Growing bureaucracy in American medicine

The other day I gave an interview to a reporter in New York on the subject of cash-only doctors. One of the topics that came up was what might drive any growth in the number of doctors choosing to abandon the insurance system and instead embrace cash-only or at least cash-friendly practices.

One of the things I mentioned to her (at least, I’m pretty sure I remembered to mention it to her – I was on some cold medicine at the time so it’s entirely possible I just read her my telephone bill) was that the burden and costs of participating in what I call bureaucratic medicine were rising, and many doctors were simply getting fed up and were looking for alternatives.

What do I mean by bureaucratic medicine, and what are those burdens and costs? I read an article in The Weekly Standard by Stephen Hayes around the same time as my conversation with the reporter that I think illustrates perfectly what bureaucratic medicine is, and why I expect more doctors in the future to decide to abandon it in favor of cash-only or cash-friendly practices.

The article explains the upcoming revision to the coding system that doctors’ offices and medical facilities across the country use to get reimbursed by Medicare, Medicaid, and private insurance companies. It’s a lengthy article, and I’ve cut it down substantially to give you an overview of just how convoluted things are about to become in bureaucratic medicine.

Code Chaos

Ever considered suicide by jellyfish? Have you ended up in the hospital after being injured during the forced landing of your spacecraft? Or been hurt when you were sucked into the engine of an airplane or when your horse-drawn carriage collided with a trolley?

Chances are slim.

But should any of these unfortunate injuries befall you after October 1, 2014, your doctor, courtesy of the federal government, will have a code to record it. On that date, the United States is scheduled to implement a new system for recording injuries, medical diagnoses, and inpatient procedures called ICD-10​—​the 10th version of the International Classification of Diseases… So these exotic injuries, codeless for so many years, will henceforth be known, respectively, as T63622A (Toxic effect of contact with other jellyfish, intentional self-harm, initial encounter), V9542XA (Forced landing of spacecraft injuring occupant, initial encounter), V9733XA (Sucked into jet engine, initial encounter), and V80731A (Occupant of animal-drawn vehicle injured in collision with streetcar, initial encounter). 

The coming changes are vast. The number of codes will explode​—​from 17,000 under the current system to 155,000 under the new one, according to the Centers for Medicare and Medicaid Services (CMS)…

It will affect almost every part of the U.S. health care system​—​providers and payers, physicians and researchers, hospitals and clinics, the government and the private sector.

Health care professionals use ICD codes to talk to one another. The codes record diagnoses and services provided, and third-party payers​—​government, insurance companies​—​use the codes to determine reimbursements and to deter fraud. Coding errors can mean unpaid claims or costly audits​—​or both.

Virtually everyone agrees that the transition will mean decreased productivity and lost revenue, at least for a time. Some experts, dismissed as alarmists by ICD-10 enthusiasts, are predicting widespread chaos in a sector of the economy that can little afford it…

There are codes for those “bitten” by a crocodile, “struck” by a crocodile, and “crushed” by a crocodile. There is also a code for injuries sustained through “other contact” with crocodiles…

Virtually every conceivable malady or injury has a code. There’s code V9102XA for someone who is “crushed between fishing boat and other watercraft or other object due to collision, initial encounter.” Or T71232A, “Asphyxiation due to being trapped in a (discarded) refrigerator, intentional self-harm, initial encounter.” If you are hurt in an abattoir, there’s code Y9286, “slaughterhouse as the place of occurrence of the external cause.” Code F521 is “sexual aversion disorder,” not to be confused with code G4482, “headache associated with sexual activity.”

Some codes appear to be anticipatory rather than descriptive. Has anyone in the history of mankind ever attacked another human with frog venom? Or sought contact with the same for the purposes of intentional self-harm? Probably not​—​and not just because frogs don’t produce venom.

But code T63813A is “toxic effect of contact with venomous frog, assault, initial encounter.” …Other codes describe occurrences that would seem unlikely to result in any kind of injury at all, such as code W20XXA, “contact with non-venomous frogs.”

