Rules regarding correct billing for medical services are codified in the United States, yet it is not always clear to laymen whether or not they are being adhered to. In this article, medical billing expert Rebecca Reier explains how reasonable healthcare rates are determined in the US and the need for patients to be vigilant against unlawful upcoding of services.
Can you give us a brief overview of what a medical billing expert is required to do?
The Medical Billing Expert:
- Authenticates the services of the provider by auditing the medical record in relation to the charges billed.
- Identifies the usual, customary and reasonable (UCR) charges per the American Medical Association definitions[1] with application at the 75th-80th percentile.
What are the most common situations that give rise to medical billing lawsuits?
Personal injury cases are the most frequent because medical expenses are listed at charge rates “not within expected parameters” by the payer, be it a plaintiff or a defendant.
How are “usual, customary and reasonable” rates determined?
The determination of UCR charges begins with validation of the service and correct coding of the service. It is then followed by an application of the 75th-80th percentile of geographically located charges. The AMA definition refers to the non- discounted fee schedule of a provider.
The commercial/government payer definition of UCR is that of a calculated discounted rate. Such a figure is generally not submissible within states with a collateral source law prohibiting the use of payer information or write-offs. This discounted UCR is determined solely by the payer within their budgetary and contractual constraints.
Personal injury cases are the most frequent because medical expenses are listed at charge rates “not within expected parameters” by the payer.
What constitutes a UCR charge and what precisely defines the value for customary rate?
The following discussion relates to the use of a non-discounted rate per the AMA policy (i.e. the “sticker price”).
- The American Medical Association[2] policy states the conditions for which a charge is customary and reasonable and NOT a discounted rate. This definition is clearly an industry standard.
- The value of fees is most often determined by access to a reliable database with a range of percentiles in a specific geographic area for a specific service (per CPT, HCPCS or DRG codes). These figures fit The AMA definition, which states that “customary” refers to the range of usual fees charged in the same geographic area for the same services without a discount.
To further define the UCR, the American Association of Nurse Life Care Planners has published that the range of customary fees “typically fall within the 75th to 80th percentile[3].”
What should policyholders do after receiving an unexpected bill for medical care that was not covered by their insurance?
It behooves the patient to fully understand and confirm their insurer’s coverage and non-coverage of services prior to scheduling care. Once a bill is received, ask to see an itemised statement of charges and compare them to what the patient actually received. For example, was the patient billed for three units of blood but only received one? Was there a “trauma team” charge of tens of thousands of dollars when the patient simply went home without any “trauma care” provided?
There are also free patient websites available such as FairHealthConsumer.org that provide useful information about customary charges for services and procedures and insurance allowance amounts in the patient’s zip code. It includes the facility, surgeon and anesthesia charge data.
The federal government has mandated that all hospitals provide a copy of their “chargemaster” or most common procedures on their websites. The No Surprises Act regarding emergency care requires individual states to provide ways of valuing the charges for the in-network and out-of-network scenarios of emergency care. Definitions and cooperative efforts are published by each state and each hospital.
It behooves the patient to fully understand and confirm their insurer’s coverage and non-coverage of services prior to scheduling care.
How do you prepare to deliver evidence?
First rule: The provider cannot bill for a service not provided. The provider cannot bill for a cost not incurred. The medical record must support the services provided in a correctly coded manner.
Second rule: The charges are at or less than the 75th-80th percentile for the same service in the same geographic area.
Once these two conditions are assessed, a summary report is presented with references to sources of information for evaluation of the services, correct coding and indication of the 75th-80th percentile as is customary.
What are some of the most complex/interesting cases that you have worked on?
Outstanding cases fall into two categories – charges for services that were blatantly not rendered or documented and fees charged that simply are “off the chart” to a degree that any layperson would question their reasonableness.
Some glaring examples of cases that I have reviewed and provided testimony:
- A surgeon billed $400,000 (eight times UCR) for a surgery involving a musculoskeletal joint. The operative report clearly indicated that the provider did NOT actually perform that procedure!
- A medium-level office visit was charged as a high-level office visit (upcoded and no other services provided) with a fee of $1,540. The 75th percentile charges were $213 or less.
- A physician billed for a certain procedure performed in another facility (ambulatory surgery centre) where the patient received two bills – one for the physician and one for the facility. The physician is not entitled to the portion of the fee that includes “facility overhead”. The physician did not incur this expense. Such a difference resulted in a $12,000 fee reduced to a UCR fee of $3,500.
- Hospital charges that were 21 times cost for spinal implants with NO overhead cost to the facility (i.e. $157,000 for implants that cost the facility $7,500).
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What do you expect to see in the future of medical billing litigation?
Certain specialties have seen a major surge in providers – and an accompanying surge in excess or upcoded fees. It has been more than a decade since the AMA stated that its purpose for a UCR policy was to “prevent fee gouging by unscrupulous providers”. The issue is now more pertinent than ever, with an increase in demand of healthcare services and a simultaneous decrease in compensation by commercial and government payers. Criminal cases are now appearing for such abuses as upcoding and unbundling of charges.
In summary, the rules to identifying medical billing abuses – either for fraud or excessive fees – are a battle fought in litigation scenarios in every state. There is clearly a need for the legal community and the patients who are assessed unreasonable fees to have a recourse regarding the issues of upcoding, medical record documentation errors and customary ranges of fees.
Rebecca Reier, President - RN, BS, CRNA (Ret.), CCS-P
Tel: +1 927-548-3064 ext. 7
About Rebecca Reier
“As President of Med-Econ, Inc., a medical practice management company, my experience spans a period of 45 years involving billions of dollars in coding and billing for medical charges for hospital services, ambulatory surgery centre and physician groups ranging from single practitioners to 40-member groups in over 22 specialties. Evaluating medical care fees, accounts receivable, coding and medical record documentation have been a daily activity for me for over 45 years.
I am experienced as a medical billing expert specifically for medical billing litigation cases for major law firms in 39 states. I have provided services for plaintiffs, defendants and life care planners in addition to acting in the capacity of a patient advocate as a medical billing expert witness for attorneys representing patients being charged excessive fees by providers. I have made multiple presentations regarding the role of the medical billing expert witness. I have also authored Chapter 28 in the AALNC ‘Textbook on Principles and Practices Fourth Edition’ regarding the medical record and the concept of usual, customary and reasonable aspects of medical charges.”
[1] The AMA adopts as policy the following definitions:
(a) a "usual” fee means that fee usually charged, for a given service, by an individual physician to his private patient (i.e. his own usual fee);
(b) a fee is “customary” when it is within the range of usual fees currently charged by physicians of similar training and experience, for the same service within the same specific and limited geographical area; and
(c) a fee is “reasonable” when it meets the above two criteria and is justifiable, considering the special circumstances of the particular case in question, without regard to payments that have been discounted under governmental or private plans.
[3] Life Care Planning and Case Management 4th Edition Chapter 30 p 731. “When obtaining pricing for services and items, it is important that the costs be usual, customary and reasonable (UCR) and not discounted. Usual and customary typically fall within the 75th or 80th percentile.”
