On July 1st, 2022, the machine-readable file (MRF) requirement of the Transparency in Coverage rules went into effect, which requires insurers and employers to publicly post the prices they pay for healthcare services. This 3-part series will get into the weeds of healthcare billing, healthcare policy, and technical specifications from the federal government on recent legislation. The first two parts are more of a 101 on how practitioners and facilities makes money in this industry, and part three will be specifically focused on the (painful) rollout of the actual MRFs and how I think it will impact everyone in the future.
Because of the volume, variety, velocity, and veracity of this topic (data engineers, see what I did there?), I'll be channeling my best Matt Levine style of writing to keep you engaged. That being said, let's dive in...
Because of the volume, variety, velocity, and veracity of this topic (data engineers, see what I did there?), I'll be channeling my best Matt Levine style of writing to keep you engaged. That being said, let's dive in...
The Practitioner's Ascent
Conceptually speaking, payment contracts between healthcare insurers and practitioners (doctors, nurses, etc.) shouldn't be difficult to explain. You perform a service, you send a bill a health plan, and you get paid? End of story, right? Oh dear sir/ma'am, I have some bad news for you: time to strap on your best Scarpas and join me on this byzantine hike to an oxygen-thin elevation, and prepare for several cuts and bruises along the way.
Let's say that you're a cardiologist: you're an expert in the care of hearts and blood vessels. In other words, you don't see patients with a lung condition. If a patient with a lung condition tries to schedule an appointment with your office, you say – or more like your front desk says – "Hey Bob, I see you have a lung condition, so you'll need to see a pulmonologist. We specialize in heart conditions, not lung conditions."
As a cardiologist, you can diagnose and treat a subset of conditions across the healthcare spectrum, and the categorization of those treatments is commonly referred to as a taxonomy. You even get a fancy industry-standard taxonomy name (Interventional Cardiology) and identifier (207RI0011X), and you'll use this info at some point in the healthcare ether to tell everyone, "Hey, I'm a cardiologist. Don't send me lung patients!" This ID is also associated with a bunch of Common Procedural Terminology (CPT) codes that catalog just what type of services you provide. You use codes associated with cardiology, not pulmonology. When and where are these codes used, exactly? More on that later.
Up next is handling your identity crisis. No, I'm not referring to your Leonard Shelby-like struggles from Memento, but rather finding an identifier that's attached to you and nobody else. Jason, you dummy, That's what an SSN is for! Well of course, but in this country we try to protect SSNs at all costs and keep them private from widespread use and abuse (~Experian breach has entered the chat~), so in healthcare we use something different that's both public and unique: the National Provider Identifier, or NPI. You register for one via the HHS CMS NPPES NPI Registry – yes, that acronym soup is legit – and receive a ten-digit number in return. This is your NPI. There are many others like it, but this one is yours. Your NPI is your best friend. It is your life.
Now you have an NPI and Taxonomy ID, so it's time to get paid by insurers for all those patients you're about to see, right? Easy tiger, we still have several steps to climb – frozen feces and all – on this Mount Everest ascent. We're talking about the exchange of money, so you now need to create a business, file with the state, and receive an Employer Identification Number (EIN), all so you can report revenue and pay taxes. Otherwise, how will we know you're not running some web3 / NFT grift based in the Cayman Islands? (I kid you not, I've recently heard certain tech pundits talk about how great NFTs would be in the healthcare space – please stop.)
You're finally armed with the trifecta of "pay me money" identifiers needed for health plans, so you bang on the heavenly gates of a $4 trillion industry to get your fair share. The courtship has now begun, and you're about to enter into a forced marriage with the insurers, but you have no idea if this celebration will turn into The Princess Bride or The Red Wedding. You're nervous, and the health plans sitting on the Iron Throne finally reply: "Silly doctor, you're not even credentialed with us, and we've not yet decided if you're in or out of network." WTF?!?
