By Lambert Strether of Corrente.

Readers may recall this post, “Potential Phishing Equilibria Under Neoliberalism in the U.S. Medical Coding System,” from back in March, where I showed how medical coding — “the transformation of healthcare diagnosis, procedures, medical services, and equipment into universal medical alphanumeric codes” — is being used to game the health care system for profit by miscoding, upcoding, the creation of opacity, and the absurdity of expecting “consumers” to practice “smart shopping” in a system where they literally could not understand the language their bills are written in. Now Elizabeth Rosenthal was written an article in the Times Magazine, “Those Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much,” that confirms this diagnosis, with the wealth of detail and analytical richness that only a major news organization can provide. The article’s deck? “Hospitals have learned to manipulate medical codes — often resulting in mind-boggling bills.”

Rosenthal uses one woman’s horror story — Wanda Wickizer — as a story hook to explain the medical coding system. (There’s a happy ending: A hard-working team of lawyers and medical activists gets Wickizer a sealed settlement with the price-gouging extremely persistent University of Virginia Medical Center.) In this post, I’ll start by briefly reviewing my post in March, comparing it to Rosenthal’s, granted so I can do a little happy dance. Then, I’ll look at the medical coding milieu as Rosenthal reports on it, from two aspects: The corrupt games coders play, and coding as a profession, including the credentials. Then I’ll put medical coding in its broader, political context, arguing that medical coding is the sort of “symbol maniplation” praciced by the “creative class” that was to be the salvation of the Democrat Party. I’ll conclude with an imprecatory prayer.

Medical Coding as a Phishing Equilibrium

Back in March, I wrote:

We might summarize Akerlof and Shiller [on phishing equilibria] as “If a system enables fraud, fraud will happen,” or, in stronger form, “If a system enables fraud, fraud will already have happened.”[1] And as we shall see, plenty of “opportunities for unusual profits” exist in medical coding.

And about those unusual profits:

Now, I’ll be the first to admit that I can’t quantify the impedance mismatches [from translating code systems], the miscoding, and the upcoding. Regardless, medical coding is the key dataflow in the healthcare system: “Roughly $250 billion is moving through those codes,” [says Steve Parente, professor of finance at the Carlson School of Management at the University of Minnesota]. On top of that, about 80% of medical bills contain errors, according to Christie Hudson, vice president of Medical Billing Advocates of America, making already-expensive bills higher. Today’s complex medical-billing system, guided by hundreds of pages of procedure codes, allows fraud, abuse and human error to go undetected, Hudson says. “Until the fraud is detected in these bills … the cost of health care is just going to increase. It’s not accidental. We’ve been fighting these overcharges…they continue to happen and we continue to get them removed from bills.” These errors, which are hard to detect because medical bills are written in a mysterious code, can result in overcharges that run from a few dollars to tens of thousands. That “mysterious code” is (now) ICD-10, and it’s the mystery plus the profit motive that creates the phishing equilibrium. Kaiser Health News quotes the Denver Post: Experts say there are tens of thousands more like Dziedzic across the country with strangling medical debts. Medical Billing Advocates of America, a trade group in Salem, Va., says that eight of 10 bills its members have audited from hospitals and health care providers contain errors. It’s estimated that at least 3 percent of all health care spending – roughly $68 billion – is lost to fraud and billing errors annually. Some say new reform laws will only make things worse.” Others say that errors occur largely because of “the complexity of deciphering bills and claims weighted down by complex codes.” Even if the “trade group” is talking its book, it’s still quite a book. NBC: Accounts of medical billing errors vary widely. While the American Medical Association estimated that 7.1 percent of paid claims in 2013 contained an error, a 2014 NerdWallet study found mistakes in 49 percent of Medicare claims. Groups that review bills on patients’ behalf, including Medical Billing Advocates of America and CoPatient, put the error rate closer to 75 or 80 percent. Gee, I wonder if the errors are randomly distributed?

As a humble blogger, I had to end with a rhetorical question. Rosenthal is far less circumspect:

Twenty-five percent of United States hospital spending — the single most expensive sector in our health care system — is related to administrative costs, “including salaries for staff who handle coding and billing,” according to a study by the Commonwealth Fund. That compares with 16 percent in England and 12 percent in Canada…. What’s less understood is the extent to which our current medical-billing system itself is responsible for the high prices patients are charged. There are, of course, many factors that have led to the United States’ record-breaking $3 trillion health care bill… But all of those individual price increases have been enabled — indeed, aided and abetted — by the complex system of billing and coding that underlies bills like those sent to Wickizer.

The ratchet only goes one way, doesn’t it? (Wickizer got a bill for $356,884.42 for services that her team estimated cost the hospital $60,000. Ka-ching.)

With that, let’s look at that process of “aiding and abetting.” I’m going to quote great slabs of Rosenthal’s piece (and without doing a lot of “But see me, here”) because it’s so well reported, and you should go read it and say nice things about it. And do read the comments.

