Special Report: Why a Hospital Bill Costs What It Costs

Reader’s Digest investigates the shocking ways we overpay up to thousands of dollars on medical expenses, and how you can understand where your money is going.

By Kimberly Hiss from Reader's Digest Magazine | September 2012
Special Report: Why a Hospital Bill Costs What It Costs© iStockphoto/Thinkstock

2. Coding is so tricky, even doctors don’t get it.

Unlike the corner gas pump, CT scan machines and syringes don’t have visible price tags, making it hard for patients and doctors alike to know their cost. “Most physicians are in the dark about costs,” Dr. Epperly says. “I did a procedure this morning to put a scope into a patient’s stomach, and I don’t know how much she’ll get charged—I’m focused on what to do as a physician to help people. I just filled out the form and put down what we did; my coder is the person who will translate that into money.”

So we asked coders—trained specialists certified by the AAPC (formerly the American Academy of Professional Coders)—what happens next. In a nutshell: Medical billing runs on three sets of universal codes: one for diagnoses (ICD-9), one for procedures (CPT), and one for durable medical goods and certain services (HCPCS). It’s the job of the coder—who can be one of many coders in a hospital billing department or an office manager doubling as a coder in a neighborhood practice—to translate every single illness, treatment, and pair of crutches into a number. Those codes are critically important because they help dictate the rest of the payment stream that follows.

It’s a complex task. CPT codes, for example, are listed in a city-phone-book-size manual in which even an MRI has about 60 variations. “Sometimes I’ll look at the information and think, I don’t know what the hell kind of code I’m supposed to use here,” says one clinician who does her own coding. “There’s so much to consider, and it can be open to interpretation.” Many clinicians still write their patients’ progress notes on paper, sometimes carbon copy forms with areas for handwritten notes and boxes listing corresponding code choices to be checked off. “People are busy, and a check mark could end up on line one versus line two, and doctors’ handwriting is notoriously sloppy, so a 2 could be misinterpreted as a 3,” says Dena Bravata, MD, chief medical officer for Castlight Health, a cost transparency company.

Some medical professionals don’t have a firm grasp of coding to begin with. In 2010, a 71-year-old cancer patient in Florida paid his physician $10,000 for injection treatments through an implanted pump because his insurance claims were denied. Turns out, the physician’s wife and office manager doing the billing were using the wrong codes. Instead of coding for only the injection therapy, they’d been coding for the actual surgery to implant the pump—ten times per month for over a year.

The system is only getting more complicated. As science generates new diagnoses and treatments, the American Medical Association issues more codes. In October 2014—for the first time since 1977—the government will institute an upgrade of ICD-9 codes to ICD-10, bumping the number of diagnosis codes to more than 144,000 from about 13,600. Professional coders are already preparing. While many predict billing delays, some are so concerned about the transition, they’re forecasting a Y2K of coding. “It’s going to be a major catastrophe,” says Pat Palmer of Medical Billing Advocates. “There will be glitches everywhere, and I foresee a huge increase in errors.”

To save money: Ask up front. Coding is typically too technical for a layperson to grasp: It would be like going to a grocery store and seeing aisles of bar codes without the products they’re attached to, says Richard Gundling, vice president of health-care financial practices for the Healthcare Financial Management Association. But it’s useful to learn the codes for your care. “The doctor’s office can often give you the CPT code for a procedure in advance,” says Gundling. “It might change if anything in your treatment changes, but at least it would give you a frame of reference.” You can give that code to your insurance company or your hospital when you ask for a price estimate. Some cost-comparison tools, like FAIR Health’s, allow you to search by CPT code. Question the code. A coding error could be to blame for an outrageously high bill. (Sometimes codes are listed on bills, sometimes not.) If your bill includes codes, check if they jibe with the ones you got from your doctor beforehand. If a bill has codes without corresponding descriptions, call the billing department to make sure they match the procedure you got (or look them up on FAIR Health’s site) or enlist the help of a patient advocacy group that has coding specialists.

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