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The Business of Medical Coding: Part 3 of 4 "Healthcare Regulations"

Posted by Stephanie Cecchini on Sep 3, 2015 4:30:00 AM

This is part 3 of a 4 part series on the business of medical coding.

In the pursuit of their careers, physicians are taught to assume responsibility for peoples’ lives and to make decisions with the goal of best patient outcomes. The mind of a physician is constantly prioritizing and classifying patient information in an effort to make the best decision — often under extreme intellectual pressure. Physicians invest the majority of their young adult life in learning their craft.



The tenacity needed to stay the course is sometimes associated with a true “calling” to practice medicine, a profound love and respect for humanity and healing. Think shaman, medicine men, or even the patient-focused doctors depicted by Norman Rockwell. However, many physicians are startled by an unexpected problem: To comply with the law, they must move their attention away from the patient.


Medicare and other payers hold a physician responsible for correct billing and medical documentation. On the surface, this seems reasonable but the complexity of rules are not simple, or easy to remember.[1] For example, physicians are not allowed to simply document what is wrong with a patient and what they want to do for them. They are required to document their patient visits according to a minimum of 50 possible service variances; all are generic hypotheticals with no bearing on necessity or quality of patient care[2]. Physicians fail audits without this arbitrary documentation –regardless of the services they actually provided or the patient’s outcome. In some cases, due to one or two missing words.

With the noble goal of protecting our privacy, HIPAA has raised the cost of healthcare, delayed communication among physicians, taken time previously devoted to patient care, and slowed medical research. It requires all healthcare providers (and the people they work with) to protect and secure any information that might allow someone’s identify to be known by other people. For example, if the patient has red hair and is the only person in that ZIP code with red hair…the red hair and the ZIP code must not be viewed together by anyone other than the healthcare providers (and the people they work with). Compliance with HIPAA has gone so far as causing physicians to stop the practice of posting photographs on their office walls of the babies they have delivered. [4] If a physician does not carefully follow complex rules, it could cost $50,0000 or more in federal fines, or even jail time — regardless of whether any patient information was ever actually seen or used inappropriately, or if the patient wished to forgive the breech.[5]


The United States requires physicians to tell medical insurance payers the medical reason for each of their billed services. To do this they use ICD-9 codes to report patient diagnoses. ICD-10 is the updated version of this code set.[9] The international community has used ICD-10 for population health analysis since 1990. They will begin using ICD-11 in 2017. To adjust for the payment related purpose of the codes, the U.S. needed to radically modify ICD-10 in order to replace ICD-9, which it also modified from the world version. [10]


The ICD-10 system was mandated …and then delayed by the United States government. It is significantly different from the ICD-9. Aside from learning how to use the codes, the changes in the format of the codes require programming changes to software to accommodate new data. What can be reported with one ICD-9 code might require choosing from hundreds of minutely differentiated ICD-10 codes. The benefit of the increased detail in ICD-10 is the potential to provide better data for improved clinical, financial, and administrative performance. However, ICD-10 is already outdated internationally. There are rumors of other systems being used instead, and implementation dates are uncertain because of back and forth legal mandates. Physicians have been left to gamble with the choice of taking on training and upgrade costs or the consequences of not being able to bill for their services if ICD-10 codes are required. At the time of this publication, ICD-10 is scheduled for implementation on October 1, 2015.


The HITECH law requires providers to use computers “meaningfully”, which means they collect and share specific patient information in an electronic format and they use technology to double check defined aspects of their clinical care. Early adopters of Electronic Medical Records (EMR) received an incentive payment and non-adopters were told they would be penalized by a Medicare pay cut. The intention of the law was to reduce medical errors such as duplication of services (patients having the same tests by different providers), and prescribing medications with contraindications. The reality has been EMR systems that are largely cited as cumbersome, time consuming, and error prone. The point and click, auto-populate, cut-paste, and drop-down menu capabilities of most EMR systems make human mistakes frighteningly possible.


