BUSI 523 Week 6 Discussion Board Forum 2 Replies Example

Discussion Board Forum 2 Replies: Coding Intensity and Administrative Costs

BUSI 523 Financial Analysis and Decision Making in Healthcare, Discussion Board Forum 2 Replies

Thread by [Student Name]

The classmates, their organizations and the cases are composites; the textbook, Scripture and the peer-reviewed sources cited are real.

Both threads I chose this week described health care dollars that pay for paperwork rather than treatment: diagnoses gathered to raise payment and the cost of turning a visit into a paid claim. Each reply adds evidence the thread did not include.

Reply to Leah

Leah, your thread described how the Medicare Advantage plan your clinic contracts with sends nurse practitioners to members' homes once a year for a health risk assessment, and how several of your patients later saw new diagnoses in their records that their own physicians had never made. Harrington (2016) explains that each Advantage plan receives a fixed sum per member every month, scaled up or down by a risk score that is computed from the diagnoses recorded for that member, so each additional qualifying diagnosis raises the plan's payment. That design is meant to keep plans from avoiding sick patients, but it also rewards plans for finding and recording as many diagnoses as possible, which is the incentive your patients experienced.

National evidence shows the effect is large. Jacobs (2024) used Medicare Advantage encounter data from 2015 to 2020 and isolated two sources of diagnoses that traditional Medicare never sees, home visits by plan clinicians and retrospective chart reviews, which together added about 7.4% to enrollees' encounter-based risk scores for 2021, an increase of nearly a tenth of a point. Because payment scales with the risk score, a 7.4% increase in scores translates into billions of dollars in added federal spending. The key question is whether those diagnoses reflect real illness that requires care. Jung et al. (2023) examined national encounter data from 2016 to 2019 and found that the additional risk scores from these assessments and reviews explained only part of enrollees' resource use; between 35.5% and 46.5% of the increase was not accompanied by more use of care. Some added diagnoses represent genuine conditions that were previously missed, but a large share appears to change payment without changing treatment.

For your clinic, a practical step would be to review a sample of diagnoses added through home assessments and ask whether each one changed the patient's care plan, medications or follow-up. Diagnoses that change care belong in the record; those that do not deserve a second look before they follow the patient for years. Proverbs warns that a false balance is an abomination to the Lord, but a just weight is his delight (English Standard Version Bible, 2001/2016, Proverbs 11:1). A risk score is a kind of scale, and it should weigh illness as it is. There is a compliance side as well. Federal auditors review Medicare Advantage diagnoses through risk adjustment data validation, and diagnoses that are not supported by the medical record can lead to repayment demands, while the Department of Justice has pursued false claims cases against plans and providers over unsupported codes. A clinic that confirms diagnoses it did not make, simply because a plan's home visit recorded them, may share that exposure. Clear documentation standards for every chronic condition on a patient's problem list protect both the patient and the clinic. Has your clinic ever been asked to confirm or remove diagnoses that came from a plan's home visit?

Reply to Daniel

Daniel, your thread argued that your physician group could improve its margin by cutting two billing positions and relying more on automated claim scrubbing. I agree that billing costs deserve scrutiny, but the evidence suggests that the expense lies in the complexity of the work rather than in the number of people doing it. A billing office is expensive because the payment system is complicated, not because billers are idle. Harrington (2016) describes the revenue cycle as a chain of steps, including eligibility checks, coding, claim submission, denial management and patient collections, and each payer adds its own rules to every step.

Tseng et al. (2018) priced that work minute by minute inside one large academic system, using time-driven costing. Billing and insurance-related activities cost about $20.49 and 13 minutes for a primary care visit, $61.54 for an emergency department visit and $215.10 for an inpatient surgical procedure. For primary care, billing costs equaled 14.5% of professional revenue, and for emergency visits, 25.2%. Physicians themselves spent a median of three minutes per primary care visit on billing tasks, time taken away from patients. Nationally the costs are enormous. Himmelstein et al. (2020) put American administrative spending by insurers and providers at $812 billion for 2017, or 34.2% of national health spending, compared with 17.0% in Canada, and found that physicians' insurance-related costs alone ran more than five times the Canadian level per person.

Those figures suggest that cutting billing staff without reducing complexity would push the work onto physicians and nurses, who cost more per hour, or would increase denials and slow collections. A better approach would be to reduce the number of payer contracts with unusual rules, standardize front-end eligibility checks so fewer claims are denied and track cost per claim by payer to show which contracts are least profitable once administrative cost is counted. In the parable of the dishonest manager, Jesus drew the lesson that trustworthiness with small amounts shows trustworthiness with large ones (English Standard Version Bible, 2001/2016, Luke 16:10), and careful stewardship of twenty dollars per claim adds up across a practice's thousands of visits. Automation can still help if it targets the right work. Claim scrubbing tools catch coding errors before submission, and automated eligibility checks at scheduling prevent the most common denials, so the same billing staff can handle more volume with fewer reworked claims. The savings then come from fewer denials and faster payment rather than from layoffs, which also protects the institutional knowledge that experienced billers carry about each payer's rules. Your group might pilot automation for one high-volume payer, measure denial rates and days in accounts receivable for six months and only then decide on staffing. Does your group know its cost to collect by payer?

References

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Harrington, M. K. (2016). Health care finance and the mechanics of insurance and reimbursement. Jones & Bartlett Learning.

Himmelstein, D. U., Campbell, T., & Woolhandler, S. (2020). Health care administrative costs in the United States and Canada, 2017. Annals of Internal Medicine, 172(2), 134-142. https://doi.org/10.7326/M19-2818

Jacobs, P. D. (2024). In-home health risk assessments and chart reviews contribute to coding intensity in Medicare Advantage. Health Affairs, 43(7), 942-949. https://doi.org/10.1377/hlthaff.2023.01530

Jung, J., Feldman, R., & Carlin, C. (2023). Coding intensity through health risk assessments and chart reviews in Medicare Advantage: Does it explain resource use? Medical Care Research and Review, 80(6), 641-647. https://doi.org/10.1177/10775587231191169

Tseng, P., Kaplan, R. S., Richman, B. D., Shah, M. A., & Schulman, K. A. (2018). Administrative costs associated with physician billing and insurance-related activities at an academic health care system. JAMA, 319(7), 691-697. https://doi.org/10.1001/jama.2017.19148