Audit of elective surgery results in $246,861 plan savings

Background

ClaimDOC’ s comprehensive line-by-line auditing of claims uncovers errors that basic claim repricing and auto-adjudication does not catch, leading to greater savings to health plans and beneficiaries. Our audit team analyzes all types of healthcare claims for a variety of potential concerns including excessive usual and customary charges, duplication of claims, correct coding edits, unbundling of services, and others. Our claims review is not intended to impact care decisions or medical practice.

Case Scenario

Member was admitted to the hospital for elective spinal correction surgery, resulting in a four-day hospital stay. The hospital claim and charges submitted to insurance totaled $321,691.21. The primary diagnosis reported on the claim was degeneration of thoracic spine.

In this case, high dollar charges included Revenue Code 360 – Operating Room for $223,417.00, Revenue Code 270 – Medical/Surgical Supplies for $58,833.25 and Revenue Codes 111, 202 and 314 Room and Board for $21,672.00. Our review of the hospital itemized bill identified unbundled services considered to be part/partial to other reported services reported and billed. Examples included charges for respiratory services, medical/surgical supplies, laboratory services, monitoring services, and pulmonary services.

Additionally, we noted charges for operating room (OR) services to be $22,692.00 for the first 30 minutes and charges of $196,200.00 for each additional minute (600 minutes) or $327.00 per minute. While it is common for hospitals to “load” or have a higher charge for the first 30 minutes of OR time due to a base/initial OR facility set-up charge, each additional minute or units of 15 minutes (depending on the methodology of charge structure the hospital creates) is lower.  The OR charge of $327.00 per minute is egregious when we analyze and compare each additional OR minute charge reported/billed by other hospitals.

For example, we commonly see hospitals billing each additional OR per minute charge in the range of $55.00 to $135.00.  We understand the OR additional time per minute or units of 15 minutes varies and may be dependent on numerous variables, i.e., direct costs, wages, benefits, surgical supplies, and other factors.  Additional and other surgery charges such as anesthesia services and physician charges are separately reported and billed.

The claim was priced based on the hospital’s cost-to-charge allowances for each Revenue Code reported/billed minus the identified unbundled services which resulted in higher pricing than Medicare’s Diagnosis Related Group (DRG) 458 of $41,407.51.

Below is an overview of the hospital charges billed and related ClaimDOC pricing and savings:

Total billed charges: $321,691.21

ClaimDOC Allowed: $74,829.98

Plan Savings: $246,861.23

Percentage of Savings: 77%

The Takeaway

Unbundling of hospital services considered part and partial to other reported/billed services and over-inflated charges were observed on the itemized bill. While hospitals may charge any amount they choose for provided services, egregious fees and billing unbundled services can complicate matters for members to understand their bills and payments, impact the collection of patient balances, build a reputation of hospitals charging high fees, create burdens for patients having no insurance and a host of others.

Our goal at ClaimDOC is to use benchmark charges and costs nationally to negotiate fair and ethical payments. Employers turn to us to seeking to establish fair reimbursement rates for their plans allowing them to save money and provide richer benefits to their employees. A win-win for everyone.