances does. For physicians, Medicare will post a fee schedule; for hospitals, Medicare posts what’s called an APC list, or Ambulatory Payment Classifications. Both are based on procedure codes, or the services that were provided.

Just to get this out of the way, not all physicians participate with Medicare, which means they don’t accept Medicare patients who aren’t willing to pay out of pocket. This also means they’re charging based on their costs, which is lucky for the rest of the world because it shows there’s at least a modicum of oversight on what they’re charging their patients. This is because, per federal law, even if they don’t accept Medicare patients, if they see any eligible Medicare patients they’re only allowed to charge a certain percentage of their costs, and they have to charge everyone else the same rate. I can’t go into any real detail about these types of physicians groups since I’ve never worked with any of them.

Hospital prices can be based on the Medicare payment schedule and charges are marked up the same way as with costs. However, just because charges are a certain amount doesn’t mean that’s actually what either hospitals or physicians get paid.

Now it’s time for the ugly side of health care finance. We’ll use Medicare as a perfect example, though I’m faking the reimbursement rates because they change every year and aren’t the same across the country.

Let’s say Medicare tells patients that they’ll pay $45 for a chest x-ray, and that you, the patient, owes 20%, which means Medicare pays $36. First, this means that no matter what the hospital bills you, they have to adjust the excess amount down to $45. Second, either you or your insurance company will get billed for $9.

Medicare doesn’t come close to paying that $36 though. Based on yearly cost reports, Medicare’s reimbursement usually comes somewhere between 35% and 55%. This means that out of that remaining $36, Medicare might be paying as little as $16.20, and the physician or hospital has to write off the rest. So, the health care provider is only getting around $25, no matter what’s charged, if the physician is a Medicare provider (every public, AKA not for profit hospital, MUST be a Medicare provider). It’s like this across the board for all services provided to Medicare patients.

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What about other insurances? Other than people without insurance (self pay), every insurance company that a health care provider participates with (meaning the insurance company has contracted with the provider to accept payment directly before billing the patient, if there’s a balance that needs to be billed) negotiates a payment rate of some sort.

Sometimes it’s a fee schedule, which means a certain amount per procedure code; sometimes it’s based on a percentage of charges, which can be more beneficial to the health care provider. And sometimes it’s based on what’s known as UCR, which stands for usual, customary, and reasonable, based on an average of rates other similar providers in the area charge. The insurance companies always know what everyone is charging for, which sometimes gives them a big advantage because providers aren’t really supposed to know what each other is billing for (though they all have ways of finding out).

There are some payers (another term for insurance companies) that hospitals in many states are stuck having to accept that are killers financially. Those payers would be Medicaid, Worker’s Compensation, and No Fault, as well as payers from other state and federal agencies such as prisons. In a state like New York, hospitals must belong to both the Medicare and Medicaid programs by law. Hospitals can’t survive on these payments, so it becomes important for them to try to get as high a rate of payment from other sources as they can.

Unfortunately, this usually means the group that takes it on the chin the worst are the uninsured. In most cases, there are few discounts for them, and they’re at the biggest risk of going to collections for non-payment of bills. Luckily, every hospital has both payment plans and charity care processes, which can reduce how much self pay patients are asked to pay, but sometimes totally erases any financial obligation. It’s based on income; that’s pretty fair. All you have to do is ask, but facilities are supposed to have signs posted telling patients about this; most patient don’t notice them, however.

In some states it’s mandatory for hospitals to reduce the bills they send to patients based on one of their contracted rates with an insurance carrier, which is a major help. This also applies to people who are on state insurance exchanges and have high deductibles.

This is a not-quite simple explanation of how the pricing process works for hospitals and physicians; it’s not comprehensive and it’s probably still pretty complicated stuff. It may not make you feel any better, and it probably won’t garner sympathy from many people.

I’m betting that when you need medical help, you’ll feel a lot better knowing that someone is there willingly to take the chance to make you, or a family member, feel much better. When you think about it, is there a limit on how much you’d pay for that life?

Medical billing and medical coding jobs and careers are easy to start, but hard to find work in. For medical billing, it’s hard to get started because physicians already have someone doing their billing for them. For medical coding, entities are often reluctant to bring on someone with no experience. For both, the training and learning curve is harder and the information more voluminous than most people realize.