The writer, Hayes, attended a workshop in Jacksonville, Florida aimed at teaching medical billing and coding specialists about the new system. The class was taught by Annie Boynton of the American Academy of Professional Coders:

…in Jacksonville, Boynton moves from a general discussion of ICD-10 to some specifics. She explains in tremendous detail how the new codes offer several different ways of codifying engagements with patients—“initial encounter,” a “subsequent encounter,” and “sequela.” The “initial encounter” in codespeak is not limited to the “initial encounter” as one might understand it in plain English, Boynton explains. There could, in fact, be several initial encounters with a patient, if those subsequent visits involved the initial injury and treatment… One student asked the question that seemed to be on the mind of everyone in the room: “So a subsequent visit would still be an initial encounter?” And then, after a brief explanation, another question: “Wait, there could be five initial encounters with the same physician?” 

After lunch, the class plunged deeper still into the intricacies of the new coding. Boynton walked the class through “excludes” codes, meant to prevent using two codes that would seem to contradict one another, and the advent of the “placeholder” character, intended to allow coders to fill all seven characters of a code in which not every character has meaning. (“X can be a placeholder, but it can also be a code character.”)…

As you can probably guess, this is going to impose serious costs and confusion on many medical providers. These costs, and errors caused by the confusion, are likely to have profound consequences. Hayes writes:

The introduction of a system with exponentially more codes, and far more complicated codes, will inevitably mean many more coding errors. The default position of payers, whether government or the private sector, will be to deny all claims that are not coded correctly. In many cases, providers will be left with a lose-lose choice: forgo payment altogether or dedicate valuable time and resources to appealing the denied claims. Hospitals, large physician practices, and other big institutions can absorb some of the losses and have the workforce at their disposal to challenge the denials. Small practices do not.

“When you have a provider who hasn’t prepared, who doesn’t know the codes, ​and they have every claim rejected because of improper coding for three months, that’s going to put people out of business,” Boynton tells me…

An ICD-10 preparation plan from the Health Information and Management Systems Society (HIMSS) advises practices to have a minimum of six months revenue in reserve to help avoid that possibility…

A 2008 study on the costs of implementing ICD-10 from the health care IT firm Nachimson Advisors warned that “significant changes in reimbursement patterns will disrupt provider cash flow for a considerable period of time.” The study projected that the total cost of the ICD-10 implementation would be $83,290 for a small practice (3 physicians and 2 administrative staffers), $285,195 for a medium practice (10 providers, 1 professional coder, and 6 administrative staffers), and $2.7 million for a large practice (100 providers, 10 full-time coding staffers, and 54 medical records staffers). Boynton says those numbers seem on target five years later…

One of those profound consequences, at least I hope, will be more doctors looking at the 155,000 codes that the ICD-10 requires providers to use in order to be paid and deciding instead for a much simpler model.

The best example of that simpler model that I can think of would be the cash-only practice of Dr. Robert Berry in Greenville, Tennessee. PATMOS Emergiclinic has been operating for over a decade (PATMOS stands for ‘Payment At The Moment Of Service,’ it’s also a Biblical allusion to the island of Patmos).

Instead of 155,000 codes, each with different reimbursement rates from different insurers, Dr. Berry has less than 100 charges listed on his fee schedule, and about half of those are for specific medications or tests. Visits are classified as ‘Nursing only’ ($15), ‘Very simple’ ($30), ‘Simple’ ($45), ‘Intermediate ($60), ‘Detailed’ ($75), and ‘Complex’ ($95).

There’s also a listing of a few simple procedures. For example, treating a simple cut of less than one inch costs $95, with an additional $25 per inch. A complex cut of less than one inch will run you $175, and it’s another $50 for each additional inch. These fees are not in addition to the per-visit cost, they include both the visitation and the treatment.

Here’s how Dr. Berry describes his practice:

At PATMOS EmergiClinic, we provide prompt care for many of the injuries and illnesses treated in Emergency Rooms at a tiny fraction of their cost. We also take care of chronic problems such as diabetes and hypertension. 

PATMOS EmergiClinic does not accept any third party payment and makes no apologies for this.  In order to keep costs down for the uninsured and the increasing number of patients who have high co-pays and deductibles, we choose not to assume the massive overhead involved in billing third party payers. This has the added benefit of eliminating bureaucratic hassles and intrusions into the doctor-patient relationship, ensuring strict confidentiality of patient information, and keeping our typical charges usually between the cost of an oil change and a brake job. 

