Remarkable Variations of Facility Charges for Hip Replacement Surgery
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 beneficiaries. Our audit team analyzes all types of healthcare claims for a variety of potential concerns including excessive usual, customary and reasonable (UCR) charges, duplication of claims, compliant coding/billing, unbundling of services and other issues. Our claims review is not intended to impact care decisions or medical practice.
In this Claims Audit Spotlight, we focus on remarkable variations of facility charges for hip replacement surgery, also known as hip arthroplasty. Hip replacement surgery is a commonly performed procedure to assist individuals with hip damage due to arthritis, injury, or other conditions to regain mobility. Given the average life span of Americans, many older adults who receive a new hip are in their 60s or 70s. Artificial hips have limited life spans and some individuals will require a revision surgery to take out the old and replace it.
The surgical procedure time for a routine hip arthroplasty is commonly 90 – 120 minutes, where the surgeon removes damaged cartilage/bone and then positions a new metal, plastic, or ceramic implant(s) to restore alignment and function of the hip.
The cost of hip replacement surgery is a composite of several elements. These typically include the surgeon’s fee, anesthesia practitioner’s fee, facility costs whether performed in a hospital outpatient department, hospital inpatient setting or ambulatory surgical center (ASC) which includes medications and the cost of the hip prosthetic. Additionally, there are often costs for preoperative tests, medical examinations and postoperative care, for example, physical therapy services.
Total Hip Replacement Claim Examples and Related Facility Charges
The case scenarios outlined below provide highlights of three (3) individuals having a total hip arthroplasty and the related charges reported/billed by the facility with CPT code 27130 on the UB-04 claim form/electronic equivalent.
Case One
A 63-year-old male underwent hospital outpatient surgery for right total hip replacement (CPT procedure code 27130) at a hospital located in Colorado.
The hospital submitted their facility claim to insurance with total charges of $202,571.03.
High dollar charges included:
- Operating room for $75,651.14
- Implants for $74,525.00
- Anesthesia for $14,855.77
- Recovery room for $21,940.03
Below is a summary of the hospital charges billed, related ClaimDOC pricing and savings:
Total hospital billed charges – $202,571.03
Hospital’s total reported costs – $17,980.46
ClaimDOC Pricing: $21,576.55
Plan Savings: $180,994.48
Percentage of Savings: 89%
Case Two
A 64-year-old female underwent hospital outpatient surgery for left total hip replacement (CPT procedure code 27130) at a hospital located in Virginia.
The hospital submitted their facility claim to insurance with total charges of $54,968.00.
High dollar charges included:
- Implants for $24,266.00
- Operating room for $ 16,481.00
- Recovery room for $5,184.00
- Anesthesia for $2,496.00
Below is a summary of the hospital charges billed, related ClaimDOC pricing and savings:
Total hospital billed charges – $54,968.00
Hospital’s total reported costs – $12,434.32
ClaimDOC Pricing: $16,299.50
Plan Savings: $38,668.50
Percentage of Savings: 70%
Case Three
A 60-year-old male underwent surgery at an ASC in Ohio for right total hip replacement (CPT procedure code 27130).
The ASC submitted their facility claim to insurance with total charges of $131,104.00.
High dollar charges included:
- Surgery for $104,680.00
- Implants for $20,000.00
Below is a summary of the ASC charges billed, related ClaimDOC pricing and savings:
Total ASC billed charges: $131,104.00
ClaimDOC Pricing: $11,817.22
Note: ASCs do not file cost reports – actual ASC surgery costs, unknown.
Plan Savings: $119,286.78
Percentage of Savings: 91%
The Takeaway
Hip replacement surgery is typically a preplanned/scheduled event. It is key for individuals to understand and discuss what the total price of hip replacement surgery will be with their practitioner/facility/staff and retain a record of the information provided. If the individual receives a higher medical bill than expected, this documented information can be helpful. Consider available options of where to have surgery, i.e., hospital outpatient or an ASC, whether the surgeon, anesthesia provider and facility is in-network or out-of-network and inquire about other related preoperative and postoperative charges.
As reflected in the case examples above, costs can vary by thousands of dollars depending on a range of factors, including the type of facility (hospital or ASC) where the surgery is performed, the facility’s markup of implants, supplies and items/services if egregious or not, geographic location, and other considerations. Bottom line, facility charges, surgeon charges, and anesthesia charges influence the ultimate cost for employers and consumers.
While hospitals, ASCs and practitioners may charge/bill any amount they elect for services/surgeries performed, egregious fees, unbundling of services, and/or incorrect coding/billing can complicate matters for members to understand their bills and payments, impact the collection of patient balances, build a reputation of improper billing, create burdens for patients having no insurance and a host of other issues.
Our goal at ClaimDOC is to use benchmark charges and costs nationally to negotiate fair and ethical payments. Employers turn to us to seek 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.