Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Fixing the American health care system is simple. Here’s how to do it.

Matthew Hahn, MD
Policy
October 25, 2017
Share
Tweet
Share

If we listen to the president, fixing the American health care system is too complicated.  It is not actually that complicated. The number one issue is cost. Even with many millions of people unable to access care, we already spend close to twenty percent of every dollar in the U.S. on health care. If we hope to include everyone in the health care system, then we need to lower health care expenditures dramatically. Here’s just one way we could do that.

A 2014 BMC Health Services Research study (“Insurance-related Administrative Costs in United States’ Health Care”) found that billing and insurance-related administrative costs accounted for nearly fifteen percent of health care spending. If you are at all familiar with the American medical billing and payment system, you know that it is exceedingly complicated and wasteful. If you are not familiar with it, here is a description of the incredible amount of work entailed in getting paid for a doctor’s appointment. To put things in perspective, all this work is for a service that, on average, brings in $75.

Two things are necessary to generate a medical bill. First is the diagnostic code(s). There are 68,000 codes from which to select. And insurance companies can deny a claim if they feel the code used is incorrect, or if the diagnosis is not covered by a patient’s insurance, or if a host of other confusing rules is not followed to their satisfaction.

Second is the evaluation and management (E&M) code, which indicates the amount of work performed during the appointment, and is defined by 1995 federal regulation. The individual code is based on an incredibly complicated three-part calculation that includes:

History: the history calculation can include the number of questions discussed with a patient, the number of body parts discussed, the number of diagnoses involved, and a review of the patient’s past/family/social history.

Physical exam: the number of individual bullet points documented or body parts examined during the appointment.

Complexity of medical decision-making: estimated based on the number and types of tests that were ordered, prescriptions written, and referrals made.

There are five E&M codes in each code set, representing five different levels of payment, and separate code sets, each with its own unique criteria, used for new vs. established patients. There are also separate code sets, based on age, for wellness appointments, and for different places of service.

This coding scheme is a constant distraction for physicians, who must keep count of what is going on at the same time that they are attempting to interact with their patients, and write excessively long notes to match the code requirements. But the effects go further than that. The system of diagnostic and E&M codes is so complicated that it birthed a new health care professional, the medical coder. The Bureau of Labor Statistics estimated that there were 188,600 “health information technicians” in the U.S. in 2014, with a median salary of $38,040. Having coders on staff adds a great deal to the cost of running a practice.

Money, therefore, becomes a virtual obsession for every practice. And coding can make all the difference from a business perspective. A code 99213 office visit (the most commonly used code) for a Medicare patient pays about $75, whereas a level 99214 pays $110. The 99214 code becomes everyone’s focus as much or more than caring for the patient.

Of course, all of the work just described is merely to generate a bill, otherwise known as a claim. But the claim is just the beginning of the multi-step process involved in getting paid. It can take five or six steps, each with its own pitfalls, and opportunities for errors or denials, before the total amount is paid.

First stop is the patient’s portion, the deductible and/or the co-pay amount. But it can sometimes be tricky to determine these amounts.

Then, the claim is sent to the primary insurance, which pays its share. Once that amount is paid, the claim is sent to the secondary insurance. The secondary sometimes includes a co-pay. After the secondary payer sends its portion, there is sometimes a small amount remaining on the claim that is billed to the patient.

ADVERTISEMENT

And any one of these steps can lead to a denial. A denial can create unbelievable headaches, or leads to unpaid claims.

Again, all of this effort is expended to collect an average amount of $75! The system is completely out of proportion to the value of the service, creates unbelievable waste (its own industry, no less), promotes fraud (another incredible cost), and distracts everyone from patient care.

In one paragraph, I will describe a better system. The five-tiered E&M coding system should be reduced to just two or three codes, and the definition simplified. A simple office visit code would denote an appointment with one or two simple acute or chronic complaints. A complicated office visit code would be used for any visit with a more complicated complaint (like headache or chest pain), or three or more diagnoses. Separate codes and definitions for new patients, or for place of service, can be eliminated, in favor of a simple computer check box. Reducing the difference in the amounts paid for a simple vs. complicated visit (how about $90 and $100, respectively) would minimize the push to up-code claims, and reduce the incentive and the possible effects of fraudulent billing. In terms of getting paid, each insurance (primary and secondary) would provide the patient with a payment card (like an ATM card) that automatically moves the money to the practice at the time of service. Billing would be eliminated altogether.

It would be easy and effective, to reduce billions of dollars of unnecessary expenditures, and remove a huge source of frustration and distraction for every medical practice. And I’m sure that there are many other ways we could do the same type of thing throughout the medical system.

Matthew Hahn is a family physician who blogs at his self-titled site, Matthew Hahn, MD.  He is the author of Distracted: How Regulations Are Destroying the Practice of Medicine and Preventing True Health-Care Reform.

