A Reliable Billing Method for Internal Medicine Resident Clinics: Financial Implications for an Academic Medical Center

Background The financial success of academic medical centers depends largely on appropriate billing for resident-patient encounters. Objectives of this study were to develop an instrument for billing in internal medicine resident clinics, to compare billing practices among junior versus senior residents, and to estimate financial losses from inappropriate resident billing. Methods For this analysis, we randomly selected 100 patient visit notes from a resident outpatient practice. Three coding specialists used an instrument structured on Medicare billing standards to determine appropriate codes, and interrater reliability was assessed. Billing codes were converted to US dollars based on the national Medicare reimbursement list. Inappropriate billing, based on comparisons with coding specialists, was then determined for residents across years of training. Results Interrater reliability of Current Procedural Terminology components was excellent, with κ ranging from 0.76 for examination to 0.94 for diagnosis. Of the encounters in the study, 55% were underbilled by an average of $45.26 per encounter, and 18% were overbilled by an average of $51.29 per encounter. The percentages of appropriately coded notes were 16.1% for postgraduate year (PGY) 1, 26.8% for PGY-2, and 39.3% for PGY-3 residents (P < .05). Underbilling was 74.2% for PGY-1, 48.8% for PGY-2, and 42.9% for PGY-3 residents (P < .01). There was significantly less overbilling among PGY-1 residents compared with PGY-2 and PGY-3 residents (9.7% versus 24.4% and 17.9%, respectively; P < .05). Conclusions Our study reports a reliable method for assessing billing in internal medicine resident clinics. It exposed large financial losses, which were attributable to junior residents more than senior residents. The findings highlight the need for educational interventions to improve resident coding and billing.