Ambulatory Care Quarterly

More patient-friendly bills ongoing industry goal

Discrepancies often undetected

Making patient bills more user-friendly — not to mention ensuring that they are actually accurate — continues to be a focus in the health care industry.

One in four consumers polled by PNC Financial Services Group Inc. (www.pnc.com) said they believe their insurer had denied a legitimate claim and, of those, many reported paying the claim out of their own pocket, probably motivated by the fear of getting their credit damaged.

In the same poll, one in three Americans reported having trouble understanding the explanation of health benefits they received from their insurer.

Common billing issues

Common billing mistakes include medical coding errors, errors in how annual deductibles are applied, and confusion about which providers are in or out of network.

One of the biggest patient billing issues is related to the need for better reconciliation between what goes onto the bill and what services are actually provided, says Susan Johnson, a Chicago-based senior consultant for Watson Wyatt Worldwide.

"The hard thing is that very rarely do hospitals submit detailed bills — just major revenue codes," she adds. "Drugs are ordered but never given and then the patient is discharged. Once [the drug] is ordered by the physician, it shows up on the bill even if the patient never receives it."

With the way bills are submitted now, such discrepancies aren't revealed until a hospital bill audit is conducted, Johnson points out. Providers may say it doesn't matter that care is not reimbursed at a line-by-line level — because of diagnosis-related groups (DRGs) — but she contends that the lack of detail ultimately increases health care costs.

"It looks like this many drugs, this many services [were provided], but they weren't," Johnson says, "so on an accumulated basis, it drives up rates."

Diligence is required at the front end by the staff who are putting the bill together, she notes. "[Detailed information] typically doesn't make it to the insurer or the biller — they're just [using] revenue codes, but nobody will know what's really going on until somebody digs in.

"There needs to be better reconciliation before the bill is actually generated," she adds. "The internal audit process needs to be tighter."

Johnson says she has observed during her own hospital experiences that all orders — and charges — are entered on a computer in the patient's room. Employees also should record the fact that the drug, for example, has actually been given to the patient, she adds.

With staffing shortages at most facilities, that doesn't always happen, Johnson notes. "The same thing happens with tests."

There is a similar lack of precision with physician billing, she says. "What we tend to see is that people get one code and use it for everything."

On a routine office visit, for example, staff may use the "new patient comprehensive" code, Johnson adds. "You have that code being used over and over for the same patient."

One reason might be that with frequent staff turnover, generic codes are overused because it's the "easy thing, instead of making [employees] think," she says. "You don't want to think it's intentional. The fraudulent or less ethical [explanation] is they're using maximum codes all the time to see if they will slip through."

If this "upcoding" isn't discovered — and often it is not — "the provider gets more money," Johnson notes.

On the physician side, "in terms of pure accuracy," she adds, the biggest problem is probably the lack of modifiers. With the CMS 1500 billing form, for example, "you can put as many diagnosis codes as you want, and then there are six or seven lines for charges that have to have CPT codes and on the right, an area for each charge line and which diagnosis code goes with that charge.

"You can be that specific, but a lot of providers don't submit that level of detail," Johnson says. "If you want to list a 'well-woman' visit plus a secondary diagnosis code for hypertension, if it's not clear on the charge line — if that doesn't match — the claim can be denied."

The latest Patient-Friendly Billing (PFB) Project report from the Healthcare Financial Management Association (HFMA), "Reconstructing Hospital Pricing Systems," is a call to action for hospital leaders to do as much as they can to achieve a rational pricing system, according to Richard L. Clarke, the organization's president and CEO.

The report describes a pricing system fraught with subsidies, hidden taxes, and conflicting incentives that is incredibly difficult for the general public to understand, inhibits transparency and price comparisons, and is costly for providers and payers to administer.

Hospitals already are making improvements to support patient-friendly pricing practices, the report states, noting that 97% of respondents to an HFMA survey say they are making "some" or "significant" progress in setting discount policies for uninsured patients. Forty-one percent report progress in creating a systematic approach to establishing rational, easily accessible pricing information, and 71% report progress in ensuring staff who interact with patients understand the organization's key pricing and payment principles.

Survey respondents said the top barriers to improving hospital pricing systems include Medicare charge structures, private payer contracts, community response, and uncompensated care.

The report, available at www.patientfriendlybilling.org, offers recommendations on how hospitals can address each of these barriers, as well as principles for improving their overall payment systems.

Since 2005, HFMA has led a collaborative effort to promote patient-friendly financial communications with support from the American Hospital Association, the Medical Management Group Association, providers, and other interested parties.

State organizations are following that lead, including the Georgia Hospital Association (GHA), which is partnering with the Georgia chapter of HFMA to assist members in implementing recommendations from some of the PFB reports, says Robert Bolden, GHA's senior director of data services.

"We've set up a billing policy workgroup, and are working over the next few months to provide some [implementation] strategies," Bolden notes. The impetus for the PFB project, he adds, is to "come up with ways to provide patients a better experience with the billing process."

Recommendations include such things as trying to do as much work as possible up front to get patients qualified for any financial assistance programs that might be appropriate, Bolden says, as well as having a strong focus on collecting payment at or before the time of service.

The whole idea behind the Georgia initiative, he points out, "is not to say you need to do this, but to find ways to facilitate and educate — to make [members] aware of what the recommendations are, and to guide them in how they might remove barriers."

Limitations in computer systems, for example, might prevent hospitals from having a patient-friendly description of a treatment or procedure in the bill, Bolden says.

"If you're allowed a certain number of characters and use medical jargon, [the bill] might say 'cholecystectomy' instead of 'gallbladder removal,' which would be the patient-friendly term," he adds. "If the patient sees that on the bill, he won't know what it is."

The solution, Bolden says, might be working with the vendor community to modify systems to be more patient-friendly.

Patient focus groups have cited such billing issues as "being overwhelmed by papers," he notes. "They may get a hospital statement — not a bill yet — saying the insurance has been billed, and then later a hospital bill, and then a bill from the surgeon, the anesthesiologist, and the radiologist, and then an explanation of benefits from the insurance company."

With that many different pieces of correspondence, Bolden says, "it's easy to put it all in a drawer and forget about it."

Emory University Hospital in Atlanta is working on a Patient-Friendly Billing project, says Peter A. Kraus, CHAM, business analyst for patient accounts services. While mostly a patient accounts endeavor, he notes, the project has patient access implications.

Patient access staff become directly involved, Kraus points out, in the following ways:

• Notifying patients when a patient-friendly billing initiative is implemented or about to be implemented. In addition to changes in statement formats, Kraus says, access to viewing and paying accounts on-line may be new and different for patients unless they have used the process through banking and credit card accounts.

• Getting good patient address data and formatting them correctly. The product being used at Emory, for example, uses an address scrubber that follows United States Postal Service parameters for abbreviations and other formatting choices, he notes. "Basically, it can stop a statement with a bad address from being sent, saving us the postage. But the address must be updated."

While the address may be "bad" in the usual sense when this happens, it could also be a matter of what words were abbreviated and how, Kraus adds. "We're not sure what the impact will be, but [the access department] has been alerted."

• Patients get to see more about their accounts than with traditional billing. If insurance plans are entered incorrectly, misspelled, etc., patients may see the results of careless work, he says.