Wide charge gaps across hospitals for medical scans
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, duplicate claims, correct coding initiative edits, unbundling of services, improper coding/billing of services, and others. Our claims review is not intended to impact care decisions or medical practice.
In this Claims Audit Spotlight, we focus on computed tomography (CT) scans and magnetic resonance imaging (MRI) tests related to coding, billing, and charges.
CT scans and MRIs are important diagnostic tests that can assist in detecting various types of health issues.
Separate Professional and Technical Components
Most diagnostic testing procedures include both a technical component and a professional component. It is key for providers to understand compliant reporting and billing of these services, whether they will report and bill the technical component of the test, the professional component of the test, or bill for the “global” component of the test (both technical and professional components).
The technical component (TC) of a service includes the provision of all equipment, supplies, personnel, and costs related to the performance of the exam. When are services performed in a hospital outpatient or inpatient setting, it is common for the hospital to bill only the technical component.
The professional component includes the physician’s review and interpretation of the test results and providing a report or report and supervision.
A global service occurs when the provider incurs the expense of equipment, supplies, personnel, etc., and provides test results, and prepares a report or report and supervision.
Many CT scans and MRI CPT codes are defined in terms of contrast use. There are various CPT codes for each body area—one for a study without contrast, one for a study with contrast, and one for a combined study (without contrast followed by with contrast). It is important the appropriate CPT code is selected for proper billing and related reimbursement.
Charges and Payment for Diagnostic Imaging Services
Factors related to how much a CT scan or MRI will cost depends on healthcare coverage, the insurance provider, the facility’s “in-network” status, the radiologist and state/location where services are provided, and whether the test is performed in a diagnostic imaging center/clinic, hospital inpatient, hospital outpatient setting or other. Charges vary widely for the same imaging test among hospitals and diagnostic imaging centers/clinics.
How much insurance pays for a particular test, such as a CT scan or MRI in many cases is dictated by how much the provider charges a patient for the test. Hospitals and Diagnostic Imaging Centers may elect to use the fee schedule Medicare publishes as their starting point for rate-setting since Medicare information is widely available and considered a “standard” in the healthcare industry compared to hundreds of different private insurance plans patients may have. Factors related to how much a CT scan or MRI will cost depends on healthcare coverage, the insurance provider, the facility’s “in-network” status, the radiologist and state/location where services are provided, and whether the test is performed in a diagnostic imaging center/clinic, hospital inpatient, hospital outpatient or other. Costs vary widely from just over a hundred dollars to thousands of dollars.
With the new hospital price transparency rule from the Centers for Medicare and Medicaid Services (CMS) which took effect January 1, 2021, obtaining a clear estimate of the cost of a CT scan or MRI furnished by a hospital or a free-standing imaging center/clinic is starting to become easier to be able to assess options for care and cost estimates of services. The CMS goals for price transparency include protecting patients from unexpected high charges, supporting competition based on cost and quality, bringing down healthcare costs, and others.
Hospital Charge Comparisons
The information below outlines the type of diagnostic test, location where services were performed and various hospital charges for CT scans or MRIs performed and reported/billed during 2021, based on our claim analysis. These examples illustrate the differences in hospital charges for the exact same diagnostic test. All CT scans and MRIs were performed as inpatient hospital services during the patient’s hospital stay.
In these scenarios, charges for diagnostic tests are part/partial to the reimbursement of a diagnosis-related group (DRG) payment, when that is the determined payment methodology. When the hospital reimbursement methodology is based on the hospital’s cost-to-charge ratio or on a percentage of total hospital charges, the hospital charge for each service/item billed is of importance and ultimately impacts hospital reimbursement.
Medicare reimburses hospitals based on a DRG payment methodology with some exceptions. Commercial health plans pay hospitals on negotiated rates, based on either DRGs, per diem rates, or the hospital chargemaster price/discounted chargemaster price. ClaimDOC’s reference-based pricing (RBP) model for hospital inpatient services is based on the higher of the Medicare DRG with markup or hospital’s cost-to-charge (C-C/R) ratio with markup.
Charges for CT scans and MRIs can vary widely among hospitals and imaging centers in the same city and region by region for the same diagnostic test with no demonstrated difference in quality.
Our analyses of these hospital claims identify both commonalities of charges and a wide range of charges for CT scans and MRI services. While hospitals may elect and bill any amount they choose for services(s) provided, egregious charges can complicate matters for members to understand their bills and payments, impact the collection of patient balances, build a reputation charging high fees, create burdens for uninsured patients and a host of other concerns.
Our goal at ClaimDOC is to use benchmark charges and costs nationally to negotiate fair and ethical payments. Employers turn to us 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.