Revenue Cycle Risk Takers

I’ve been a freelance healthcare reporter/writer/editor for more than six years now. By choice. After two publishing companies unceremoniously let me go — one after 25 years, the other after six — I chose not to let some knuckleheads ever again decide whether I could provide for my family.

I turned down two offers of full-time employment and put my faith in myself. It worked out better than I could have imagined. I’ve never looked back. Other than just now when I typed “knuckleheads.”

One reason it’s worked out is I don’t cheat. My fees are my fees. I charge higher than most but less than some. I’d like to think I’m pretty good at what I do. I should be after more than 40 years of doing this. But I don’t inflate hours or pad time sheets for a few extra dollars. I look back at hours for similar projects to make sure what I’m charging is consistent with past work. People shouldn’t pay me more because I was slower than usual or less efficient. I’ve never used and don’t intend to use artificial intelligence to do anything.

What brought on this self-reflection and brag is a new study in Health Affairs. Four researchers from the Rand Corp. and one from Brown University looked at changes in DRG coding patterns at hospitals in five states over a nine-year period, 2011 through 2019. Medicare, Medicaid and most private health insurers pay hospitals for inpatient care based on DRGs, or Diagnosis Related Groups. The study pool consisted of 239 medical conditions for which hospitals assigned DRGs. The five states were Florida, Kentucky, New York, Washington and Wisconsin.

Hospitals assign a DRG to an episode of care based on how it codes the patient’s primary diagnosis, or reason for going to the hospital, and secondary diagnoses for other medical conditions. Health insurers pay more for a DRG when the patient was sicker than average for that DRG, depending on the coding. Hospital revenue cycle departments code DRGs based on the clinical documentation done by the staff.

When revenue cycle departments “upcode” patient cases, they bring in more revenue for their hospitals without any corresponding justification for higher clinical costs.

The researchers found that the number of patient discharges with the highest intensity care for those DRGs jumped by 41% over that nine-year period. Taken at face value, that would mean the number of patients treated for those conditions and who were sicker than average for those conditions rose 41%.

After adjusting for variables like patient demographics, pre-existing conditions, length of stay, hospital characteristics, and others, that 41% was more like 13%, the researchers said. In other words, over that time period, those patients were sicker but not nearly as sick as hospitals said they were.

That difference was an extra $14.6 billion in payments to hospitals for inpatient care in 2019 alone, per the researchers’ calculations. The figure includes $5.8 billion paid by private health plans, $4.6 billion paid by Medicare and $1.8 billion paid by Medicaid.

“These findings add to the evidence that hospitals may move patients into the highest billing category in order to increase the amount they are paid for patient care,” said Daniel Crespin, lead researcher, in a press release. “This suggests that government programs and private payers are paying billions more each year than what would be expected based on historical rates.”

The researchers hedged their conclusion by saying that more research is needed to definitively know if the hospitals were cheating or just doing a better job of coding based on the clinical documentation.

If I suddenly billed 41% more hours for basically the same work, it wouldn’t be because I was doing a better job tracking my hours.

David W. Johnson, founder and CEO of 4sight Health, likes to say the smartest people in healthcare work in revenue cycle. Maybe that’s true. Maybe it’s not. Either way, they’re willing to take the risk of upcoding without getting caught.

Thanks for reading.