Games Coders Play

Rosenthal describes the medical coding phishing equilibrium in detail:

Seemingly subtle choices about which code to use can have large financial consequences. If after reviewing a hospital chart of, say, a patient who has just had a problem with his heart, a hospital coder indicates the diagnosis code for “heart failure” (ICD-9-CM Code 428) instead of the one for “acute systolic heart failure” (Code 428.21), the difference could mean thousands of dollars. … Each billing decision, then, can be seen as a battle of coder versus coder. The coders who work for hospitals and doctors strive to bring in as much revenue as possible from each service, while coders employed by insurers try to deny claims as overreaching…. Hospital coders teach doctors — and doctors pay to take courses — to learn how they can “upcode” their charts to a more lucrative level with minimal effort. In a doctor’s office, a Level 3 visit (paid, say, at $175) might be legally transformed into a Level 4 (say, $225) by performing one extra maneuver, like weighing the patient or listening to the lungs, whether the patient’s illness required that or not. [Let that sink in.] … E.R. doctors, for example, learned that insurers might accept a higher-reimbursed code for the examination and treatment of a patient with a finger fracture (usually 99282) if — in addition to needed interventions — a narcotic painkiller was also prescribed (a plausible bump up to 99283), indicating a more serious condition.

(Notice the caregivers backfilling the actual delivery of healthcare to game the codes for maximum profit. I suppose a smart shopper would be able to avoid that. Not.)

Coding as Symbol Manipulation

Rosenthal labels such games “strategic coding” — kudos! — and describes how they metastatized throughout the health care system:

[B]ecause strategic coding meant increased payment, that begot coding specialists and coding courses and coding degrees. There are now different increasingly complex coding languages that define payment for different kinds of services: CPT codes, for office visits delivered by doctors, as well as HCPCS, ICD-PCS-CM and DRG, for charges that are incurred in the hospital. There are tens of thousands of codes in each lexicon that have become increasingly specific.

And there are, of course, credentials for those who manage and create the “strategic coding” meritocracy:

Toward the end of the 20th century and into the next, as strategic coding increased, a new industry thrived. For-profit colleges offered medical-coding degrees, and internships soon followed. Because alphanumeric coding languages are as distinct from one another as Chinese is from Russian, different degree tracks are necessary, along with distinct professional organizations that offer their own particular professional exams, certifications and licensing. Hospital systems and insurers — which have become huge, Hydra-like enterprises — now all employ roomfuls of coding-program graduates to perform these tasks. Membership in the American Academy of Professional Coders has risen to more than 170,000 today from roughly 70,000 in 2008.

In fact, medical coders are, exactly and precisely, the sort of “symbol manipulators” that Thomas Frank’s 10%-ers, with their fetish for credentials, believe are the future of America’s economy (because that’s who they themselves are). Clinton Labor Secretary Robert Reich wrote in 2009:

[O]ver the long term, symbolic analysts will do just fine – as long as they stay away from job functions that are becoming routinized. … The global market gives them more potential customers for their insights [ha ha]. To be sure, symbolic analysts are popping up all over the world. … But apart from recessions, demand for symbolic analysts in the U.S. will continue to grow faster than the supply. … In decades to come, nations with the highest percentages of their working populations able to do symbolic-analytic tasks will have the highest standard of living and be the most competitive internationally . America’s biggest challenge is to educate more of our people sufficiently to excel at such tasks.

“Have the highest standard of living and be the most competitive internationally.” Now it’s 2017, eight years on. How’s that working out, Bob? Average benefits evenly distributed, and all that? No downsides, given the actual symbols manipulated, and for what purpose?

Conclusion

A continuing theme of this series comes from Clive:

Increasingly, if you want to get and hang on to a middle class job, that job will involve dishonesty or exploitation of others in some way.

And “medical coding” is certainly one of those “good jobs at good wages” we keep hearing about. However, as Rosenthal shows — regardless of individual coders with good intentions, who do exist — systemically, in a for-profit system, “medical coding” = “strategic coding,” and that’s as dishonest or exploitative as, say, robosigning.

When Medicare for All is finally passed, there will still be a place for medical coding, redirected toward its original purpose, to deliver health care. (HR676, at least provides for retraining.) And I can’t help but think that when the medical coders don’t have to screw people over for profit any more, they’ll feel much like the cleansed soul described in The Screwtape Letters:

Just think … what he felt at that moment; as if a scab had fallen from an old sore, as if he were emerging from a hideous, shell-like tetter, as if he shuffled off for good and all a defiled, wet, clinging garment.

But as for the phishers of people who invented “strategic coding,” and did the training, and awarded the credentials, the people who ran the for-profit schools and the professional organizations, and cashed the fat checks, and built the system that tried to take the money Wanda Wickizer had saved for her kids to go to college, what of them? The corruption of this “creative class” is surely of a different order from the coding foot-soldiers; this creative class is not only corrupt, but enables corruption in others (“aid and abet”). If I were to wish that everything that happened to the West Virginia coal-miners happened to them, starting with the loss of their jobs and the savage destruction of their communities, would that make me a bad person? Probably. So instead, I’ll wish that they find continuing useful employment in the medical field: Emptying bedpans, for example.