Internal Medicine Coding Alert

Published on Sun Jun 26, 2005 PDF

Presented by Steven M. Verno, CMBSI

The following supplement to Internal Medicine Coding Alert is the transcript of a teleconference presented by The Coding Institute. To obtain the slides for the conference, please log on to our Online Subscription System at http://codinginstitute.com/login and download the current issue, and the slides will be contained therein. If you're not sure how to use the Online Subscription System or need help downloading the issue, please contact our customer service department at 1-800-508-2582 or service@medville.com, and one of our representatives will be able to assist you.

The speaker for the teleconference, Steven M. Verno, CMBSI, specializes in medical coding and billing for emergency medicine, family practice, urgent care and pediatrics and is a Certified Master and Instructor in Medical Coding, Medical Billing, Medical Terminology, and Nursing Assistance. He is currently an emergency physician practice manager and a consultant to many more. He is on the editorial board for ED Coding Alert and Medical Office Billing Alert.  Over the years, Steve has had more than 30 coding and billing articles published. He is also the moderator for the MAB forum, and is in constant demand as a consultant, speaker and A/R Recovery specialist.

Thank you very much. I would like to welcome everybody to the conference and I am sure we will have a good time over the next hour.  I want to start out with the disclaimer.  I am not an attorney.  I just sound like one and the information I am presenting is strictly for training purposes only.
 
I am going to start off this seminar with a little scenario here.  We are going to have a patient named Mary Jones.  She has a medical complaint and she goes to one of the local emergency rooms for medical care, and in her possession she has an expired driver's license and an old insurance card that she obtained from her previous employer.  I am sure some of you have met Mary Jones at some time in the past.  She signs the emergency room log, she is seen by the Triage nurse, and then she is called by the hospital registrar, who takes her information and enters it into the hospital computer system.  So we already know at this time that Mary Jones is giving you bad information in order to be seen.  While in the emergency room, she is sent to the laboratory for tests and she is sent to the x-ray department for a series of x-rays.  She has an EKG performed and is later discharged with instructions to see her primary care provider.  Now, the claims for the hospital, the emergency room physician, the cardiologist that performed an interpretation of her EKG, all lab tests, and the radiologist - they are all denied because Mary Jones did not have coverage at the time of service.  The bills that are sent to Mary by all of these people - the hospital, the radiologist, the laboratory, emergency room physician, and cardiologist have all been returned as a mail return, and it says moved, no forwarding order by the post office.

This scenario, I know, takes place on a daily basis.  It happens in hospitals, health clinics, urgent care centers, and it happens with the ancillary providers simply because the registrar took the information that was given to them at face value without verifying it and the billing companies allowed the claim to be sent without verifying the information that they received.  I know this happens on a daily basis and we will explain why later on, and how you can find out how this is happening.

Now it has been my personal experience that many hospital registrars do not verify the information they receive and they do not understand the impact that the information that they receive and input into the computer system has with other physicians or practices that interact with the hospital visit.  One hospital registrar that I spoke with did not even know that the emergency room physician was not an employee of the hospital.  She thought that the doctor was an employee. 

Based on my personal experience, approximately 85% of the information received from the hospital contains bad information in one form or another, such as an incorrect or incomplete home address, or incorrect or incomplete insurance information.  Now, is this because the registrar is doing a bad job?  No, not necessarily.  In a lot of cases, this is because the patient is giving bad information at the time of service.Based on my own personal visit to the emergency room on September 11, 2003, I just returned from a plane trip and I was experiencing some leg problems so I went to the emergency room thinking maybe I had deep vein thrombosis.  So I went to my own emergency room for medical care.  When I got there, I went through and signed in, saw the triage nurse and sat for about 45 minutes until the registrar called me up, and when I sat down in front of her she was on the phone talking with her friend.  I gave her my current driver's license and my current insurance ID card, which is through Tricare.  She was still talking on the telephone while she was entering the information into the hospital system.  Then she put the phone down.  She gave me the forms to sign.  I noticed that I had to sign for a Notice of Privacy Practices.  I asked her for a copy.  I was told that there was none.  I told her that I was not going to sign the form if I was not given a copy and she said that I could not go further until I signed the documentation acknowledging that I received it.  I told her that I am not signing it, I told her she still had to see me, I had to be processed through so she went through, but she was very angry because I would not sign the document.

A form that she gave me told me that I would be billed separately and who would be sending me the bills.  This is very, very good, but I noticed that my practice address and the phone number was incorrect, as well as the identification of the Medical Director.  When I brought this to her attention, she became angrier because now she was back on the phone and I had interrupted her phone call.  She said that I was incorrect with the information that was on the paperwork. I identified myself as the practice manager and she still said that I was wrong.  Now how can I be wrong if I am the practice manager?  So every patient that was coming into this emergency room was getting incorrect information when they came to see the registrar. 

Now, several months later, I started getting bills from the hospital.  I got bills from the radiologist, from the lab, from the doctor that interpreted the ultrasounds and from my own billing company.  When I looked, my name was misspelled on every bill.  This was because she entered my name wrong into the computer system.

