Coding Care: The Risk of Misrepresentation

The government incentivizes private health insurers to keep healthcare costs down by providing lump-sum payments to manage individual health expenses. To ensure insurers are not adversely affected by high-risk populations, the government uses risk adjustment, offering additional payments for sicker patients. However, this creates an environment where insurers may be incentivized to improperly code patient conditions to maximize reimbursement, leading to significant issues such as $50 billion in overpayments. Recent reports highlight cases where insurers erroneously or fraudulently diagnosed patients with conditions they did not have, like diabetic cataracts after surgical removal. This raises questions about the integrity of coding practices and the financial implications for Medicare.