According to a new study published this week, hospitals in the United States have received billions of dollars in extra payments from insurers and government programs by billing for higher-intensity care than what would be expected.
The study was conducted by RAND and published in the journal Health Affairs this week. It examined the period from 2011 to 2019 to see how hospitals carried out their billing practices.
And what they found led the authors of the study to argue that reconfiguring hospital payments is necessary so that they no longer take advantage of the system.
According to the study, during the time frame examined, hospital discharge documentation showed that patients needing the highest-intensity level of care increased by 41%. Researchers estimated that the figure should have only increased by 13% during that period.
Hospitals are paid by Medicare and private health insurance based on the main diagnosis of a patient when they stay at the hospital. Hospitals are given higher payments by Medicare when patients have more complications and co-existing conditions.
Because of this practice, which Medicare put in place in 2007, the study says that hospitals have an incentive to document patient cases at the highest level of complexity, known as “upcoding.”
Daniel Crespin, the lead author of the study and an economist at RAND, shared that upcoding is the means of “adding to the cost of health care overall, which is, in some ways, always going to trickle down to ... higher out-of-pocket payments for health plan premiums in private markets, as well as putting a burden on taxpayers for Medicare.”
The increase in upcoding resulted in $14.6 billion in hospital payments in 2019, relative to 2011 coding practices. That figure included $5.8 billion from private health plans, $4.6 billion from Medicare, and $1.8 billion from Medicaid.
To compile its findings, the researchers examined data from Florida, Kentucky, New York, Washington, and Wisconsin.The data from those five states represented about 20% of hospital discharges across the country.
In response to the study, the American Hospital Association told Axios that it was still reviewing the findings, though it said several trends over the period examined have likely contributed to higher-intensity discharges.
“It is also important to highlight that this study includes limited data from just five states, making it hard to draw any larger conclusions,” Aaron Wesolowski, the vice president of research strategy and policy communications at the AHA, shared with Axios.