Association of Insurance Mix and Diagnostic Coding Practices in New York State Hospitals

Importance  Given higher reimbursement rates, hospitals primarily serving privately insured patients may invest more in intensive coding than hospitals serving publicly insured patients. This may lead these hospitals to code more diagnoses for all patients.

Objective  To estimate whether, for the same Medicaid enrollee with multiple hospitalizations, a hospital’s share of privately insured patients is associated with the number of diagnoses on claims.

Design, Setting, and Participants  This cross-sectional study used patient-level fixed effects regression models on inpatient Medicaid claims from Medicaid enrollees with at least 2 admissions in at least 2 different hospitals in New York State between 2010 and 2017. Analyses were conducted from 2019 to 2021.

Exposures  The annual share of privately insured patients at the admitting hospital.

Main Outcomes and Measures  Number of diagnostic codes per admission. Probability of diagnoses being from a list of conditions shown to be intensely coded in response to payment incentives.

Results  This analysis included 1 614 630 hospitalizations for Medicaid-insured patients (mean [SD] age, 48.2 [20.1] years; 829 684 [51.4%] women and 784 946 [48.6%] men). Overall, 74 998 were Asian (4.6%), 462 259 Black (28.6%), 375 591 Hispanic (23.3%), 486 313 White (30.1%), 128 896 unknown (8.0%), and 86 573 other (5.4%). When the same patient was seen in a hospital with a higher share of privately insured patients, more diagnoses were recorded (0.03 diagnoses per percentage point [pp] increase in share of privately insured; 95% CI, 0.02-0.05; P < .001). Patients discharged from hospitals in the bottom quartile of privately insured patient share received 1.37 more diagnoses when they were subsequently discharged from hospitals in the top quartile, relative to patients whose admissions were both in the bottom quartile (95% CI, 1.21-1.53; P < .001). Those going from hospitals in the top quartile to the bottom had 1.67 fewer diagnoses (95% CI, −1.84 to −1.50; P < .001). Diagnoses in hospitals with a higher private payer share were more likely to be for conditions sensitive to payment incentives (0.08 pp increase for each pp increase in private share; 95% CI, 0.06-0.10; P < .001). These findings were replicated in 2016 to 2017 data.

Conclusions and Relevance  In this cross-sectional study of Medicaid enrollees, admission to a hospital with a higher private payer share was associated with more diagnoses on Medicaid claims. This suggests payment policy may drive differential investments in infrastructure to document diagnoses. This may create a feedback loop that exacerbates resource inequity.