Ongoing Price Transparency Initiatives – Egregious Charges
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 for health plans and its plan members. 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 many others. Our claims review is not intended to impact care decisions or medical practice.
In this Claims Audit Spotlight, we focus on a claim example where our audit team did a double take when reviewing the claim and related charges. We considered three (3) questions:
- Is the hospital really charging this much for the diagnostic test?
- Is this an error in hospital billing?
- Is the hospital charge egregious for the service provided and billed?
Case Scenario
A 45-year-old male was seen at a hospital outpatient department in Saint Petersburg, Florida, for a CT scan of the abdomen and pelvis with contrast. The diagnosis on the claim listed acute appendicitis.
The UB-04 claim form/electronic equivalent 837I was reported/ billed as follows:
CPT code 74177 – CT of abdomen/pelvis with contrast (1 unit) – hospital charge $32,272.02
CPT code Q9967- Contrast (1 unit) – hospital charge $122.00
Total hospital charge – $32,394.02
ClaimDOC Pricing: $424.01
Plan Savings: $31,970.01
Percentage of Savings: 99%
Of interest, the hospital’s cost-to-charge ratio (ratio between a hospital’s expense and what they charge) with a markup for both codes – $199.35. So why does the hospital randomly charge $32,394.02 for the diagnostic CT scan?
Is this charge justifiable?
According to the Medicare procedure price lookup for outpatient services, for CPT code 74177 performed in a hospital outpatient department, the national average facility fee is $376.
Another website source provides estimated costs based on cash prices that providers have historically charged on average for CT abdomen/pelvis with contrast in the state of Florida lists hospital outpatient as $319.
Information from Turquoise Health for zip code 33710 across all facilities says the average case price for CT scan of abdomen/pelvis with contrast is $2,792. “However, the price you pay varies significantly based on your location and any insurance coverage.”
In a Florida Trend, article dated 8/16/2022, it was reported the majority (80%) of Florida hospitals are not complying with the federal price transparency law to post prices online.
The Takeaway
The concerns of egregious charges were observed on the above hospital health insurance claim. While hospitals can charge any amount they elect for items/services provided, egregious fees and billing errors can complicate matters for members to understand their bills and payments, impact the collection of patient balances, build a reputation of facilities charging high fees, create burdens for patients having no insurance and a host of others.
Obtaining pricing estimates prior to needing or having related care to understand how much one is obligated to pay for their services can be beneficial to avoid surprise medical bills. Whenever an individual receives a bill and the cost for care seems inappropriate/questionable, an inquiry to the provider and/or health plan should be made to obtain an explanation of the service(s) and corresponding charges. Hospitals need to do the right thing, comply with the federal price transparency laws and post their prices online so consumers have the necessary information.
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.