No one ever questions the fees you pay for healthcare, but we should and we should know who sets them.

Each time anyone goes to any healthcare provider or facility, the appointment, whether for an office visit or some diagnostic test, must be coded on a sheet that lists all of the procedures or patient activities. We generally have no idea who owns these codes, if anyone, and how the fees associated with each code are arrived at by that entity.

Now is the time to pull back the curtain and take a look at some of these things that we have always assumed we didn't need to know. Do we need to know more? I would say we do.

First, let's look at the codes. Where are the codes found on some patient documents? Each time you visit a healthcare provider or facility, you will usually receive an EOB (explanation of benefits). This is how much that code can charge and how much your insurance paid for it, leaving you with how much you have to pay. It depends on your insurance coverage, but there are other concerns here.

Some healthcare providers or facilities will not indicate the correct code for whatever service you receive. This is called, in medical parlance, upcoding—sometimes referred to as fraud. Check your procedure codes for accuracy. Yes, all those numbers have a meaning hidden behind them, and you should know what you are being charged for or what you are allegedly being charged for.

I can tell you that, many years ago, after I had had an operation, I reviewed the charges and codes the surgeon submitted and was taken aback. Although it was supposed to be one procedure, the surgeon charged for three different operations and was paid for three operations.

Was that fraud? It wasn't a mistake, and the surgeon was improving her bottom line. It's quite easy for them to do this since patients assume they cannot understand coding, and they also assume that everything is correct.

Not all insurance companies scrupulously check the codes, as in my case. But as to the question of coding, where does this all come from?

Coding History

Systems of medical coding are the conversion of health care services, diagnoses, and procedures into standardized alphanumeric codes. The two primary systems in the United States are the International Classification of Diseases (ICD) and Current Procedural Terminology (CPT). Note on CPT codes: “License to use CPT for any use not authorized herein must be obtained through the AMA, CPT Intellectual Property Services…” In order to use the codes, someone must apply to the AMA for permission and pay the fee. Does everyone need to use these CPT codes?

CPT codes are not required by law, although it would be imprudent not to do so. Providers are required to use CPT codes when submitting claims to Medicare and Medicaid. Since the majority of health insurance companies follow the same format as Medicare and Medicaid, CPT codes are used by practically every insurance company. Now, the use of CPT codes is copyrighted by the AMA.

The ICD system was first developed in the 1890s as the International List of Causes of Death and has since gone through several revisions. The World Health Organization (WHO) owns and maintains the ICD system globally, with many countries developing their own system adaptations. The United States uses a clinical modification (ICD-10-CM) developed by the National Center for Health Statistics (NCHS), which is a part of the Centers for Disease Control and Prevention (CDC).

As noted, the CPT coding system was established in 1966 and is owned and managed by the American Medical Association (AMA). The AMA is the copyright owner of CPT codes and exercises copyright protection, attracting licensing fees. Healthcare providers must pay to update the codebooks every year to ensure they are up to date with the code changes. How many patients know that the AMA is involved in the fees that they pay and that there is money to be paid to the AMA for the use of these codes?

How Are Fees Determined?

The government plays a significant role in determining the fees for medical services through the Medicare Physician Fee Schedule (PFS). This fee schedule assigns relative value units (RVUs) to each code depending on three major components of the RVUs:

Physician work (time, skill, training)
Practice expenses
Professional liability insurance

These RVUs are then multiplied by a conversion factor (an amount in dollars) to reach the Medicare (in the US) payment amount. The conversion factor is adjusted every year through legislation, and this provides the government with the ability to set the payment rates directly.

Typically, commercial insurers set their fee schedules based on Medicare rates, resulting in a downward flow of effects such that the government’s actions regarding Medicare fees affect the entire healthcare payment system.

The RBRVS (Resource-Based Relative Value Scale) Update Committee (RUC), which is comprised primarily of physicians selected by medical specialty societies, makes recommendations to CMS concerning RVU values. CMS does not follow all RUC recommendations but implements about 90 percent of them, meaning that the system is such that the specialty medical societies’ appointees effectively control the fee determination process.

Accessing the CPT Codes

The copyright that the AMA retains over the CPT codes excludes it from being accessible on their website. However, there are sites that do permit you to do a basic search for specific the types of procedures are:

00100–01999Anesthesia
95700–95811Sleep Medicine Testing Procedures
10004–69990Surgery
70010–79999Radiology Procedures
80047–89398Pathology and Laboratory Procedures
90281–99607Medicine Services and Procedures
98000–99499Evaluation and Management
0001F-9007FCategory II Codes
0002M-0020MMultianalyte Assay
0042T-0947TCategory III Codes

For each of these code areas, that site also provides an additional source of information regarding what it covers. No, it's not easy to do, but it is important that all patients understand what is being charged by the coding that has been put on your EOB. For example, if you search "anesthesia," specific types of this procedure are outlined as they are for each of the above areas.

What about code 90281, Medicine Services and Procedures? That is also further broken down on this website, and you can search there. For office procedures and other healthcare-related items, the "98000 code Evaluation, and Management" would be where you would search. This website is probably the most useful for patients.

All of this is useful information because patients need to keep track of what their medical records indicate has been provided to them and what has been charged to any insurance as well as what they are being charged. It's as it would be with anything else – you want to keep things correct and you want to watch your budget. Also, if health records are inaccurate, they can lead to miss perceptions of you or your medical status in the future.

As always, let the buyer beware (caveat emptor) because an informed consumer has power and discretion.