Medical Economics

Ever wonder how doctors get paid? I know what you're thinking. We enter the room, spend 10 or 15 seconds mostly ignoring you, slap some ice-cold instruments onto your body just to watch you jump, then depending on when our next BMW payment is due, we make up a dollar amount that WE think is fair.

Doctors may have been able to charge what they thought was a "fair" price 40 years ago, but not any longer. Many docs don't even know what they charge (sounds amazing doesn't it).

As the largest single payer, the government sets fees and billing rules under Medicare that have been adopted in one form or another by the insurance carriers. So, it doesn't matter what the doc charges, the payers tell the doctor what they WILL pay. In most states, the doctor has to accept it and can not bill the patient for any more than their deductible or co-pay.

Recently, I attended a seminar on medical billing (not my idea by the way). I thought that an explanation of HOW the government determines physician reimbursement might be instructive to those who think it is random, and to those who still can't wrap their head around the concept that government involvement is a/the major problem in medicine already! As you read through the following (or at least skim it, because reading it might be hazardous to your health), please consider the vast bureaucracy of people necessary to determine, process, audit, and bill all of this stuff. Maybe you'll get an idea of why there are so many clipboard carrying useless flesh-bags in hospitals today (the ones Dr. Tim Johnson proposes that we retrain to provide your medical care).

First, you have your RVU's or Relative Value Units. Of course, there are 3 types of RVU's (the actual physician work, the practice expenses, and the liability insurance). The RVUtotal = RVUwork + RVUpractice expense + RVUliability.

Now you're probably thinking about the fact that in different areas of the country, these costs may vary and that is true, so there is the Geographic Practice Cost Index (GPCI). This ranges from a low of 1.0 to a high of 1.5 (Alaska).

Medicare uses a Conversion Factor or CF which varies from year to year in order to control payments. This factor was just lowered another 5.3% in 2009 to $36.0666666 per RVUtotal.

So, the formula is:

Medicare Payment = RVUtotal X GPCI X CF

So, all of this gets plugged in to determine a charge for each level of billing from 1 to 5 (where 1 is a patient with whom you have barely any contact, and 5 is complex) plus a critical care billing for the most life-threatening and time consuming cases.

So, we're done right? The doc just marks the appropriate billing level, right? Nope. Not in the ER anyway. For us, the billing fun is just beginning!

Remember your medical record? That thing that you THOUGHT was for keeping your medical information? Well that SHOULD be it's primary purpose, but it's not. It serves two other purposes that sadly have eclipsed it's importance as a source of information about you.

The first is obvious and that is as a source of medico-legal protection for the health care staff. Your record is replete with exactly what you said including specific symptoms you denied having, and specific warnings you were given, etc. Anything you refused or argued about will be in great detail. This isn't for your benefit. It's to protect us from the vultures. But I digress.......

The second alternate purpose of your record is that it has become your billing template! In order to bill you at any of the 6 billing levels, it must be documented that you were asked certain numbers of questions and examined in a specific number of areas.

Here's how this part works:

In taking the history of your presenting problem, there are 8 elements of your symptoms that I could ask (location, quality, timing, severity, etc); I can document your Past History, your Social History (job, smoking, drinking), and/or your Family History; then there is the Review of Systems (the litany of questions that don't seem to have anything to do with anything such as "do your gums bleed", or "do you have any rashes", or "any burning on urination"). There are 14 such body systems that can be touched upon in a system review.

Finally, there is the physical exam which can be broken into roughly 7 body areas or 12 organ systems.

Remember that no matter how good of a job that I do, only the stuff that gets written down will support a bill. If I spend an hour with you and document poorly, I can't legally charge for my time or effort....even though you will likely think I did an excellent job and appreciate my time and attention, it doesn't matter. Sadly for this very reason, your medical record is the more important patient to some providers. Especially with Medicare beginning to audit charts for billing compliance!

So, to justify billing any of the different levels, you actually have to document different permutations of: historical elements; past/family/social elements; certain number of system review questions; and certain numbers of physical exam areas documented. The higher the billing level, the more items from each list required to bill that level of service. (For example for level 4, you need 4 or more historical elements,; a family, social, or past history; up to 9 systems reviewed; & 5-7 body systems examined).

(In addition to all of this, your "medical decision making" is quantified based on whether the history came from the patient, a family member, the EMS, or others; documentation of Labs, Xrays, EKG's, reviewing old records and summarizing them, etc. Points are given for these activities that count toward more difficulty to "support" your billing level in case there is a question). Remember, all of this has to be documented for it to have officially happened!

Yes, in case you are wondering, legions of people known as "Medical Coders" actually sit down with each and every chart and count these items and bill the charts accordingly! All of these people make a good living, and their salaries are built into your medical care costs (and it's governmental rules and regulations that cause these people to exist).

So, now that you know how simple medical economics is, you know why it's so simple to reform the health care system! The government has simplified it so far, who would ever doubt that more government involvement couldn't possibly simplify it further therefore making it less expensive without cutting services!!!

So, the next time your doc has his/her face buried in a chart instead of making eye contact with you; or the next time the doc spends 5 minutes with you and excuses themselves to sit outside the room and spend 15 minutes with the chart, you'll know why.

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