# Reasonableness Review Methodology How to assess whether medical charges are "usual, customary, and reasonable" (UCR) without testifying as a billing expert. Loaded by Step 5 of the parent SKILL.md. **Operating principle.** Produce a benchmark **range**, not a single "reasonable amount." The fact-finder (or a retained billing expert) decides reasonableness. Naming benchmark sources, percentiles, and methodology is the deliverable; opining is not. --- ## Three Distinct Numbers (do not conflate) | Number | What It Is | Where It Lives | |---|---|---| | **Chargemaster (billed)** | Provider's list price. Largely arbitrary. | UB-04 / CMS-1500 "Total Charges" | | **Allowed amount (negotiated)** | What an insurer's contract permits | EOB "Allowed Amount" column | | **Paid amount** | What was actually transferred (insurer + patient) | EOB "Plan Paid" + "Patient Resp." | For hospitals, chargemaster commonly runs materially higher than the Medicare-allowed amount for the same service; actual multiples vary by facility, code, and year and must be retrieved, not estimated `[VERIFY per facility/code/CY]`. A chargemaster total alone is not evidence of reasonableness — flag every reasonableness analysis that relies on chargemaster as the only data point. --- ## Benchmark Sources | Source | Type | How to Cite | Notes | |---|---|---|---| | **FAIR Health FH Benchmarks** | Commercial allowed amounts by geozip and percentile (50/75/80/90th) | "FH Benchmarks, geozip ___, percentile ___, retrieved [date]" | Subscription required; commonly used by courts and arbitrators. `[VERIFY: subscription / data run obtained]` | | **Medicare Physician Fee Schedule (MPFS)** | CMS-set rates by HCPCS, locality, and year | "CMS MPFS, locality ___, CY ___, HCPCS ___" | Public, free; often cited as a floor. Locality matters. | | **Medicare OPPS / IPPS** | Outpatient APC and inpatient DRG rates | "CMS OPPS APC ___, CY ___" / "CMS IPPS DRG ___, CY ___" | Use for facility benchmarking. | | **State workers' comp fee schedule** | State-regulated maximums | "[State] DWC fee schedule, CY ___, code ___" | State-specific; many PI cases borrow as a reference even if WC does not apply `[VERIFY admissibility]`. | | **Commercial allowed-amount data from case EOBs** | Real-world payer rates | "EOB [doc-label, p. N, Bates ___]" | Strongest evidence: it is what was actually paid in this case. | | **Hospital price-transparency files (CMS rule)** | Posted negotiated rates and self-pay rates per facility | "[Hospital] machine-readable file, retrieved [date]" | Quality varies; often incomplete. `[VERIFY]` each retrieval. | **Do not invent.** Never quote a FAIR Health percentile, a CMS rate, or a hospital posted rate that has not been actually retrieved. If no benchmark was run, the deliverable says "benchmark not obtained — recommend billing-expert review." --- ## Geographic Adjustment - FAIR Health uses **geozip** (first three digits of ZIP). - Medicare uses **locality** (state or sub-state region). - Workers' comp uses state. - Always match the benchmark's geography to the place of service, not the patient's home. ## Percentile Methodology When using FAIR Health or comparable percentile data, present the band — typically 50th, 80th, and 90th percentile — and note where the case charge falls. Do not pick a single percentile as "reasonable" without explicit direction from counsel; courts and arbitrators differ. --- ## Letters of Protection (LOP) Scrutiny Where treatment is rendered under an LOP (provider holds bill pending settlement): - Billed amounts under LOP are **commonly higher** than market rates. Treat with skepticism. - Many LOP providers do not have payer contracts; chargemaster IS the bill. - Disclosure of LOP, referral source, and any factoring/discounting of the receivable is required in some jurisdictions and is fertile cross-examination ground `[VERIFY: jurisdiction]`. - Recent appellate trends in some states (e.g., Florida) have addressed admissibility of LOP-related amounts and discount evidence — flag for counsel research `[VERIFY: current jurisdiction law]`. Action: tag every LOP-billed line item, present chargemaster *and* a Medicare/FAIR Health benchmark side-by-side, and surface the LOP disclosure question. --- ## Billed vs. Paid (Jurisdictional) The skill's main jurisdictional table (in SKILL.md) governs which measure is admissible. This reference adds the operational guidance: - **In paid-only jurisdictions** (e.g., California per *Howell v. Hamilton Meats*) `[VERIFY current law]`: the recoverable measure is the amount actually paid or owed; chargemaster differential is not admissible to inflate. Carry billed for context, present paid as primary. - **In collateral-source-rule jurisdictions**: billed charges may be admissible as evidence of value; collateral payments cannot reduce. Present billed as primary, paid as secondary. - **In hybrid / "reasonable value" jurisdictions**: present both columns plus a UCR benchmark range; the fact-finder picks. When counsel has not specified, default to carrying both columns and flag the question in Checkpoint B. --- ## How to Present the Reasonableness Section A short table per major service category: | Service | CPT/HCPCS | Billed | Paid | MPFS Reference (locality, CY) | FAIR Health 50th / 80th / 90th (geozip) | Notes | |---|---|---|---|---|---|---| Then 1–3 sentences interpreting (without opinion): - "Charge falls at the 90th percentile of FH commercial allowed amounts for geozip ___." - "Billed amount is approximately N× the MPFS rate for the same code in this locality." - "Paid amount aligns with the negotiated rate from [payer] per EOB." Stop short of "the reasonable charge is $X." That is for the fact-finder or a retained billing expert. --- ## When to Recommend a Billing Expert Flag for retained billing expert when any of the following are true: - Total billed exceeds $100,000 (or jurisdiction-specific threshold per counsel). - LOP-billed treatment makes up a material share of damages. - Reasonableness is the central disputed issue (defense argues paid-only or UCR). - A specific code's reasonableness requires PTP/MUE analysis or specialty-specific norms. - Hospital chargemaster is a load-bearing damages exhibit. A CPC (Certified Professional Coder), CCS, or CHC credential is typical for billing experts; a CPMA (Certified Professional Medical Auditor) is common for compliance-style audits. --- ## What This Reference Does NOT Do - Does not contain percentile values or rate tables (must be retrieved live from each authority). - Does not constitute UCR-expert testimony. - Does not resolve jurisdictional admissibility — that is counsel's call. ## Anti-Hallucination Rules - Never quote a FAIR Health percentile, MPFS rate, or hospital posted price without an actual retrieval cite (URL, file, date). - Never describe a "typical UCR" or "average reasonable charge" as if it were a known number. - Where data was not obtained, write "benchmark not obtained" — never approximate.