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Implant billing patterns cause concern

A Virginia hospital charged $274,951 for 14 implantables used in a lumbar spinal fusion procedure. The hospital would not provide invoices for the hardware. After medical director review, and using the Qmedtrix database of costs for implants common for that procedure, as well as the profiled standard hospital mark-up rates for those implants, the bill was reduced to $20,668, a savings of 92%.

A Texas hospital charged $186,402 for 46 implant units used in a lumbar fusion procedure. After medical director review, it was determined that only 20 pieces of hardware were used during the procedure. In addition, the hospital billed separately for surgical supplies that are not reimbursable separately as implants. After determining eligible charges, the Qmedtrix database of costs for implants and the profiled standard hospital mark-up rates for those implants were used to reduce the implant charges to $24,926, a savings of $161,476 or 87%.

As these two cases illustrate, the extreme charge mark-ups and lack of provider billing accountability caused by inappropriate implant billing practices have payers concerned.

Over the past decade, implant charges have inherited much of the same pricing issues that drove up charges for pharmaceuticals – lack of pricing transparency, increased demand and the impact of provider and manufacturer relationships. As with pharmaceuticals, tracking the appropriateness of charges based on how they are billed, how they are used and their cost is challenging.

BillChek’s implant review component verifies:

• Whether an implantable is to be reimbursed separately or as a part of a global procedure.
• The average reimbursement for the implant(s) based on the costs or charges as stipulated by the jurisdiction.
• Whether the invoice appropriately documents and corresponds to the operative report.
• Whether the billing entity is allowed to bill for the implant.

This last point is of particular interest, since obscuring the source of implant charges can create confusion and can effectively set up payers to reimburse twice for implants. This is especially true in circumstances where implants that are separately charged are not separately payable, but are considered part of a global payment (i.e. DRG-based reimbursement amounts).

The Division of Financial Services (DFS) and the Three-Member Panel has retained Research & Planning Consultants, L.P. (RPC) of Austin, Texas to assist the DFS in developing a payment method consistent with the Florida Statutes and in compliance with the March 2007 decision in One Beacon v. Agency for Health Care Administration (AHCA), a case which upheld the use Qmedtrix’s methodology in Florida.

Qmedtrix argued, and successfully won a decision that the correct interpretation term “usual and customary” is the average charge in the community rather than a single provider’s charge as stated in the reimbursement manual.

Based on RPC’s report, the DFS and the Three Member Panel have recognized that the reimbursement manual needs to be updated to conform to the statues as interpreted by the Appeals Court.

The DFS and the Three-Member Panel recently held a workshop to review the RPC report and to identify how to establish reimbursement rates for hospital services based upon “usual and customary charges” as defined in the One Beacon decision.

While Qmedtrix awaits an updated reimbursement manual developed by the DFS, Qmedtrix will continue to offer cost-containment solutions that comply with the controlling case law in Florida, and address new billing abuses as they emerge.

Qmedtrix has added the review of charges for diagnostic and ancillary services when performed at an outpatient hospital facility. In addition to the review of outpatient facility surgery charges, BillChek reviews and recommends reimbursement for:

• Radiology procedures
• Laboratory and pathology services
• Emergency room charges
• Hospital-based clinic charges
• Non-emergency urgent care
• Therapeutic services such as infusion therapy
• Physical medicine services, including physical therapy charges billed by a hospital on an outpatient basis, when the therapist is a hospital employee

Hospitals are increasingly billing for durable medical equipment (rentals and new equipment sales) as well as ambulance services. These services are reviewed by Qmedtrix under the ambulance and durable medical equipment bill types, even when billed by a hospital.

Questions or comments? Visit our web site, contact your account manager or call Customer Service at (800) 833-1993.

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