Medicare and its Complexities

Medicare rules the healthcare industry in the United States. They write all the rules. Literally.

I've learned that the coding rules are so complex, there are entire industries dedicated to helping healthcare institutions manage and navigate those rules. The medical coders who put codes to every diagnosis and every procedure, go through all the notes, lab results, and operative reports to enter the proper codes for billing.

If the healthcare providers (Doctors, Physicians Assistants, and Nurse Practitioners) don't state things just right, then a diagnosis cannot be coded, or is given a non-specific code. These codes, in turn, are what drive the DRG's (Diagnosis Related Groups). This is what is billed out to Medicare and other insurers. Although DRG's were developed for billing on Medicare patients, wherever Medicare goes, most insurers follow. Most insurers pay according to the DRG.

The codes also drive Severity of Illness (SOI) and Risk of Mortality (ROM) scores. These are derived from a more advanced version of DRG's, called APR-DRG's. They (supposedly) take into account how many co-morbid conditions the patient has, and the complexity of care required. These SOI/ROM scores, along with the billing codes and DRG's, are what many of the publicly-reported quality scores are based upon.

All these rules are written by the nice folks at the Centers for Medicare and Medicaid (CMS).