Image credit: Shutterstock.com

Prev

An interview with an American doctor working in Canada

October 24, 2017 Kevin 0
…
Next

How to care for patients who are personal health researchers

October 25, 2017 Kevin 2
…

Tagged as: Practice Management, Public Health & Policy, Washington Watch

Post navigation

< Previous Post
An interview with an American doctor working in Canada
Next Post >
How to care for patients who are personal health researchers

ADVERTISEMENT

More by Matthew Hahn, MD

  • This doctor got COVID. Here’s what it taught him.

    Matthew Hahn, MD
  • These leaders will not fix health care

    Matthew Hahn, MD
  • The demonization of socialized medicine

    Matthew Hahn, MD

Related Posts

  • How social media can help or hurt your health care career

    Health eCareers
  • The bureaucratic myth harming American health care

    Matthew Hahn, MD
  • Fixing our health care system won’t make us healthy

    Christopher J. Frank, MD, PhD
  • Fixing health care requires putting patients and their health teams on top

    Matthew Hahn, MD
  • Turn physicians into powerful health care influencers

    Kevin Pho, MD
  • A Southern California outbreak highlights failures of the American health care system

    Eric Rafla-Yuan and Janet Ma

More in Policy

  • Bundled payments in Medicare: Will fixed pricing reshape surgery costs?

    AMA Committee on Economics and Quality in Medicine, Medical Student Section
  • Who gets to be well in America: Immigrant health is on the line

    Joshua Vasquez, MD
  • Online eye exams spark legal battle over health care access

    Joshua Windham, JD and Daryl James
  • The One Big Beautiful Bill and the fragile heart of rural health care

    Holland Haynie, MD
  • Why health care leaders fail at execution—and how to fix it

    Dave Cummings, RN
  • Healing the doctor-patient relationship by attacking administrative inefficiencies

    Allen Fredrickson
  • Most Popular

  • Past Week

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • Why specialist pain clinics and addiction treatment services require strong primary care

      Olumuyiwa Bamgbade, MD | Conditions
    • Who gets to be well in America: Immigrant health is on the line

      Joshua Vasquez, MD | Policy
    • When a medical office sublease turns into a legal nightmare

      Ralph Messo, DO | Physician
    • America’s ER crisis: Why the system is collapsing from within

      Kristen Cline, BSN, RN | Conditions
    • FDA delays could end vital treatment for rare disease patients

      GJ van Londen, MD | Meds
  • Past 6 Months

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • Here’s what providers really need in a modern EHR

      Laura Kohlhagen, MD, MBA | Tech
  • Recent Posts

    • Life’s detours may be blessings in disguise

      Osmund Agbo, MD | Physician
    • Inside the heart of internal medicine: Why we stay

      Ryan Nadelson, MD | Physician
    • The quiet grief behind hospital walls

      Aaron Grubner, MD | Physician
    • Why peer support can save lives in high-pressure medical careers

      Maire Daugharty, MD | Conditions
    • Bundled payments in Medicare: Will fixed pricing reshape surgery costs?

      AMA Committee on Economics and Quality in Medicine, Medical Student Section | Policy
    • How Project ECHO is fighting physician isolation and transforming medical education [PODCAST]

      The Podcast by KevinMD | Podcast

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 59 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

  • Most Popular

  • Past Week

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • Why specialist pain clinics and addiction treatment services require strong primary care

      Olumuyiwa Bamgbade, MD | Conditions
    • Who gets to be well in America: Immigrant health is on the line

      Joshua Vasquez, MD | Policy
    • When a medical office sublease turns into a legal nightmare

      Ralph Messo, DO | Physician
    • America’s ER crisis: Why the system is collapsing from within

      Kristen Cline, BSN, RN | Conditions
    • FDA delays could end vital treatment for rare disease patients

      GJ van Londen, MD | Meds
  • Past 6 Months

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • Here’s what providers really need in a modern EHR

      Laura Kohlhagen, MD, MBA | Tech
  • Recent Posts

    • Life’s detours may be blessings in disguise

      Osmund Agbo, MD | Physician
    • Inside the heart of internal medicine: Why we stay

      Ryan Nadelson, MD | Physician
    • The quiet grief behind hospital walls

      Aaron Grubner, MD | Physician
    • Why peer support can save lives in high-pressure medical careers

      Maire Daugharty, MD | Conditions
    • Bundled payments in Medicare: Will fixed pricing reshape surgery costs?

      AMA Committee on Economics and Quality in Medicine, Medical Student Section | Policy
    • How Project ECHO is fighting physician isolation and transforming medical education [PODCAST]

      The Podcast by KevinMD | Podcast

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Fixing the American health care system is simple. Here’s how to do it.
59 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...