Outpatient Visit Bills are Increasing in Intensity Levels

Claims across physician offices, urgent care centers, and emergency departments have trended towards higher level codes.

Providers are increasingly billing outpatient visits at higher intensity levels which has led to a rise in healthcare spending, according to a report by Kaiser Family Foundation and the Peterson Center on Healthcare's Health System Tracker.

Researchers examined private, large-employer based insurance claims from the Merative MarketScan Commercial Claims and Encounters database from 2004 to 2021 to analyze trends in complexity coding across physician offices, urgent care centers, and emergency departments.

The study found that the share of moderate intensity (level 3) claims across all three sites of care decreased from the majority (60%) in 2004 to less than half (45%) in 2021. Higher intensity level 4 claims, meanwhile, nearly doubled from 19% in 2004 to 37% in 2021. Bills at the highest complexity (level 5) did double from 3% in 2004 to 6% in 2021.

Even for specific diagnoses that are less likely to be worsening over time, the study found claims trended toward higher levels. Urinary tract infections were level 3 claims over half the time (54%) for emergency department visits and 67% for outpatient office visits in 2004. By 2021, level 3 claims accounted for only 31% of emergency department claims and 57% of outpatient office claims. Level 3 claims were the most common for headaches in 2004 in both physician (58%) and emergency departments (41%), but level 4 claims were the majority in both settings by 2021.

The result of outpatient bills trending towards higher levels was 4% higher outpatient evaluation and management spending in both physician offices and emergency departments in 2021, compared to visits being coded at the same levels in 2011.

"Overall, our findings demonstrate that regardless of the driving factors, increasing billing at higher levels for outpatient care has led to substantial increases in outpatient visit spending at the health system level," the researchers wrote. "For consumers who bear the marginal costs of more expensive services—those with co-insurance or deductibles—this trend impacts out-of-pocket costs in addition to overall health system costs."

The report suggest that upcoding isn't all to blame for the trend, which was also highlighted in a recent study published in Health Affairs that found high-intensity billing for treat-and-release emergency department visits had significantly increased over the past 14 years.

However, upcoding is a practice that can be all too common, which is why the Office of Inspector General recently recommended that CMS takes aim at the issue to ensure hospitals bill appropriately moving forward.