19 Nov The Story of What Healthcare Charges And What It Costs

I had the privilege of joining the Healthcare Price Transparency Tweet Chat last night. (#hcpt more on simpler here) During the conversation a few topics came up about patients understanding pricing better, the cost of healthcare, and being able to access the information.
This made me think, I am not sure how many healthcare organizations actually understand what their internal cost is to produce a specific episode of care for patients, let alone most healthcare professionals knowing and understanding billing, coding, charges, and reimbursement.
So, I decided that I was going to try and shed a bit of light on this and see if I can help to explain what is the cost to produce an episode of care versus what is the charge of that care to patients.
I know as other healthcare “insiders” read this post, they will begin to argue one point or another, so I am going to be as transparent as possible and share my methodology.
We are going to specifically take a look at the treatment of lung cancer patients, undergoing radiation therapy. I will use CMS data, as well as the most likely scenarios for a treatment for lung cancer. Then I will do my best to think through the cost equation that it will take to produce that same episode of radiation therapy.
We will assume that this is a new patient to radiation oncology, has been referred appropriately, and that workup has been completed. I will use the CPT codes for an outpatient department of hospital. I will also use NCCN for dose fractionation schemes for therapy.
Charges for radiation therapy:
1. New patient consult, level complex (99205): $164.67
2. Simulation: CT Scan for Therapy Guide (77014) $124.54; Set Radiation Therapy Field (77290) $531.94; Radiation Therapy Planning (77263) $158.89; Radiation Treatment Devices (77334) $150.04
3. Treatment Planning {will assume 8 beams}: IMRT Radiation Therapy Plan (77301) $1990.35; Radiation therapy Dose Plan (77300*8) $66.69*8= $533.52; MLC Treatment Devices (77338*8) $$501.16*8= $4009.28
4. Physics: Radiation Therapy Physics Consult (77370) $118.06
5. IMRT Treatments (70Gy in 2Gy fractions): Radiation Treatment Delivery IMRT (77418*35) $405.55*35= $14,194.25
6. Weekly Charges over 6 weeks: Continuing medical physics (77336*5) $43.89*5= $219.45; Weekly Port Films (77417*6) $14.29*6= $85.74; Radiation Treatment Management (77427*5) $178.28*5= $891.40
Total Charges = ~$23,172.13 (give or take a $1000)
Now we will begin to look into the cost it takes to produce that treatment. 
Staff: Radiation oncologist, nurse, medical physicist, dosimetrist, 2.5 radiation therapists, receptionist, nurse navigator, and medical coder/biller.
MD, around 5 hours including 1 hour consult, 15 minute weekly visits, time for treatment planning, simulation, contouring, reviewing plan, new start: $1205
Nurse, around 3 hours for initial consult, weekly visits, end of treatment: $96
Medical Physicist, around a total of 3 hours between IMRT QA checks, calculations, and weekly chart reviews: $288
Dosimetrist may spend on average of 5 hours working on a treatment plan: $240
Radiation Therapists, figure 2.5 therapists to treat on a daily basis, 2 for simulation, and average of 15 minute time slots: $840
Navigator may spend a total of an hour with a radiation therapy patient: $32
Receptionist may spend a total of an hour with a patient during course of treatment: $16
Billing/coder: may spend up to a total of 2 hours on patient: $44
Cancer registrar may spend an additional 1 hour abstracting: $30
Total staffing cost: ~$2791.00
Figure in the amount of capital investments such as Vault: $1M, Radiation Therapy Linac, EMR, and Treatment Planning computers: $5M, Clinic $1M, CT Simulator $500,000, and additional equipment, QA, consumables, and reusable device aids: $1.55M
Total for above: $8.55M
Now, I know this is simple math, but in order to figure out the cost related to the Lung Cancer Patient being treated, I wanted to take into consideration the above costs and figure it into the overall cost to produce the care of the patient.
So $8.55M/(8years(or 4,204,800 minutes) = $2.03/minute
So figure the patient spends a total of around 500 minutes in the department over the course of their entire treatment, the cost of the facility, equipment, and additional resources is an additional: 500 minutes * $2.03/minute = $1015.00
So the total cost to produce the IMRT treatment for the Lung Cancer patient comes to a total: $3806.00
In summary it appears to be the following scenario: A patient would be charged an average of about $23,172.13 for their treatment.
The cost it takes the facility to produce that treatment between staffing, equipment, and the cost of the facility is around $3806.00
If we want to be better consumers and to be able to have more control over the story of how we use care and what we are willing to pay for that care, we need to not only understand what we are charged, but we need to better understand that price it takes the care team to produce that care for us.
I hope this small story of lung cancer charges in radiation oncology will begin to help you think a bit differently.
What will your healthcare price transparency story be?
~CancerGeek