New approach proves powerful in reducing inaccurate billing
Whitepaper | David V. Cardelle, R.Ph.
Vice President Payment Integrity Solutions, Change Healthcare
David is a registered pharmacist with 37 years of experience in the healthcare industry. He has specialized in developing and managing innovative cost-containment solutions for the payer industry.
Errors in physician coding cost billions of dollars each year to the U.S. healthcare system. Such a large financial impact can be attributed to a relatively small problem: human error. This white paper delves into the details surrounding the problem, and shares a simple solution.
It’s no secret that today’s healthcare environment is undergoing massive changes. There are a multitude of initiatives transforming the current healthcare landscape as we know it, including the Affordable Care Act, health exchanges, corporate-based wellness and population health management, Accountable Care Organizations, medical homes, and consumer-driven healthcare.
The list of acronyms and need for “new thinking” is daunting. Most, if not all, of these initiatives are rooted in sound principles, unique in their own way, and by and large have positive impacts on the quality and costs of specific aspects of healthcare delivery. At their core, they seek to solve the same underlying (and enormous) problem: skyrocketing healthcare costs. Estimated to be 17.8% of the GDP in 20151, healthcare in the United States has the highest measurable costs in the world. The current trajectory is not sustainable, and, at the risk of stating the obvious, healthcare must be redefined.
While this may seem insurmountable, it doesn’t have to be. Providers, payers, partners, and even consumers do not need to “eat the elephant in one bite,” so to speak. All around us there are meaningful, effective, actionable ways to reduce healthcare costs. One example is to address the high cost of inaccurate coding/ billing, which leads to overpayment of claims.
E/M Coding Issues Gain Prominence through OIG and Medicare
The area of physician billing is largely unregulated and mired with inefficiencies and inaccuracies that result in billions of dollars of inappropriate payments to physicians. This issue garnered national attention in May 2012 when the Office of Inspector General (OIG) issued a report stating that between 2001 and 2010, Medicare payments increased by 43 percent, from $77 billion to $110 billion.
During this same period, Medicare payments for evaluation and management (E/M) services increased by 48 percent, from $22.7 billion to $33.5 billion. This $11 billion increase in payments over ten years includes a 13 percent increase in the number of E/M services billed, 346 million to 392 million. The payment amount increased 31 percent, from $65 to $85 per visit.2
The OIG reports E/M services are 50% more likely to be paid in error than other Part B Medicare services.3