Are ER’s Cashing in on Upcoding?

Washington, DCSince 2009 emergency room charges have jumped by as much as 85 percent. Are patients really sicker? Has the actual cost of care gone up that much? Are hospitals price-gouging? For both uninsured patients and those with big deductibles, the bottom line is the same – a gaping hole in the pocketbook.

The secret (and thus perhaps part of the solution) may lie in the familiar medical scam of upcoding, often exposed through Medicare fraud lawsuits, but not limited to Medicare situations. Upcoding may be a major price-driver in the “facilities fee” portion of emergency room bills.

Why is my ER bill huge and hard to understand?

When Churchill used the phrase, “a riddle, wrapped in a mystery, inside an enigma,” he wasn’t talking about emergency room bills. He might as well have been, though.

There are a lot of problems with emergency room bills. Insured patients may be charged different rates than uninsured patients.The bill may bear little relationship to the service rendered: witness the $629 bandaid. Insured patients may discover that they cannot be reimbursed for services rendered if their ailments turn out to be less serious than reasonably feared. But there is another very common and pernicious practice – billing for more intense treatment of a condition than was actually required or rendered. It may be a piece of the puzzle that is relatively simple to address.

Nerd alert! Medical coding conversation ahead

Without getting too deep into the weeds, there are two parts to an ER charge: the physician’s fee and the facility fee. The former is more regulated than the latter.

Facility fees cover the basic cost of keeping the lights on and the doors open whether the ER is busy or not, but the fees are calculated according to a complicated formula that also factors in the level of care provided. Same lights, same doors, but the facilities fee charged for treating a heart attack may be more than that for stitching up a knee. Facilities fees can add millions of dollars to a hospital’s coffers in the course of a year depending on which code is chosen for a given treatment.

Emergency room facility fees are coded on a scale of 1 to 5 to reflect the complexity of care delivered to the patient. Hospitals have a financial incentive to boost the facility code to the highest plausible level, perhaps even a bit beyond. Not surprisingly, a Vox study reported in December 2017 that emergency rooms across the country increasingly used higher intensity codes. Emergency room fees rose twice as fast as the price of outpatient health care, and four times as fast as overall health care spending. Why?

Medical coding malfeasance is likely only one of the issues driving emergency room bills into the stratosphere. But it can make a big difference and is relatively easy to contest. What should you do? Investigate that bill. And get some help. This is a discrete problem that may be easy to tackle.