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July 13, 2022
David Burda
Economics Outcomes Policy

When Medicare Billing Codes Lose Their Leverage

Hospitals, health systems and medical practices are businesses just like businesses in any other industry. They respond to economic incentives, and they do things for economic reasons. Plain and simple.

Well, maybe not so plain and simple. A new study in the Annals of Internal Medicine suggests that the above may be true, but only if hospitals, health systems and medical practices are good business people.

Three physician researchers from Brigham and Women’s Hospital in Boston looked for any link between physicians’ use of Medicare billing codes for prevention and care coordination services and the provision of those services by the physicians. The assumption is, if you pay doctors to do the right thing — such as providing prevention and care coordination services to patients — doctors will do it. And the way you do that is by creating more billing codes for prevention and care coordination services.

I’m sure that’s what Medicare regulators thought when they added 34 new billing codes for prevention and care coordination services to the Medicare Physician Fee Schedule over a 15-year period, from 2005 through 2020. Some of the 19 prevention codes were for services like annual wellness visits, depression screening and obesity screening and counseling. Some of the 15 care coordination codes were for things like behavioral health integration, chronic care management and transitional care management.

In short, Medicare incentivized doctors to do those things for their Medicare patients to keep them as healthy as possible by letting doctors bill separately for those things.

Well, as it turns out, at least according to this new study, many primary care physicians did those things anyway for their eligible Medicare patients. But most doctors didn’t bill for them, losing out on tens of thousands of dollars in annual revenue for their practices. Here are the numbers:

  • About 9 percent to 100 percent of patients were eligible for a specific preventive service, depending on their condition. Only 5 percent to about 61 percent of the eligible patients got that service. PCPs billed for even less — 1 percent to about 36 percent for the service provided.
  • About 23 percent of patients were eligible for transitional care management services, depending on their care coordination needs. Of those, only about 43 percent got them. PCPs billed for even less — about 9 percent for the transitional care management service they provided.
  • An individual PCP lost out on nearly $50,000 in annual gross revenue by not accurately billing for preventive and care coordination services that they provided to their eligible Medicare patients.

“The use of billing codes remains low across nearly all prevention and coordination codes,” the researchers concluded. “The discrepancies between service eligibility, provision of services regardless of billing, and actual billing suggest that attempting to codify each distinct activity done by a PCP in the MPFS may not be an effective strategy for supporting primary care.”

In other words, Medicare should stop adding billing codes for services it wants physicians to perform because there’s no connection between creating the codes and doctors using them even if the doctors provided the service. The “I’ll do it if you pay me/I’m paying you now do it” rhetoric that’s so prevalent in the healthcare industry today falls apart.

So, what’s really going on here?

At the practice level, the study reveals that most PCPs provide prevention and care coordination to their Medicare patients as needed regardless of whether Medicare pays them. But the clinical documentation and billing requirements to get paid are so onerous that, to the PCPs, it’s just not worth the hassle.

At a policy level, the study demonstrates that fee-for-service reimbursement systems are unless tools to improve outcomes. At some point, even paying for volume doesn’t work because there simply are too many billing codes. FFS systems are ala carte menus of medical care gone wild.

What we need, of course, are value-based reimbursement systems that pay providers based on clinical, health and cost outcomes. Under value-based reimbursement, being a good doctor automatically makes you good at business.

To learn more about physicians, billing and financial incentives in healthcare, please read:

Thanks for reading.

About the Author

David Burda

David Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers — patients — are king. If you do what’s right for patients, good business results will follow.

Dave’s personnel experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 40 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 40 years and his three children, none of whom want to be journalists or lobster fishermen.

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