Also unpopular is that computers can come between the doctor and the patient. The practice of medicine requires physicians to actively listen to patients. The EMR causes some to be distracted by entering data in the required data fields. There are even new positions starting to takeoff around the problem, such as the use of “scribes”. Scribes are allied healthcare workers who enter data into the EMR for the physician. While helpful, they come at an added cost that many are not able to afford.


Due in part to the Balanced Budget Act of 1997, there are not enough doctors in the resident training pipeline to meet our nation’s demand, especially for primary care physicians. Congress capped the number of residency positions at 94,000 in 1997 and has not subsequently adjusted the ceiling. Since then, the U.S. population has increased by 40 million people. The ratio of doctors serving patients has significantly decreased, which is already leading to long waits for medical care in some rural communities across America.


Even if we had enough residents in the pipeline, younger physicians can’t replace older doctors 1:1. Aside from lesser experience, studies show that Generation Y physicians exhibit different attitudes toward their professional life than physicians between the ages of 50-65, and may not be willing to put in the same number of hours.[12] If this accurately reflects the younger workforce, physician productivity will decrease with retirements. This survey also found over half of physicians over 50 planned to retire, seek non-clinical jobs, or significantly reduce the number of patients they see in the next one to three years.


The formulaic approach of setting payment rates for physician services using the Sustainable Growth Rate (SGR) was replaced in 2015 by MACRA. MACRA provides automatic, annual payment increases of 0.5% for all doctors through 2019. Payment rates stay frozen at 2019 levels through 2025. Beginning in 2019, no automatic increases will be provided but doctors’ respective rates will be altered with bonuses or penalties based on their performance under a Merit-Based Payment Incentive System (MIPS) or through an Alternative Payment Model (APM) program. This is meant to compel physicians to shift from fee-for-service to “value based” medicine.


In inflation-adjusted terms, these small annual increases constitute reductions in physician payment rates. Even before negative incentives, which will be as much as -9 percent by 2022, Medicare’s pay to physicians will not keep pace with their practice costs in the long run.[13]


Stayed tuned for the final installment in this series.



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About Stephanie Cecchini: 

Stephanie is the Vice President of Medical coding services at Aviacode. Executive level revenue cycle management consultant. Stephanie has a notable variety of experience within the healthcare IT industry. CPC, CEMC, CHISP AHIMA Approved ICD-10 Trainer.



Notes [1] The bulk of the rules that must be memorized are covered in: Publication # 100-04 Medicare Claims Processing Manual Chapter 12 – Physicians/Nonphysician Practitioners. This publication contains 230 pages of detailed, and heavily exception based, instructions for the correct payment and documentation of services. [2] 1995 and 1997 Documentation Guidelines for Evaluation and Management Services [3] HIPAA costs and patient perceptions privacy safeguards Mayo Clinic [4] Baby-photo collages come down as privacy concerns go up By Anemona Hartocollis NEW YORK TIMES AUGUST 10, 2014 [5] Failure to comply with HIPAA can result in civil and criminal penalties (42 USC § 1320d-5). [6] New York-Presbyterian Hospital and Columbia University [7] Parkview Health System [8] American Medical Association (AMA) initiated study on ICD-10 implementation costs conducted by Nachimson Advisors 2008 and updated 2014 [9] ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health Problems (ICD), a medical classification list by the World Health Organization (WHO) [10]The US Version of the ICD-10 adds 55,000 diagnoses to the world version [11] The Financial and Nonfinancial Costs of Implementing Electronic Health Records in Primary Care Practices. Health Affairs March 2011 vol. 30 no. 3 481-489 [12] Health Central, “Doctors Leaving Practice.” Merritt, Hawkins & Associates 2003 [13] 4/9/2015 Memo from DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services OFFICE OF THE ACTUARY SUBJECT: Estimated Financial Effects of the Medicare Access and CHIP Reauthorization Act of 2015 (H.R. 2)

Topics: Medical Coding, United States Healthcare