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One of the major problems in deciding to do work like this on your own is that no one wants to trust someone without any real billing or coding experience to do work for them. Both of these are harder to do that people who haven’t done it realize. Going to a billing course or coding clinic isn’t enough to make you an expert; both of these careers are way more complicated than people realize.

This isn’t an overly detailed article on the subject, but it should be enough to give information to anyone looking at this as an independent career pause to think about it a lot more before giving it a shot.

Coding

When people talk about medical coding, most of the time they’re talking about diagnosis coding. In a hospital or clinic, there’s a department that usually handles 95% of all the coding; some labs might enter diagnoses based on the scripts from physicians. For a small physician’s group, coding is often handled by the physician. For a large physician’s group, they might hire someone to code their bills.

Diagnosis coding takes longer to learn than billing, and one must be certified in order to get a job doing it. After all, with the implementation of ICD-10 a few years ago, there are now more than 111,000 diagnosis combinations!

Coding Issues

The reason hospitals and clinics are hesitant to hire people without experience in coding is because there are some heavy penalties for incorrect coding. On the fraud list of the Office of Inspector General’s office, a division of the Department of Health and Human Services, is upcoding, which means coding a higher level of diagnosis than what the patient really had. Diagnoses impact inpatient payments, and upcoding gives the indication that a patient received a higher level of care than what the medical record might indicate. There’s a major difference in reimbursement to a hospital if something is coded as a urinary tract infection or septicemia, though both may seem similar to a coder.

Coders also need to know how to code everything in a patient’s chart that may be relevant to the reason they’ve presented themselves at either the physician’s office or the hospital, without adding everything. They also need to figure out which diagnosis is the primary.

Sometimes it’s cut and dry. If a person reports because they cut their toe open, one wouldn’t code their history of heart problems. However, they might need to code diabetes if special treatment needed to be given to stop the bleeding because the person’s foot isn’t healthy due to the diabetes.

Medical Billing

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In general there are two types of medical billing. One is physician’s billing, the other is facilities billing. Facilities can mean hospitals, clinics, nursing home, etc. Physician billing includes clinics, ambulances and the like, and it’s separated by the fact that it’s billed on what’s known as a HCFA-1500 form almost exclusively. Facilities will often use both the HCFA-1500 and the UB-04 for billing, depending on who, for whom, and what they’re billing.

For instance, hospitals mainly use the UB-04, but in some circumstances must submit the other form to collect on some lab services. Overall, both usually bill electronically, so the form isn’t as important as the format and the specific information that’s required for insurance companies to make payment. Medical billing personnel don’t have to be certified.

Medical Billing Issues

There are two main facts about medical billing. One, the work is never done. Whereas a medical coding person could conceivably get caught up and not have to code anything else in a day, medical billing always has more to do.

That’s because, two, not every bill gets paid just because it’s been sent out. There are literally hundreds of reasons medical bills won’t get paid, and it’s up to the medical billing person to figure it out. Reasons can include:

Incorrect charges on a claim
Incorrect codes on a claim
Incorrect personal or demographic information on a claim
Incorrect identification numbers on a claim
Coordination of benefits issues (determining which insurance is primary if a patient is covered under more than one policy)
No authorization number
Missing charges
Incorrect units of service

There’s no one source to learn all the reasons medical bills aren’t paid. It’s all done on trial and error and time. Sometimes even the explanations of benefits aren’t explanatory enough. A lot of time is spent calling both patient’s and insurance companies trying to get information and to get bills paid. Without having the knowledge or background of what to ask and how to follow up your accounts receivable is going sky high, cash will be low, and everyone will be stressed.

Costs of Starting Either Business

The costs for starting both of these businesses can be relatively low, though much lower for medical coding. A medical coder can start a business with an ICD-10 manual book and nothing else, although purchasing coding software would reduce the time it takes in arranging codes properly.

Medical billing will cost a little bit more, although it should cost a lot more. The person would have to purchase both medical billing software and paper forms. Because of the paper file cabinets would be needed, although these days most insurance companies want to receive bills electronically. Software can range from around $500 all the way up to $10,000, but you have to know what you’re looking for. What happens too often is someone buys the cheapest thing around and then has no idea how to use it properly.

Self employment isn’t an easy endeavor, and getting into the health care financial industry without experience is a terrifying prospect. It’s always best to see if you can get some real experience before thinking about embarking on your own.
 

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