It turns out this isn't as straightforward as you hoped. You're now stuck in a waiting room that makes the DMV look efficient. The health plans need to make sure you are who you say you are, you do what you say you do, and you're qualified to do it – this is credentialing, and it can take weeks or months to complete. The other fun part is whether you'll be in the VIP club or not – your in-network vs out-of-network status – which determines how much you get paid for each of those five-digit CPT codes you put on a sheet of virtual paper after a patient visit. Like being on the other end of a negotiation with a snake-oil used car salesman, you feel like you're getting fugazed on these rates, but you haven't had enough time to research a fair-market value for each code. You hope for the best, pray to avoid the worst... and wait. Finally, the health plans come back and say you're good to go! Life is stressful, but life is good. It's time to start getting paid.
Your patients start rolling in from different plans, and you're excited. You motivate your staff to quickly put all those fancy code combinations (EIN, NPI, Tax ID, CPT, OMG, etc.) in a special form called a HCFA 1500 – otherwise known (in your deepest southern voice) as a "hick-fuh" – and submit that electronic form via your Electronic Health Record (EHR) system, which does some magic behind the scenes and sends that form to the health plan for payment. You wait a few weeks, check your business bank account, and your heart skips a beat when you notice significantly fewer deposits than you expected. You're frustrated, and after some research you find out most of your claims submitted to the health plans have been denied. Denied?!? WHY?!? Well, since you're a cardiologist, your patients require a prior authorization from the health plan to be seen by you. Prior authorization?!? Yup, in this forced marriage, any weary travelers wanting to visit your home must first get approval from the Iron Throne. You knock everything off your desk like my daughter does with her Lincoln Logs when she's mad, and you sulk over this logistical nightmare.
After the anger subsides, you realize the only way to finish this ascent is to hire more Sherpas – more office staff – to help carry the logistical load of your journey through The Best Healthcare System in the World ™. You and your team learn about the specific nuances of prior authorization and billing with each health plan – it's usually a different process for each – and you start building muscle memory on the 127-steps needed to convert a patient visit to money in the bank. The denied claims start dwindling, the money starts arriving in a consistent manner, and you finally – cautiously – reach the summit and celebrate. Congratulations, you've been assimilated into The Collective!
The example I just gave is a common – albeit simplified version if you can believe it – of how a healthcare practitioner becomes a participant in health insurance plans. I skipped over many topics on 1) other coding concepts you need to know (ICD, CPT modifiers, place of service, etc.), 2) other ways your payments are calculated (Medicare vs Medicaid vs Commercial vs Capitation), 3) and other vendors that you'll directly or indirectly have to deal with (clearinghouses, provider "portals", etc.). However, you should get the point: making money as a practitioner is NOT a simple process. And we're just getting started: stay tuned for Part 2 of this series, where I take us from Mount Everest to The Mirror Dimension and we learn about how organizations – not practitioners – get paid.
Let's say that you're a cardiologist: you're an expert in the care of hearts and blood vessels. In other words, you don't see patients with a lung condition. If a patient with a lung condition tries to schedule an appointment with your office, you say – or more like your front desk says – "Hey Bob, I see you have a lung condition, so you'll need to see a pulmonologist. We specialize in heart conditions, not lung conditions."
As a cardiologist, you can diagnose and treat a subset of conditions across the healthcare spectrum, and the categorization of those treatments is commonly referred to as a taxonomy. You even get a fancy industry-standard taxonomy name (Interventional Cardiology) and identifier (207RI0011X), and you'll use this info at some point in the healthcare ether to tell everyone, "Hey, I'm a cardiologist. Don't send me lung patients!" This ID is also associated with a bunch of Common Procedural Terminology (CPT) codes that catalog just what type of services you provide. You use codes associated with cardiology, not pulmonology. When and where are these codes used, exactly? More on that later.
Up next is handling your identity crisis. No, I'm not referring to your Leonard Shelby-like struggles from Memento, but rather finding an identifier that's attached to you and nobody else. Jason, you dummy, That's what an SSN is for! Well of course, but in this country we try to protect SSNs at all costs and keep them private from widespread use and abuse (~Experian breach has entered the chat~), so in healthcare we use something different that's both public and unique: the National Provider Identifier, or NPI. You register for one via the HHS CMS NPPES NPI Registry – yes, that acronym soup is legit – and receive a ten-digit number in return. This is your NPI. There are many others like it, but this one is yours. Your NPI is your best friend. It is your life.
