Provider Bills: The Wild World of
Hospital Chargemasters
Stacy M. Borans, MD
Chief Medical Officer
Advanced Medical Strategies
Learning Objectives
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Understand how to assess provider bills for
unbundled charges, inflated charges, billing
errors, level of care issues, and coding errors.
Be aware of the bill adjudication options.
Know when to refer a bill for an audit.
Know the differences among the various audits
available.
Understand the role of the Stop Loss Policy/Plan
Document in a Provider Bill Audit.
Provider Bills: Golden Rule
If you’ve seen one claim, you’ve seen one
claim.
Provider Bills: The Basics
Required Elements for Evaluating Claims:
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UB 92 or HCFA 1500
Itemized Claim
Stop Loss Policy/Plan Document Language
Operative Report if Procedure Completed
Spinal Fusion—Implants
 Gastric Bypass
 Cochlear Implants
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Provider Bills: Medical Necessity
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Critical Care Levels easiest to assess
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Ventilator without tracheostomy
Blood Pressure support drugs-Dopamine, epinephrine,
etc.
Invasive lines-Swan Ganz, arterial lines
Other levels of care are more difficult to
assess
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Telemetry-Monitored Setting
Acute: Medical, Surgical or Rehab
Subacute: Medical or Rehab
Skilled
Provider Bills: Medical Necessity
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Be aware of potential
experimental/investigational issues
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Gamma Globulin
Avastin, Erbitux, Rituxan-Other Chemotherapeutic Agents
CellCept-primarily used to prevent rejection in transplant
patients
Epogen, Neupogen, Remicade and Growth Hormone
Always helpful to have a clinical opinion before
reimbursing or denying the claim
Provider Bills: Infants
Provider Bills: Infants
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Indications for Nitric Oxide Use:
Infants >34 weeks gestation
 Hypoxic respiratory failure with pulmonary
hypertension
 Conventional treatments have failed
 Should be performed in centers with ECMO
capability
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Provider Bills: Infants
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NICU has multiple Levels of Care:
Level
Level
Level
Level
4
3
2
1
Cardiac ICU/ECMO
Neonatal ICU
Transitional Nursery/Step Down
Well Baby Nursery
Provider Bills: Inflated Charges
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Case Study:
53 year old female with past medical
history significant for multilevel
degenerative disc disease. Admitted to
hospital for anterior discectomy and
fusion.
LOS 6 days
 Total Billed Charges $235,000
 PPO discount 20%
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Provider Bills: Inflated Charges
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Quant.
4
2
2
1
2
2
2
2
5
6
2
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Supply/Implants
Price
BONE DWL FZ 18X23 4012
BONE GRAFTON PUTTY 10C
TSRH3D PC CON ROD 6.35
TSRH3D CONN MED 837913
SCREW TSRH3D 637-635
SCREW TSRH3D 637-640
SCREW TSRH3D 837-735
BONE OSTEOPHIL RT 10CC
TSRH3D CONNECTR 6.35-S
TSRH3D LOCK SCRW 82812
INFUSE-MED 7510400
$66,000.00
$12,962.50
$3,430.00
$4,968.00
$4,344.00
$4,344.00
$4,344.00
$14,220.00
$24,840.00
$3,963.00
$52,600.00
SUBTOTAL:
$196,265.50
Provider Bills: Inflated Charges
Provider Bills: Inflated Charges
Provider Bills: Inflated Charges
Provider Bills: Inflated Charges
Provider Bills: Inflated Charges
Provider Bills: Inflated Charges
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Potential Charge Issues:
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Implants/Devices greater than 50% of total billed
charges
Daily Room Rates-ICU Bed Rate >$2,000/day, MedSurg Bed Rate >$1,000/day
Dialysis-Monthly Charges greater than $7,000 or
individual Dialysis Charges greater than $2,000
Erythropoietin (EPO)-Charges greater than $1,000
Individual Chemotherapy/Radiation Therapy Claims
greater than $15,000
Provider Bills: Inflated Charges
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Hospital of The University of Pennsylvania
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Philadelphia, Pennsylvania, 19104
Hospital type: Voluntary Nonprofit Other
Data for the period ending: 6/30/2006
Hospital Charge Comparison
(http://www.hospitalvictims.com)
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UPenn:
Hospital Mark-Up: 473%
Cost to Charge Ratio:
0.21
Total Costs to Hospital:
$845,781,104
Total Charges to Patient:
$3,997,318,578
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Johns Hopkins:
Hospital Mark-Up: 122%
Cost to Charge Ratio:
0.82
Total Costs to Hospital:
$1,088,071,198
Total Charges to Patient:
$1,327,547,538
Provider Bills: Inflated Charges
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Mathematics 101: Inpatient Bills
General rule of thumb to assess charges:
Divide the total billed charges
by the length of stay.
