When they bill a procedure, physicians match their work with a special code for reimbursement. Sometimes – all too often – there is a mismatch, and the numbers don’t add up.

It is becoming so confusing that many docs don’t want to deal with it, but that causes problems up the road, as physicians and health systems evaluate procedures, the kind of diseases being treated, and reimbursement. Lots of money is being lost all around.

Incorrect coding is to blame for nearly half of improper claims submitted to Medicare, and the monetary losses increased from $57.8 billion in Medicare and Medicaid payments in 2015, and $68 billion in 2016. When the government is unsure what’s going on, it carries out what doctors dread: audits.

The audits themselves are causing disarray among physicians and hospital systems. Having conflict with the government is one thing, and that draws big headlines. But there is often the unspoken side to this: doctors and hospital systems are also hurting themselves, by improperly filing codes that cheat themselves out of millions of dollars and undermine their quality of care, says Adrian Velasquez, CEO and founder of predictive analytics provider Fi-Med, based in Brookfield, Wi.

Fi-Med touts its proprietary technology that has helped major hospital systems increase revenues and eliminate compliance risk through their software technology that identifies potential billing errors that can lead to overpayments. His clients include major hospital systems such as Mt. Sinai in New York, the Catholic Health Initiative and University of Alabama health systems.

“More hospitals are ripping themselves off; they aren’t compliant and they don’t have the right protocols, or are doing an effective review of documentation,” Velasquez says. At the same time, “insurance companies have many coders looking at what is submitted by doctors. For doctors, it’s difficult to match the codes for work they are doing,” he says. “It’s humanly impossible to keep track of a specialty.”

Velasquez says studies show a whopping 80 percent of all medical bills contain errors, which he blames on lack of industry staffing and wide-ranging standards, suggesting that it is too low of a priority among doctors and hospitals until it is too late.

One of the problems is the complication of the codes themselves, which must be measured to actual procedures. The health system’s ICD-9 and ICD-10 added thousands of new codes, or revised them, which physicians must match to get proper reimbursement, he says.

As Velasquez said in a statement, compliance is one of the most important areas of any hospital system, or even in physician groups, but the most are “under-resourced when it comes to personnel and budget.”

“It’s viewed as a cost center, not a profit center,” he says. “When cuts are made they are often made in compliance.”

As a result, lots of physicians are caught in the maelstrom, putting inaccurate information into coding systems, either by “undercoding” – that can result in underpayment for the conditions they are treating, or “overcoding” – billing too much for the procedure. While the percentages vary, at least 25 percent occurrence rate for each incident, which Velasquez decries as undermining docs and the system.

“Physicians didn’t become physicians to become compliant,” he says. “They became physicians to heal people and make people well. That’s the real problem.”

In the meantime, there have been many cases in which a host of hospitals and physician groups have been shelling out big money to settle cases in which they have either flouted the law, or having problems dealing with billing. Some are involved in fraud, trying to re-invent their coding to get bigger payments, while others are making big mistakes. Government regulators also are having trouble keeping tabs on all this.

Each week, the government enters into corporate integrity agreements (CIAs) or simply integrity agreements with health care providers as part of federal health care program investigations stemming from a variety of false claim statutes.

In such an analytical world, physicians and hospitals can use data to substantially help themselves with coding issues, and that’s the business Velasquez is in.

Essentially, technology to locate coding issues can prevent incorrect billing, saving hospital networks millions of dollars, he says. “Healthcare providers who use analytics to improve internal processes and identify red flags dramatically improve their compliance risk and bottom line,” Velasquez said in a statement.

He points to one particular case where technology assistance potentially could have played a key role in overcoming significant billing and coding problems.

Earlier this year, the Carolinas Healthcare system settled a Justice Department lawsuit alleging that it “upcoded” lab results to get bigger payments from federal healthcare programs, Healthcare Finance News reported.

The government said the hospital system conducted urine tests coded as “high complexity” for federal reimbursement, which resulted in more than $80 per test than if coded properly as a “moderate complexity.” The event occurred from 2011 to 2015. It resulted in Carolinas Healthcare System paying out $6.6 million.

With great technology, the issue could have been prevented, or as Velasquez says, “proactive technology.” It’s about the interpretation and application of complex and constantly changing billing guidelines, Velasquez says.

Since 1993, Fi-Med has been working alongside healthcare providers to “maximize revenue and reduce risk,” from catching billing errors to providing high-level safeguards. The company  touts a subscription service that analyzes hospital or network billing data that quickly shows if providers are at risk. Its technology tracks “coding behavior, audit risk evaluation, management revenues and over/under charges,” according to the company website.

Its REVEAL/md can identify “in minutes” unusual coding behavior and patterns that fall outside of what would be considered normal numbers based on comparisons to what was submitted to the Centers for Medicare and Medicaid Services (CMS).  Once identified in REVEAL, the hospital or auditor would have to investigate further to determine if an error occurred leading to the overpayments, the company says.

“REVEAL/md cannot determine if fraud has occurred, but this step is essentially the first step that a government auditor/investigator would take to determine if they need to dig deeper,” says Velasquez.

When he created the program, “there wasn’t a lot of interest,” Velasquez says, but he knew it would become a significant issue as there were growing headlines about federal recovery and audit charges.

“Now it’s getting a lot of traction, and a lot of interest,” he says.

The reason? More hospitals are finding they are lost in the maze, even before they start their billing journey.  — Joe Cantlupe