Now you have an NPI and Taxonomy ID, so it's time to get paid by insurers for all those patients you're about to see, right? Easy tiger, we still have several steps to climb – frozen feces and all – on this Mount Everest ascent. We're talking about the exchange of money, so you now need to create a business, file with the state, and receive an Employer Identification Number (EIN), all so you can report revenue and pay taxes. Otherwise, how will we know you're not running some web3 / NFT grift based in the Cayman Islands? (I kid you not, I've recently heard certain tech pundits talk about how great NFTs would be in the healthcare space – please stop.)
You're finally armed with the trifecta of "pay me money" identifiers needed for health plans, so you bang on the heavenly gates of a $4 trillion industry to get your fair share. The courtship has now begun, and you're about to enter into a forced marriage with the insurers, but you have no idea if this celebration will turn into The Princess Bride or The Red Wedding. You're nervous, and the health plans sitting on the Iron Throne finally reply: "Silly doctor, you're not even credentialed with us, and we've not yet decided if you're in or out of network." WTF?!?
It turns out this isn't as straightforward as you hoped. You're now stuck in a waiting room that makes the DMV look efficient. The health plans need to make sure you are who you say you are, you do what you say you do, and you're qualified to do it – this is credentialing, and it can take weeks or months to complete. The other fun part is whether you'll be in the VIP club or not – your in-network vs out-of-network status – which determines how much you get paid for each of those five-digit CPT codes you put on a sheet of virtual paper after a patient visit. Like being on the other end of a negotiation with a snake-oil used car salesman, you feel like you're getting fugazed on these rates, but you haven't had enough time to research a fair-market value for each code. You hope for the best, pray to avoid the worst... and wait. Finally, the health plans come back and say you're good to go! Life is stressful, but life is good. It's time to start getting paid.
Your patients start rolling in from different plans, and you're excited. You motivate your staff to quickly put all those fancy code combinations (EIN, NPI, Tax ID, CPT, OMG, etc.) in a special form called a HCFA 1500 – otherwise known (in your deepest southern voice) as a "hick-fuh" – and submit that electronic form via your Electronic Health Record (EHR) system, which does some magic behind the scenes and sends that form to the health plan for payment. You wait a few weeks, check your business bank account, and your heart skips a beat when you notice significantly fewer deposits than you expected. You're frustrated, and after some research you find out most of your claims submitted to the health plans have been denied. Denied?!? WHY?!? Well, since you're a cardiologist, your patients require a prior authorization from the health plan to be seen by you. Prior authorization?!? Yup, in this forced marriage, any weary travelers wanting to visit your home must first get approval from the Iron Throne. You knock everything off your desk like my daughter does with her Lincoln Logs when she's mad, and you sulk over this logistical nightmare.
After the anger subsides, you realize the only way to finish this ascent is to hire more Sherpas – more office staff – to help carry the logistical load of your journey through The Best Healthcare System in the World ™. You and your team learn about the specific nuances of prior authorization and billing with each health plan – it's usually a different process for each – and you start building muscle memory on the 127-steps needed to convert a patient visit to money in the bank. The denied claims start dwindling, the money starts arriving in a consistent manner, and you finally – cautiously – reach the summit and celebrate. Congratulations, you've been assimilated into The Collective!
The example I just gave is a common – albeit simplified version if you can believe it – of how a healthcare practitioner becomes a participant in health insurance plans. I skipped over many topics on 1) other coding concepts you need to know (ICD, CPT modifiers, place of service, etc.), 2) other ways your payments are calculated (Medicare vs Medicaid vs Commercial vs Capitation), 3) and other vendors that you'll directly or indirectly have to deal with (clearinghouses, provider "portals", etc.). However, you should get the point: making money as a practitioner is NOT a simple process. And we're just getting started: stay tuned for Part 2 of this series, where I take us from Mount Everest to The Mirror Dimension and we learn about how organizations – not practitioners – get paid.