Getting Billing Right - Brief Article

Healthcare Financial Management, Dec, 1999 by Richard L. Clarke

If you find yourself at a social function--say, a neighborhood dinner party--and the conversation drifts toward what you do for a living, chances are you eventually will have to "defend" current healthcare billing practices. I use the word "defend" loosely, since most of us are very dissatisfied with the cumbersome and unwieldy system of detail charging. There has to be a better way.

Ronald Petterson, FHFMA, a long-time member of the Association, agrees. He recently wrote letters to both Dick Davidson, president of the American Hospital Association, and to me urging that we work with the government and payers" ...to move our industry from the '40s and '50s method of charging for healthcare services, and into the new millennium." I agree.

In the September 20, 1999, issue of Modern Healthcare, editor/associate publisher Clark Bell wrote an editorial on this same subject in which he noted that health care's failure to "get billing right" was one of its greatest embarrassments. He wrote that "...if providers cannot make sufficient improvements, regulators and politicians gladly will." How true.

And Allen Hicks, a former healthcare executive who has provided leadership at both the local and national levels for many years, also had thoughts on the topic when he wrote in a letter to Bell that the issue of getting the billing right was "...one of the most important public relations issues facing hospitals." He also noted that from "...an older person's perspective, someone needs to isolate this problem and find a solution." Absolutely.

Talk to any healthcare financial manager, especially a patient financial services director, about the public's perception of the current billing system and you will get a similar response. Often, the master listing of service items, or the chargemaster, contains ten thousand or more chargeable items. Maintaining this monster, verifying that the coding is correct, and ensuring that the charges are accurately applied to each patient's account is both resource-intensive and fraught with potential for error. And, of course, the potential for error also raises the risk of compliance violations. So getting the billing right is an imperative.

Why is this important issue an ongoing problem? I believe there are three reasons. First, various rules, regulations, and legal requirements force healthcare providers to itemize their charges. These requirements often base reimbursement, cost allocation, and program coverage on the items of service provided and the charges for those services. Detail charging appears to be the only way these items and charges can be captured.

Second, providers fear that if all-inclusive pricing were developed based on a per-office-visit or per-case basis, it would increase significantly the cost risk of treating patients. Not all patients have the same mix of compilations and pre-existing conditions, and hence the volume and cost of services provided could vary significantly. The debate about the impact of Ambulatory Payment Classifications as an all-inclusive payment system for ambulatory services echoes this concern.

Finally, price control is a third concern. All-inclusive pricing, with an average or standard price mandated for each group of services, has all the shortcomings of the current RBRVS and DRG systems. An average or standard price will not reflect the true cost and risk of treating individual patients. All-inclusive pricing for each group of services has the potential to make this situation worse.

How can the situation be resolved? I believe there are both short- and long-term solutions. In the short term, providers must carefully examine, modify, and monitor their chargemaster systems to ensure they reflect the charge philosophy of the organization, adhere to Federal and state laws and regulations, and are clearly understood by all employees who interact with them. More attention must be paid to ensuring that the chargemaster is correct in order to ensure the bill is correct.

For the long term, trade associations for providers and payers, the government, health information management professionals, and healthcare financial managers must begin the process of rationalizing the charging and billing process. These groups must develop an alternative to the current system that reduces the concerns of all parties, meets reasonable legal and regulatory requirements, and achieves what all of us want: to get the billing right.