Although you might associate low cost with low quality, Dr. Berry achieved board certification in Internal Medicine in 1993, scoring at the 99th percentile on the core component of the board exam. He also achieved Board Certification in Emergency Medicine in 2003. He is able to provide many ER-level services such as suturing complex lacerations, splinting fractures, and treating asthma attacks. He has kept many patients from being hospitalized by giving IV therapy in his clinic. 

Even insured patients who can’t see their doctors in a timely fashion come to PATMOS. They have found that quick, competent care for simple, acute illnesses such as sore throats and bronchitis is worth paying a little more than their co-pay. 

I’ve known Dr. Berry for nearly a decade, and he was probably the first cash-only doctor I learned about. From my conversations and exchanges with him, I can tell you that he is much, much happier with his 100 or so fees, displayed for all to see, than he would be having 155,000 codes to deal with while waiting months to be paid, after fighting with the insurer or government program over whether any given encounter was an ‘initial’ or a ‘subsequent’ encounter.

In large part because of ICD-10, I fully expect more doctors in the coming years (especially the next 2-3 years) to look at Dr. Berry’s practice or others like it and conclude that they’d prefer that to the alternative of bureaucratic medicine. For self-pay patients, this will only be a good thing.

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6 Responses to Growing bureaucracy in American medicine

  1. Dustin says:

    What a nightmare we are in for!

  2. Jerome Bigge says:

    These requirements under Obamacare will increase the cost of health care, not reduce it. Increasing complexity means higher costs to comply with the rules. These costs will be passed on to the patient and his or her insurance company. The result will be higher monthly premiums for health insurance. Which in turn reduces the amount of money left over for anything else. Less consumer demand (because of higher Obamacare costs) will also create more lay offs as businesses “downsize” or move off shore because of higher US costs. This in turn means fewer jobs, with the jobs that remain perhaps paying less due to increased costs of health insurance for employers. Also the US, due to higher costs thanks to Obamacare will be even less “competitive” with the rest of the world than we are now.

    Any possible alternative to our present system has to offer lower costs overall. However any method that reduces health care costs also is going to reduce the incomes of those now working in the health care field if you include the health insurance companies as part of the now nearly three trillion dollar US health care industry. There is also the issue that expanding Medicaid means the taxpayers are going to have to pay more too. Unfortunately, the Republicans don’t have any real solutions for these problems either. I do offer suggestions on my blog “”, but the savings that will be generated will also result in lower incomes for many involved in health care.

  3. Barbara P says:

    The only problem I have met with cash pay doctors is..they are so expensive!!

    Do any of these doctors let you pay ‘on time’?

    The Medical University of SC clinics will let you pay at least $25 a month until your bill is paid…(for those without insurance.) But they claim you pay half what an insured person pays. Then why did it cost me $185 for a refill of a prescription? They told me they would not give me a refill, unless I saw the doctor.

    • says:

      It all depends on which doctor you’re seeing, for what, and what your own financial circumstance is. A lot of cash-only doctors are fairly inexpensive for routine visits, often less than or only a little more than the cost of a co-pay someone with insurance might pay. Of course in some areas, like New York, they might be quite a bit more expensive! Also if you’re having surgery done, etc.

      I’m not sure if any cash-only doctors allow people to pay ‘on time,’ I do know that there are some lending companies that specialize in medical loans. I’ll try to remember to do a post on one soon, I’ve done a couple already, you can find them under the category ‘medical loans’ on the right side of the blog.

  4. Frugal Nurse says:

    Excellent post, thank you. What you described of Dr. Berry’s fee schedule at the PATMOS clinic is very similar to European health care, such as in France and Germany, where fees for doctor services are required to be posted in plain sight in their offices. Wow, what a crazy idea to actually know up front what you are buying and for how much! If only…

  5. Michele says:

    Thank you for writing this, but I must correct you about poisonous frogs not existing. There is a frog which I think is called the “poisonous dart frog” that produces poison on its skin which is used by some tribes to create poisonous darts. ..I can’t imagine a medical code being needed for this for it probably isn’t even as common as “suicide by jelly fish.”

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