The battle over billing codes

Medical records.

Kai Ryssdal: There are two main things that happen when you go to the doctor. You get your exam or check-up or treatment for whatever ails you. And there's a bunch of paperwork. Some that you do before you get seen -- histories, allergies -- and some the doctor does afterward. Usually a piece of paper with a bunch of numbers on it. Procedure codes. You probably don't pay much attention to 'em. No reason you should. But they're the very heart of the way we do health care because every one of 'em has a dollar amount attached.

Gregory Warner reports from the Marketplace Health Desk at WHYY.


Gregory Warner: Think about all the stuff you do without charging for it. You toss out that receipt you could have submitted for reimbursement. You work late, but don't charge overtime. But imagine you were doing hundreds of things for free worth tens of thousands of dollars a month. Then you'd probably say:

Larry Rabon: Wow! I need to be charging for these things that I'm already doing!

Larry Rabon is a urologist in Florence, S.C. Like every doctor he charges by procedure. Taking out a tumor, there's a code for that. Using a special scope to do it -- that's a different code. If the patient's obese -- the surgery's harder -- that's another code. If the surgery wasn't scheduled or there was a post-operative infection... you get the idea.

Rabon: There's a code for these things! And so that's huge amounts of funds that were just sitting on the table that were not being charged for.

Two years ago Larry Rabon decided to do things differently. He was going to find every code that he was missing, and bill for that. To take on this task he assembled a very loyal team! And here they are:

Geneva Rabon: Dr. Rabon is my husband and my boss.

Geneva Rabon, head nurse. And her daughter:

Lauren Richburg: My name is Lauren and I'm in billing.

And son-in-law:

Sean Richburg: I'm the office manager.

And another daughter.

Rainey Rabon: My name is Rainey Rabon.

Larry Rabon: Well my business has developed into a family affair.

And a family vacation for the Rabons means packing up the Suburban and driving down to Orlando, Fla. -- not to Disney World, but to a hotel right across the street from Disney -- to attend the annual billing and coding conference known as Coding Con.

Barbara Cobuzzi: How's everybody doing? You had fun last night?

Barbara Cobuzzi may not be the greatest at working a crowd...

Cobuzzi: Anybody go to Disney?

But when it comes to medical billing, she's a pitbull.

Cobuzzi: Because nobody is going to pay you if you don't ask. Come on, bring chairs in!

The lecture is packed because Cobuzzi is demonstrating how to squeeze every completely legitimate dollar of reimbursement out of a procedure.

Cobuzzi: So first we bill 24, then we bill 25...

By using the exact right codes in the exact right order.

Cobuzzi: Then we bill the IND, with the 79.

If this sounds impossibly complicated...

David Cutler: There are two things that have made this particularly complex.

Thing No. 1, according to David Cutler, health economist at Harvard...

Cutler: We still pay for medicine the same old way.

Procedure by procedure.

Cutler: So when there were very few things doctors could do they just said look I did X or Y or Z and they got paid for that. Now that there are hundreds of thousands, they have to write down each miniscule thing and get paid for that.

So imagine you're zooming into a photo down to the pixels and then you see those pixels have pixels? That's what medical billing is like. Everything is itemized. There's a price tag on every test and each procedure and exam.

Rabon: There's a code for these things!

Wait, wait! Let's just get one thing straight. Billing codes were invented to make things simpler! Doctor does something, there's a code for that, this is a way for insurance companies and doctors to agree on exactly what the doctor's doing and what should be paid for it. But that brings us to David Cutler's second reason why medical billing has become so complex. It comes down to just two words: shrinking reimbursements.

Cutler: All of a sudden you've got doctors getting paid less for doing something. And they say how am I going to make any money? The way I'm going to make money is by making the number of things that I've done increase.

For instance, knee surgery and rehabilitation used to be all one procedure until hospitals figured out if they...

Cutler: Discharged the patient...

After surgery, and sent them...

Cutler: Somewhere else for rehabilitation...

That somewhere else might be a different floor of the same hospital.

Cutler: Now I've just added another thing I can bill for.

One code becomes two.

Cutler: So that became the norm and still remains the norm.

It became normal for insurance companies and Medicare to say:

Cutler: We're going to pay less for each service!

And the specialists to respond by...

Cutler: Indicating more and more codes for exactly what you did

And that's the reason that the cost of care can keep going up even as the price for any one procedure is held down.

Rabon: Uh, almost like playing chess! Uh, they make a move and we make a counter move because they're trying not to pay us, we're trying to get paid!

And in this game, Larry Rabon has become a grandmaster. He's increased his revenue by 70 percent -- hundreds of thousands of dollars per year.

Rabon: I'm doing the same amount of work.

He's just charging for every little thing he's doing. It's like a code war between doctors and insurance companies. And the hotter this war gets, the more it costs... us. Our premiums and taxes pay for the coding gurus and soldiers on each side. There are now 2.2 people doing billing for every one doctor in America.

Cutler: It's a major part of the health care industry spent just dealing with that back and forth.

That back and forth -- you'd know this if you've ever been caught up in it -- means reams of extra paperwork and referrals and authorizations and denials and appeals and this costs an extra $360 billion a year. That's according to the Institute of Medicine. Which is to say, if we could just shave off one seventh of the extra bureaucracy...

Cutler: That's well more than it would cost to bring insurance coverage to every single American who is now uninsured.

So can we get rid of the codes? Well, some doctors and hospitals are already signing up for a new program under the health care reform law that would pay doctors by a lump sum instead of per procedure. But other doctors don't want to give up their independence. Larry Rabon and his family have gotten used to playing the chess game. And if every doctor played as well as they do, then our deficit would really be in trouble.

In Orlando, Fla., I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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