Excessive Markup of CT Scans — What Is a Fair Charge?
Background
ClaimDOC’s comprehensive line-by-line review of claims uncovers errors that basic claim repricing and auto-adjudication do not catch, leading to greater savings for medical plans and plan members. ClaimDOC’s audit team analyzes all types of healthcare claims for a variety of potential concerns including excessive usual and customary charges, duplication of claims, incorrect coding, unbundling of services and many others. Claims review is not intended to impact care decisions or medical practice.
This Audit Spotlight focuses on a patient undergoing computerized tomography services and the associated imaging charges billed by the hospital.
Coding/Billing CT Scans
A computerized tomography scan, also called a CT scan, is a type of imaging that uses X-ray techniques to create detailed images of the body. It then uses a computer to create cross-sectional images/slices of the bones, blood vessels and soft tissues inside the body. CT scan images show more details than an ordinary X-ray.
CT scans may be performed without a contrast agent (dye), or it may be performed with contrast. There are numerous CPT codes to consider when reporting and billing CT scan services, depending on the area of the body being imaged, whether performed without contrast, with contrast or without contrast followed by contrast and further sections/sequences. Additionally, CT scans may be considered a “global” service code (encompassing both the technical component and professional component reported with no modifier), a professional component-only service (reported with modifier 26) or a technical component-only service (reported with modifier TC).
Disparities Identified in Charges for CT Scans
Factors that alter the charge for CT scans can vary significantly depending on:
- The type of CT scan ordered by the practitioner
- The facility type where the CT scan is performed
- If uninsured or insured
- If the provider is in-network or out-of-network
- The location (city/state) where the imaging is performed
Example of Egregious Hospital Charge for CT Scan Services
Patient had two outpatient CT scans performed at a Florida hospital for the diagnosis of peripheral vascular disease. The hospital billed the following CT tests on a UB-04 claim/electronic equivalent:
Hospital outpatient charges included:
- CPT code 75635, defined as CT, abdominal aorta and bilateral iliofemoral lower extremity runoff, with contrast material(s), including noncontrast images, if performed, and image processing and related charge of $36,745.01.
- The hospital’s reported cost for the scan (CPT code 75635) — $169.39.
- CPT code 70498, defined as CT, neck, with contrast material(s), including noncontrast images, if performed, and image postprocessing and related charge of $14,539.38.
- The hospital’s reported cost for the scan (CPT code 70498) — $67.03.
- Contrast (CPT codes Q9967 and J7050) and related charge — $2,234.27.
The hospital’s reported cost for the contrast (CPT codes Q9967 and J7050) — $100.06.
Total Billed Charges: $52,408.66
Total Hospital Reported Cost: $336.48
ClaimDOC Pricing $516.41 based on Medicare outpatient hospital APC rate with markup.
The Takeaway
Charges billed by hospitals for CT scans vary greatly between hospitals. While some inherent costs will always make CT scans a more expensive diagnostic test than an X-ray, many of the extraneous costs of hospital CT scans are avoidable. In the above example, the hospital’s total billed charges of $52,408.66 and the hospitals’ total reported cost of $336.48 for the scans signals the hospital’s markup is egregious. Whenever patients have the option, provider alternatives regarding where to have CT scan(s) performed should be considered and clear estimates of CT scan charges prior to services should be requested.
Hospitals use their chargemaster, a list of procedure codes with corresponding prices for thousands of items/services to bill services provided to generate hospital bills. Hospital rates are typically established by individual hospitals and with few exceptions, are not subject to any limitation of charges in most states. The relationship between the chargemaster markups and hospital revenue, and the variation in markups across hospitals and departments continue to suggest hospitals use markups to enhance revenues. Hospital markups should be held to a point that is fair to all concerned — patients, hospitals and insurers alike.
ClaimDOC’s Comprehensive Claims Review and Goals
The improper reporting of services, coding/billing errors and egregious charges can complicate matters for members to understand their healthcare bills and payments, impact the collection of patient balances, build a reputation of providers charging high fees, create burdens for patients having no insurance and a host of others.
When an individual receives a bill for healthcare services appearing questionable/inappropriate, an inquiry to the provider and/or health plan should be made to obtain an explanation of the service(s), corresponding charges and reimbursement.
Our goal at ClaimDOC is to use benchmark charges and costs nationally to negotiate fair and ethical payments. Our high-quality and expert review of claims identifies and prevents improper medical claim payments and maximizes long-term cost savings opportunities. Employers turn to us 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.