Organizations that pay large amounts for health care, such as the federal government, want to pay for results instead of paying for each service regardless of whether your health improves or worsens.  For example, if you have diabetes, they want to pay the doctor more if your blood sugar level improves or if you avoid serious complications. 

But it is difficult to figure out how to pay doctors fairly under that framework. One potential problem is that it could encourage doctors to turn away the sickest patients and patients who they suspect may not follow their instructions.

As a result, for now, doctors typically bill for each service rendered, and in order to get paid, they must report to your insurance company the standardized codes that specify the services for which they are billing. 

Instead of saying, “I put a cast on George’s broken wrist,” doctors might report the code 25600, which means “closed treatment of distal radial fracture (e.g., Colles or Smith type) or epiphyseal separation, includes closed treatment of fracture of ulnar styloid, when performed; without manipulation.” 

Assuming that you have the patience to decode all the jargon, knowing what your doctors say they did can help you in at least two ways.  First, it can help you communicate with them.

Second, it can help you figure out if the bills you get are in fact all for services you actually received.  Publications ranging from Consumer Reports to the Wall Street Journal have reported that 30-90% of medical bills analyzed have errors in them. 

Errors are far more common in hospital bills than in bills for simpler medical events. Still, in about the last six months, I found eleven overcharges on medical bills my husband and I received – without any hospitalizations or complicated treatment.  The providers all eventually agreed and credited our accounts. Using the procedure codes to clarify what all the charges were for made it easier to get some of the errors corrected.

To find out what the codes on bills from your doctor mean, search on [CPT lookup] and choose one of the first results from the American Medical Association labeled “cpt Code/Relative Value Search.”  Enter the code you want to know about in the field provided.  The explanations of codes can be quite detailed.

For example, enter code 96116, and the result is:  “Neurobehavioral status exam (clinical assessment of thinking, reasoning and judgment, e.g., acquired knowledge, attention, language, memory, planning and problem solving, and visual spatial abilities), per hour of the psychologist's or physician's time, both face-to-face time with the patient and time interpreting test results and preparing the report.”

You can get even more detail if you sign up on the site for a free account.