Medical Billing Business

a Modern Definition

When asked about the purpose of medical billing, most people answer that it exists to get doctors paid. But physicians get paid routinely in some countries that have no medical billing. So the conventional wisdom goes, if getting paid was the only reason for medical billing, then it should be relatively easy to eliminate it and even save billions (see Dr. Ezekiel Emanuel's article in the New York Times on November 12, 2011). Although medical billing does get physicians paid, its function is much broader. This short article attempts to better define the role medical billing plays in our society.

Three Basic Questions About Healthcare


First, doctors have the legal ability to offer any medical therapy they choose. It can be helpful, harmful, or just useless. As Dr. Doug Cassel noted, "a physician can treat your pancreatic cancer with organic turmeric, order weekly MRI's scans for headaches, perform twenty plastic surgery procedures at once, or give you Propofol to sleep." How can we discover if doctors deliver quality care or if they practice outside of our expectations?


Next, documenting and reading every individual patient encounter to all of its detail would exceed our resources because of tens of thousands of disease entities, diagnostic studies and treatments, and countless individual variation. How can we document every encounter accurately, specifically, and concisely enough and still afford rapid identification of its correctness and payment scale?


Third, covering the entire population with the same plan would be wasteful (or insufficient) as different population segments require different coverage. How can we ensure a variety of coverage for different people?

 

What is the role of Medical Billing today?​​​​​​​​​​​


In finance, the efficient-market hypothesis asserts that financial markets are "informationally efficient," which means that the prices reflect all the information available to the market participants. A market efficiency mechanism collects and delivers all relevant information to the market participants.


Medical billing is a healthcare market efficiency mechanism that

  1. ensures treatment quality,

  2. documents treatment,

  3. reins in out of control physicians, and

  4. offers patients alternatives.​​​​​​​​​

Instead of writing payment protocols for every possible patient encounter, we have codified diagnosis and treatments. These two sets of codes along with a mapping system of the codes to the payment schedule allow us to test if appropriate tests and therapy are performed for a given problem. Further, the sets of codes and the mapping system are digitized, allowing fast processing of vast amounts of data.


This mapping system easily identifies physicians who practice outside of its expectations. Medicare and insurance companies verify treatment adequacy to problems using this mapping system, often called billing rules.


Additionally, ICD codes for diagnostics and CPT codes for treatments represent the DNA for medical records. For many medical issues, a physician needs to know little more than what is contained in the billing record. To quote Dr. Doug Cassel, "virtually all of the benefits that... can come from electronic medical records, including treatment evaluation and demographic data, are contained in billing records, which have been electronic for years."


Finally, one insurance plan will never fit all. A young person has far different medical needs than a middle age family with three children, or an elderly diabetic. So, insurance plans differ in coverage and costs. Some insurance plans cover elective surgery at a higher cost, while others exclude such coverage. Different people choose to spend their healthcare dollars differently, and medical billing is the tool we use to differentiate between plans and levels of care. Getting physicians paid is a secondary or perhaps even a tertiary aspect medical billing. It's the only mechanism that ensures patients can get the care they want.

Medical Billing Business Histogram

Medical Billing Business Payment distribution curve is bell shaped. Billing services currently exist to manage medical practices. These services relieve medical professionals of tedious detail work, but rarely do they offer a means to substantially maximize the practice's bottom line. This can take anywhere from several days to several months to complete, and require several interactions before a resolution is reached.

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