Implants are another hot topic for medical cost containment. They’re one of the biggest cost drivers in medical costs for workers’ compensation and auto. A group in California was just indicted for fraud with medical billing.
The law in California allows for a $250 mark-up over the manufacturer’s invoice. This group was buying the implants, marking them up by $1,000’s and then selling them to hospitals, and modifying the invoices to make them appear to be from the manufacturer.
Rising found a similar situation in New York years ago. The law allowed for a percentage mark-up above the cost of an implant (ex. 150%) . Rising noticed very high implant costs from one hospital, their implants were about 10 times more than we were seeing elsewhere. Rising did a background check on this hospital’s supply company and found out it was actually owned by the hospital.
In a legit scenario, if an implant cost $1,000 from the supplier, then the hospital should charge $1,500 maximum. In this example, the hospital bought the implant from their “supply company,” which had already marked it up tenfold to $10,000. Then, the hospital billed at $15,000.
The games are endless. Knowing the actual manufacturer’s rate and the lowest rate for each item allows for alerts and solutions to be created that help curb this costly issue for payers.