Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Eric Gay / AP

The health care system's complex payment system gives doctors and hospitals lots of incentives to bill for more expensive services than they actually provide, a practice known as upcoding. Numerous settlements between health care companies and the Department of Justice indicate it's a widespread problem.

Why it matters: Upcoding affects everyone — it saps money from the taxpayer-funded Medicare and Medicaid programs and could lead to higher premiums for people with commercial insurance. But there's no evidence the health care system is fighting upcoding effectively, or that the problem will go away.

The basics of upcoding: Health care providers document what they do as much as possible because they want to maximize their revenue and profit in an era of declining payments. Just take a quick glance at the multitude of industry coding webinars, including one titled "Keeping up with the Code-ashians."

But this can spur people to exaggerate medical claims or willfully overbill.

  • Carolinas HealthCare System, a hospital system based in North Carolina, paid $6.5 million to the Department of Justice last month to settle allegations that it knowingly overcharged Medicare and Medicaid for urine drug tests.
  • Instead of coding for the lower-paying "moderate complexity" urine drug tests, Carolinas' doctors allegedly used "high complexity" codes. The settlement cleared Carolinas of liability.
  • The services that are most vulnerable to upcoding are routine doctors' visits, known in the medical billing world as "evaluation and management" visits, and lab services. Billions of dollars have been wasted on those incorrectly coded services, according to the federal government.
  • This practice is separate from fraudulently billing for services that were never provided or weren't necessary, but it's a fine line.
  • There have been numerous other upcoding settlements with the Department of Justice over the past several years, including a $60 million settlement against IPC Healthcare, a national doctors group that was bought by TeamHealth.

Part of the problem is not every doctor or coder views medical services the same way. Notes and codes are vague, and interpretations can be different.

"You couple that ambiguity with a system that rewards increasing intensity of services, and it shouldn't be surprising that you wind up with upcoding," said Christopher Brunt, a health economist at Georgia Southern University who has studied the issue.

Punishments don't appear to be working: The financial penalties for upcoding can be severe, especially for smaller doctor groups. But the Department of Justice doesn't appear to be changing behaviors among the larger organizations. Carolinas' $6.5 million settlement, for example, is just 0.1% of the hospital system's revenue, or 3% of its operating income. U.S. Attorney Jill Westmoreland Rose, who oversaw the Carolinas settlement, wasn't available for an interview.

The continued use of higher-level medical codes "seems too prevalent to me to indicate that DOJ is a real credible threat," Brunt said.

This goes beyond providers: Health insurers, especially those that participate in Medicare Advantage, have been accused of inflating medical codes for members as well.

Go deeper

White House nominates Rick Spinrad as NOAA leader

In this NOAA GOES-East satellite handout image, Hurricane Dorian, a Cat. 4 storm, moves slowly past Grand Bahama Island on September 2, 2019. (Photo by NOAA via Getty Images)

The White House on Thursday evening nominated Rick Spinrad, an oceanographer at Oregon State University, to head the National Oceanic and Atmospheric Administration (NOAA).

Why it matters: Filling the NOAA slot would complete the Biden administration's leadership on the climate and environment team. The agency, located within the Commerce Department, houses the National Weather Service and conducts much of the nation's climate science research.

3 hours ago - World

Israeli officials will object to restoration of Iran deal in D.C. visit

Photo: Anadolu Agency / Getty Images

Israeli Prime Minister Benjamin Netanyahu has instructed the delegation traveling to Washington, D.C. next week for strategic talks on Iran to stress their objection to a U.S. return to the 2015 nuclear deal and to refuse to discuss its contents, Israeli officials say.

Why it matters: That position is similar to the one Israel took in the year before the 2015 nuclear deal was announced, which led to a rift between the Israeli government and the Obama administration. History could now repeat itself.

Updated 3 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Coronavirus cases aren't budging — even after vaccinations doubled— Health care workers feel stress, burnout more than a year into the pandemic — Handful of "breakthrough" COVID cases occurred in nursing homes, CDC says.
  2. Vaccines: Johnson & Johnson's vaccine production problems look even bigger — All U.S. adults now eligible for COVID-19 vaccine.
  3. Political: Watchdog says agency infighting increased health and safety risks at start of pandemic.
  4. World: EU regulator: Benefits of J&J vaccine outweigh risk of rare blood clots.
  5. Variant tracker: Where different strains are spreading.