Every bill stated that the claims that they sent were denied and the reason for the denial was because the insurance company could not identify me.  I saw that the registrar entered the wrong policy number.  She entered the wrong insurance company.  Instead of sending the claim to Tricare, she entered that I was covered by Aetna Health Insurance.  Now I do not know how she entered Aetna because I never gave her an insurance card, but she entered Aetna.  So I had to tell everybody that was billing me to bill Tricare.  Once they started billing Tricare with the correct information, they started getting paid.

Now even when calling these providers to correct the problem, several of them - like I said - wanted my Aetna insurance card even when I told them that I was not even covered by Aetna.  So they were not even listening to me.  They were adamant that I was covered by Aetna.  I said if I am covered by Aetna, how come you are getting the denial saying that they cannot identify me? 

Now mistakes such as these are costing the medical profession billions of dollars in lost revenue and it is not just with the amount of the claim, but it is in the spending of the money, in administrative costs to code the claim, bill the claim, correct the situation, then re-bill it and then follow up on the claim.

Now Mary Jones in our initial scenario is what is called a "wolf."  Now, a wolf in nature is a smart and cunning animal that preys on the weak in order to survive.  Mary Jones is a patient that is a wolf and she is very smart, she is a very cunning person and she preys on the weak practices in order to receive free medical care.  You have probably seen her when she comes in. 

What she does is that she goes to see the practice or the hospital that that accepts information at face value.  She goes to the practice that never verifies the information she gives them, and when they try to bill her or contact her regarding the bills or ask her for the correct information, if they do verify, then she becomes very threatening and intimidating.  By doing this, she is confronting you and she basically wants you to the write the bill off.  So you have got to watch out for the wolves that are out there.  They come to your office.  They go to the hospital all the time, and they are looking for the weak practice.

Now in a typical ER visit, when a patient visits the hospital, especially the emergency room, it is not just the hospital that is affected by the information that you get from the patient.  Who is affected by this?  You have the hospital itself.  Then you have the emergency physician group, which is usually an outside business that is contracted to provide services in the hospital, but they do their own coding and billing.  You have the radiology group that may be an external company.  We have many of them here in Florida that are external to the hospital, that do their own coding for x-ray interpretations.  You have outside laboratories.  I cannot tell you how many times I have heard complaints from outside laboratories about bad information that they receive because now they cannot get the lab test paid.  You have the cardiology group, if there was an EKG that was performed, they are going to interpret the EKG.  Then you have physician consultants that are called in to see the patient.  If you send patients out for other tests, such as an MRI or an ultrasound, you have separate companies that do these and they base the billing and everything on the information that is received.  Naturally, you have the insurance company itself because they have to take the time and effort to receive the claim that you are sending them, input it into their system and then only to deny it because the patient is not in the system, the benefits were terminated a long time ago or the patient is using a card that they should not even be using.  Their benefits do not kick in for another couple of days.  So there is a whole group of people that are involved with the information that is taken at the time of the visit.  Even with a health clinic, you are also dealing with a collection agency if you send accounts to a collection agency.

Now, what is the cost of a typical visit to a hospital?  Well, on the high end, a typical emergency room hospital visit could be up as high as $1000.  The emergency room physician bill could be as high as $500 or more.  The radiologist could be at least $500, the cardiologist at least $500.  I know an MRI costs $1500 because that is what I was charged for an MRI.  You have lab tests that could be at least $1000 and outside consultants can charge up to $3000 or more.  So a typical ER visit could cost at least $8000 or more.  That does not include the inpatient bill.
 
Now let us say that an average hospital will see approximately 250,000 patients per year through the emergency room.  If you take this 250,000 and multiply x8000, which is the high end, you are looking at the cost of $2 trillion per year in medical costs.  That does not even count the cost that you have to spend in administrative fees and managing this stuff.  This is just the bill itself.  $2 trillion at a typical hospital and, like I said, it is high-end.  We are not talking about low-end.

I know that an average inpatient visit with no surgeries can cost an average of $30,000 a week.  I know that for a fact because my brother was in the hospital for a week.  He had absolutely nothing done to him.  He just laid in bed watching cartoons and eating meals from the dining facility and his bill was $32,000.  The hospital is not getting paid on his visit because they keep sending the bill to the wrong address and he keeps telling them that that.  They send it to an old address that somehow they have got into the system and he keeps calling up saying, "look! I am not at this address."  So if a hospital has 10 admissions a day that have a one-week stay, this could amount to $300,000 a week in revenue that could be lost due to incorrect or un-validated information.  This amounts to $15,600,000 per year in lost revenue.  Now we know why the cost of medical care is so high - because if they cannot make this revenue, they have got to raise their charges, that is typical in business.  They have to make up their losses somehow.

If you are a physician practice and you provide services at the hospital, you are dependent on the information that you receive at the time of the visit.  If the information is bad then you do not get paid and you spend money on administrative costs trying to get paid. 

