Doctors: Crack Insurance Codes Before They Crack You

Doctors: Crack Insurance Codes Before They Crack You
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Physicians who bill insurers or the federal government for their patients’ health care costs will become responsible this fall for incorporating almost 7,000 diagnostic code changes into their practice of medicine and keeping of electronic medical records (EMR). 

Many doctors will avoid this burden by billing their patients directly, and by using EMR software designed with patient care as its primary goal instead of compliance with federal requirements.

Starting in October, 5,739 new medical codes will become valid, 850 will be revised, and 323 will be deleted from ICD-10, the most recent version of the International Statistical Classification of Diseases and Related Health Problems, a list of diagnoses maintained by the World Health Organization (WHO), according to the reference website

The code changes will take effect exactly one year after the federal Centers for Medicare and Medicaid Services transitioned from ICD-9 to ICD-10, prompting insurers and health care providers who bill third-party payers to do the same.

To help insurers determine whether to reimburse doctors for a procedure, insurers require physicians to indicate a patient’s ailment with an ICD code, in addition to a Current Procedural Terminology (CPT) code indicating the patient’s course of treatment.

Physicians typically use EMR software to help them bill insurers with ICD and CPT codes. The software also helps doctors comply with federal reporting requirements. The most compliant doctors are likelier to receive higher reimbursements for patient care from the federal Centers for Medicare and Medicaid Services (CMS). Doctors in the lowest percentile of compliance face financial penalties under the Medicare and Children’s Health Insurance Authorization Act (MACRA) and Merit-Based Incentive Program (MIPS).

Some doctors weary of the code culture of mainstream medical practice in the United States are gravitating to direct-pay models, such as cash and direct primary care practices. Direct-pay physicians avoid insurance code requirements by billing patients directly instead through insurers or CMS.

Dr. Kathleen Brown converted her practice, Oregon Coast Dermatology, in Coos Bay, almost entirely to a cash practice in 2011. For the previous 16 years, she had billed patients primarily through third-party payers. When Brown “opted out,” as some call it, of billing Medicare and insurers, she posted her prices online for her patients to see.

“Since we do not accept insurance, we are able to be transparent about our pricing, and we charge exactly what we say we do,” Brown’s website states. “We are not a concierge practice and therefore do not charge an upfront fee to be a member of our practice.”

Patients settle up with Brown on their way out of her office after she has treated them. Her three-tiered price structure bills patients for every five minutes of care, starting at $38, $44, and $49, dependent on the skill level required. For each additional 5-minute block, Brown charges an additional $27, 33, or $38, also dependent on the level of treatment patients need.

If a patient desperately wishes to submit the cost of his or her visit to an insurer for reimbursement, Brown will accommodate the request—for a fee, she told me during an episode of the Health Care News Podcast that aired in August. Producing an ICD-10 or CPT code may not be patient care, but it’s good customer service when a patient asks. Less than one-third of her patients do.

Other doctors who have opted out of the third-party payer system, including code requirements, have flourished with the help of EMR designed to serve direct-pay physicians and patients. Dropping CMS as a payer frees doctors to use EMR software custom-built to enhance patient care, not jury-rigged to harvest codes and other data.

Dr. Fatima Jaffrey opened Crescent Medical, her direct primary care (DPC) clinic in Oklahoma City, Oklahoma, in 2014. From day one, Jaffrey has used an EMR platform called to help her collect only as much information as she needs to provide superior patient care, as determined by Jaffrey and her patients, not federal EMR or coding requirements. was developed by DPC physician Josh Umbehr as his alternative to using nine incompatible EMR platforms for the first two years after he opened his clinic in Witchita, Kansas.

 The catch:, while HIPAA-compliant, does not comply with federal reporting requirements under CMS’ “meaningful use” program (which, under MACRA, is being absorbed by MIPS).

This is because a chasm separates the EMR that physicians actually need to treat patients from the EMR the government demands most physicians use, as Jaffrey and Umbehr told Health Care News in September.

“The EMR most often used by those of us in DPC is a completely different EMR and is structured for DPC, strictly for the care of that patient specifically,” Jaffrey said. “We’re not paid by the code entered for the patient.” 

“Codes aren’t health care,” Umbehr said. “They are industry bureaucracy. Surprisingly, we can care for patients without those codes and, in fact, have significantly more time to focus on the patient rather than on the paperwork.”

Physicians who are stuck in the code culture—unlike Brown, Jaffrey, and Umbehr—should not get too comfortable with ICD-10. WHO will release ICD-11 in 2018.

Doctors should think hard about cracking the codes before the codes crack them.



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