This will give you the average billed charges/day.
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Assess excessive charges in the context of level of care
provided.
Provider Bills: Billing Errors
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Billing errors come in a variety of forms:
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Duplicate Charges
Incorrect Quantities: Cochlear Implants
Incorrect Pricing
Surgical Misadventures:
unused and/or incorrectly billed hardware
28 hour days for ventilator or respiratory care
Equipment used for multiple patients
Provider Bills: Billing Errors
Provider Bills: Billing Errors
Provider Bills: Billing Errors
Provider Bills: Billing Errors
Provider Bills: Unbundled Charges
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Tests and other services that are
automatically performed as a panel,
group or set, should be billed as
a single service.
When a provider breaks these services
out of the bundled group and bills them
individually, the provider is deemed to be
"unbundling."
Provider Bills: Unbundled Charges
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Daily Nursing Charges or daily ventilator
charges in addition to room and board
Lab drawing fees for blood tests
Airway clearance and oxygen in addition
to ventilator charges
Chemistry Panel Charges plus individual
electrolyte charges
Solutions and mixture charges for IV
medications
Provider Bills: Unbundled Charges
Provider Bills: Unbundled Charges
Provider Bills: Multiple Issues
Provider Bills: Adjudication Options
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Adjudicate claim with the PPO discount
Attempt negotiation with hospital…
even if PPO discount is in effect
Clinical Review if Medical Necessity Issues
identified.
Provider Bill Audit if excess charges/
billing errors identified.
Policy Language
(Both Stop Loss and Plan Document)
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Detailed UCR Language is to your
advantage.
Carve out drugs: 200% of AWP
 Carve out Implants: Invoice plus a percentage
 Percentile at which charges will be covered for a
geographic region—75th, 85th, 90th
 Cite sources: Ingenix, Red Book, etc.
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Policy Language
(Both Stop Loss and Plan Document)
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Specific and Detailed Definitions are most
helpful:
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Experimental/Investigational Language
UCR Language
Medical Necessity/Custodial Care
Proactive Language is also helpful:
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50% notices
Premium discounts for aggressive claim management
Provider Bills: In Summary…
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All claims are NOT created equal.
If you think you have a billing issue, you
probably do.
Many billing issues can be identified internally by
reviewing complete claim information.
Identify trusted resources for assistance.
Investigate all your options prior to adjudication
Detailed Stop-Loss Language is helpful
Audit Options:
Reasonable & Customary
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Advantages:
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Significant Savings
Prompt Turnaround
Disadvantages:
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No Opportunity to look at Medical Necessity
Provider Appeals
Possible confliction with PPO contract
Audit Options:
Billing Errors
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Purpose: Identify billing errors and
discrepancies.
Resources:
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Coding Expertise
Clinical Expertise
Process:
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Review of Plan Document
Line-by-line adjustments made to itemized charges
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Removal of Inappropriate Charges
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Duplicate Charges
Unbundled Charges
Coding Errors
Adjustments to LOS, LOC and Utilization
Audit Options:
Billing Errors
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Generate Report
Presentation to Provider
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Sign-off
Appeal
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Advantages:
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Negotiation/Settlement/Sign-off
Provider Less Likely to Appeal
Disadvantages:
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Audit Does Not Address R&C and May not Yield
Significant Savings
No Opportunity to Review the Medical Record and
Medical Necessity
Audit Options in Summary
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Weigh the Advantages and Disadvantages
Between Audit Types
If the Claim is In-Network Ensure the PPO
Contract Supports the Audit Process. Avoid
Accessing Contracts With Audit Restrictions.
Every Claim is Unique –
Find the Most Appropriate Audit Solution
Understand and Enhance Policy Language to
Support the Audit Process
Questions/Comments
Thank you for attending!