Now if you are an independent practice and you are obtaining information yourself, the patient comes into your clinic and comes up to the front desk, if you do not verify the information before the patient is seen, you stand to lose just as well.  You lose a lot of money that is sitting on your system.  Verification of this information is very, very important.  Verifying the information that you are inputting is important to ensure that you get payment of the bill and that those that are dependent on your information will receive good information so it does not cost them time and money, and it catches the wolves at their game.

Non-verification of information:  Let us say Mary Jones is covered with ABC Insurance, which is an HMO and the visit is $100.  Well, you are going to spend 15 minutes entering the demographics into the billing computer.  At $10/hour, this is 17 cents a minute so 15 minutes of entering is $2.55.  If you enter the demographic information wrong, you just blew $2.55 for that patient.  You code the claim and enter the codes in the system.  It takes about 10 minutes, $1.17.  You process the claim to go through everything so if you add up all the administrative costs of processing the claim - it is about $6.50.  Now let us say that you do not get paid.  90 days later, you call the insurance company.  We know for a fact that you spend a lot of time on hold.  The average is about 20 minutes.  Then you spend about 10 minutes checking on the claim status.  This is about $5.10.  The insurance company states that claim is not on file.  I know that a lot of you have gotten that information from the insurance company.  I have gotten it many, many times myself so you enter the notes and you re-process the claim.  $6.50 again.  You wait about another 60-90 days later and then the EOB arrives telling you that the patient was terminated and has no benefits.  So you enter notes about the denial and you process the account to have statement sent to the patient.  Now remember that Mary Jones has given you a bad driver's license so you process the statement, $6.50.  They do not respond.  You send them a second statement, another $6.50.  They do not respond to that so you send them the third statement, $6.50.  You send them a final notice letter letting them know that their account may be sent to a collection agency, another $6.50.  Then you finally send the account to your collection agency so that has got to be processed by the administrative department and they put it on a disk or CD or whatever.  That is about $5 of administrative cost.  Now how much did you make on this visit, not a penny.  How much did you spend in administrative costs?  About $53.67.  It is a lot of money to lose.  Now you send it to your collection agency.  They try to contact her, but you have got bad information going to them so they do the work that they do.  They can do a skip trace and then they finally find her.  She agrees to pay $100 that she owes so she pays it.  The collection agency gets their 40%.  You get you $60, but you spent $53.67 to collect it so you made $6.33, but you have got to spend this to enter the payment into your system and then store the data elsewhere so you have lost money on this simply because nobody verified the information.

Now let us say that she does not pay the bill.  It goes to your collection agency.  Not only did you lose the $100 for the visit, but you spent $53.67 trying to collect it so Mary Jones does not pay it at all - they cannot find her - so your overall loss is $153.67 and that does not count the money that the collection agency is losing in trying to collect this as well.

The cost to verify:  Let us say Mrs. Smith walks in.  She says that she has XYZ insurance.  You go to the XYZ insurance Web site and you check eligibility.  XYZ insurance says that Mrs. Smith terminated her insurance more than 90 days ago.  While she is standing there or is sitting in the room, you inform her that her insurance is terminated.  So she gets very, very angry and she storms out in search of another doctor that will not check her information.  How long does it take?  Well, I have done this online.  It takes about a minute.  I have gone to several of our insurance Web sites that they have set up now.  I have been able to log in, enter the information that is on the screen and then in a minute it has taken me to find our whether or not she has benefits.  It cost me 17 cents to do this.

So the cost of verifying versus not:  The cost of verifying to find out that Mrs. Smith is a wolf costs me 17 cents, but if I did not do anything?  If I took her information at face-value, we provided the care, we billed the insurance company, we called to check on the claim status, we re-sent the claim, we get the denial, we bill the patient, we re-bill the patient, we re-bill the patient, then we send the final notice letter and then we send her to collections, we spend $153.67.  What would you prefer, 17 cents loss or $153.67 loss?  I know some of you probably want the $153.67, but I want 17 cents.

Now, how much does the practice lose?  People do not think of this.  They do not because they do not see it.  It is not in physical dollars that they see, but if you see 32 patients a day, that is 160 patients a week, 8,320 patients a year.  If you have an average charge of $100, 10% of your patients give bad information, it is 832 patients.  832 x $153.67 means your practice lost $127,853.44 in a year.  Now these are high-end numbers.  These are estimated costs, but I can assure that practices lose a lot more than that, and hospitals lose millions of dollars because of the information that is taken in.

Now let us say the average charge is $100.  If you see 100,000 patients a year, that is a loss of $1,530,000; with 150,000 patients a year, it goes up to almost $2,300,000.  With 200,000 patients a year, it is over $3,000,000.  With 250,000 patients a year, it is almost $4,000,000.  So is it worth not verifying the information?  Is it worth not putting in the information correctly so you can get this money paid?  Maybe if we can start doing this, we can start lowering the cost of healthcare.  There are other factors involved in the loss of healthcare, but that is for another time.

Now I have heard these typical excuses for not verifying: