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Reasonable Charge Analysis

Medical Cost Containment

Reasonable Charge Analysis


Reasonable Charge Analysis SFUR is routinely retained to provide a usual and customary reasonable charge review (UCR) of charges submitted by the providers. SFUR will review all bills and associated clinical documentation. SFUR will review and compare with standard coding guidelines and customary and reasonable rates according to criteria and methods. Reasonable Charges (billed charges net of any adjustments are itemized and listed. Charges that have no reductions are a result of provider or facility charges which are correctly coded and less than or equal to the corresponding benchmark UCR amounts. Totals for both gross Billed Charges and Reasonable Charges are calculated.


Reasonable Charge Analysis is performed for general liability, personal injury, workers compensation, litigation cases, and numerous other scenarios.

The objective of this service is to provide a reasonable charge summary for gross charges reviewed.  Over a 15 year period, SFUR has averaged 58% lower reasonable charge amounts when compared with the bill charged amounts.

SFUR charges a percent of gross charges for this service.


Below is an example of real world Scope of Analysis used in a Reasonable Charge Analysis

Scope of Analysis:

Other than commenting on body system charges that patently have nothing to do with the claim in question or charges that precede the date of loss, this analysis will not address medical necessity, utility or appropriateness of treatment.

Rather this analysis is restricted to issues pertaining to coding of services and reasonable charges. Billed charges are reviewed and compared with standard coding guidelines including CPT and the National Correct Coding Initiative (NCCI). The Current Procedural Terminology (CPT) code set is a medical code set maintained by the American Medical Association through the CPT Editorial Panel. The CMS developed the National Correct Coding Initiative (NCCI) to promote national correct coding methodologies and to control improper coding leading to inappropriate payment in Part B claims. Charges for procedures which do not meet these standards are adjusted. Following this assessment, reasonable charges are estimated as described below. Facility (Hospital or Ambulatory Surgical Center) and Provider

Reasonable Charges :

Reasonable fee estimates are derived from the FAIR Heath Benchmark database at the 75th percentile. This database reflects actual charge data submitted from hospitals within the same “geozip” (first 3 digits of the zip code).

“FAIR Health is a national, independent, nonprofit organization dedicated to bringing transparency to healthcare costs and health insurance information through data products, consumer resources and health systems research support. FAIR Health oversees the nation’s largest collection of healthcare claims data, which includes a repository of over 23 billion billed medical and dental procedures that reflect the claims experience of over 150 million privately insured individuals, and separate data representing the experience of more than 55 million individuals enrolled in Medicare. Certified by the Centers for Medicare & Medicaid Services (CMS) as a Qualified Entity, FAIR Health receives all of Medicare Parts A, B and D claims data for use in nationwide transparency efforts. FAIR Health licenses its privately billed data and data products—including benchmark modules, data visualizations, custom analytics, episodes of care analytics and market indices—to commercial insurers and self-insurers, employers, hospitals and healthcare systems, government agencies, researchers and others”

These are charge data, that is, what facilities and/or doctors charge the patient, and are not payment data, that is, what the insurer, such as Medicare or Medicaid or a PPO or an HMO, pays. For purposes of Medicare collecting data on physician practice expenses and trends in the cost of various CPT codes, Medicare encourages doctors in submitting a bill to charge whatever the physician charges for a particular CPT code. For surgical assistant charges and multiple surgical procedure encounters, CMS adjustment rules are applied.

Anesthesiology Reasonable Professional Charges:

Anesthesia Reasonable Professional Charges are based on FairHealth data when actual surgical time is not provided. When surgical time data is provided, reasonable charge estimates are based on allowable base units (intensity/complexity of anesthesia) and time units (duration of the anesthesia, 15 minutes = 1 unit), multiplied by an anesthesia conversion factor. Based on the 2017 ASA commercial conversion factor survey results, the national average commercial conversion factor was $78.57, ranging between $70.87 and $83.38 for the five contracts. The national median was $72, ranging between $67 and $76.30 for the Charges related to medical services which were medically unnecessary or unrelated to the acute injury, as determined by independent peer review are excluded from this analysis.
five contracts.

The median figure is used for analysis. In the 2016 survey, the mean conversion factor ranged between $68.33 and $74.36, and the median ranged between $64 and $71. In contrast, the current national Medicare conversion factor for anesthesia services is $22.0454, or about 28.1 percent of the 2017 overall mean commercial conversion

Ambulance Reasonable Charges:

Ambulance Reasonable Charges are based on 200% of the locality specific Medicare allowable amount (including base rate and mileage.

Other Charges:

For some items, comparable fees are not listed in the references above (for example, certain orthotic devices). In such instances, the charge is compared to benchmark UCR rates established by the US Department of Veterans Affairs:

“Reasonable Charges are based on amounts that third parties pay for the same services furnished by private-sector health care providers in the same geographic area. Reasonable charges are calculated for inpatient and outpatient facility charges, and for professional or clinician charges for inpatient and outpatient care.” (https://www.va.gov/COMMUNITYCARE/revenue_ops/payer_rates.asp)

Instances when CPT codes are not provided with the statement we received:

Based on the documentation and statement descriptions included, CPT codes are appended. Bill is adjusted per UCR (usual, customary, and reasonable). Miscellaneous ASC and hospital facility supplies, without line item detail or available comparisons are allowed at a rate using the same ratio as the codable services.


All of the opinions contained in this report are based upon my review of the file materials, my training and experience and the documents and industry standard data sources. I am qualified to conduct this analysis based on my Certified Professional Coder (CPC) Certification and my Medical Doctor (MD) License in addition to my industry knowledge, experience and training. My Certified Professional Coder Certification was initially issued by the American Association of Professional Coders (AAPC) in 2005. In order to become credentialed with the AAPC, I was required to sit for and pass national competency exams which measured my level of proficiency of ICD-9/10, CPT and HCPCS coding rules and guidelines. In order to maintain my certification, I must complete 18 hours of annual continuing education credits. I have over 16 years of experience with the coding of healthcare services and claims review.