FAIR Health Releases Brief on COVID-19

April 16, 2020

One aspect of COVID-19 that is of great interest but little understood is the potential cost to the nation of inpatient services for those with the disease. On March 25, FAIR Health released a brief estimating those costs and delving into the potential of telehealth for coping with the pandemic.

In the brief, entitled COVID-19: The Projected Economic Impact of the COVID-19 Pandemic on the US Healthcare System, FAIR Health drew on its database of over 30 billion private healthcare claim records, and on estimates of Medicare and Medicaid costs, to project US costs for COVID-19 patients requiring inpatient stays. The report received wide attention from media outlets such as CNBC, Modern Healthcare, Becker’s Hospital Review, Crain’s Health Pulse, Kaiser Health News Morning Briefing, Health Plan Weekly, Business Insider, HealthLeaders, Healthcare Dive, ThinkAdvisor, BenefitsPro and HIT Consultant.

Among the findings reported in the brief:

The total costs for all hospitalized COVID-19 patients may range from a low of $362 billion in charges and $139 billion in estimated in-network amounts to a high of $1.449 trillion in charges and $558 billion in estimated in-network amounts, depending on the incidence rate and severity of the infection in the US population. This finding is based on FAIR Health projections, derived from estimates issued by public health experts, that from 66 million to 198 million Americans may become infected with the novel coronavirus that causes COVID-19, and that from 4.9 million to 19.8 million of them may require inpatient stays.

The total average charge per COVID-19 patient requiring an inpatient stay is estimated at $73,300 and the total average estimated in-network amount per commercially insured patient at $38,221.

FAIR Health estimated the costs of COVID-19 medical care based on proxy codes used by providers. The findings stated above were based on inpatient ICD-10 procedure codes and revenue codes associated with influenza and pneumonia.

DRGs
As an alternative, FAIR Health also calculated US costs for hospitalized COVID-19 patients on the basis of diagnosis-related groups (DRGs) associated with pneumonia. On the basis of DRG, the per-patient average costs for hospitalized COVID-19 patients vary depending on severity as indicated by the DRG code, with DRG 193 for major complication or comorbidity, DRG 194 for complication or comorbidity and DRG 195 for no complication or comorbidity. The total average charges per patient range from $74,310 for DRG 193 to $42,486 for DRG 195. The total average estimated in-network amounts per commercially insured patient range from $38,755 for DRG 193 to $21,936 for DRG 195.

Total costs for all hospitalized COVID-19 patients vary on the basis of which DRG code is used. Assuming the highest projected numbers of infected patients needing inpatient stays, the costs range from $1.469 trillion in charges and $575 billion in estimated in-network amounts (for DRG 193) to $840 billion in charges and $329 billion in estimated in-network amounts (for DRG 195).

Telehealth
FAIR Health also examined telehealth codes commonly used for respiratory infections and their costs. Of the top 10 telehealth codes most often associated with all respiratory infections, the predominant one in 2019 was CPT^®1 99441 (physician/qualified healthcare professional telephone evaluation and management [E&M], 5-10 minutes), which accounted for 50 percent of all telehealth services for respiratory infections. The average charge for CPT 99441 is $43 and the average estimated in-network amount for those commercially insured is $34, making it the lowest-cost service of CPT codes that are used only for telehealth.

E&M codes billed both for telehealth and non-telehealth include 4 of the top 10 codes most often associated with respiratory infections. Among these codes, having telehealth as the place of service in most cases yields cost savings by comparison with all places of service for the same code.

FAIR Health President Robin Gelburd stated: “In this time of profound uncertainty and shared purpose, we hope that the information in this brief is useful to policy makers, payors, providers, researchers and other healthcare stakeholders, and to the country as a whole.”

Marty Makary, MD, MPH, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health and a professor of surgery at the Johns Hopkins University School of Medicine, commented: “As we as a country mobilize every resource to fight COVID-19, people want to know how much it will cost. FAIR Health has helped put a price tag on medical services to care for these patients based on the best available projections using real-world data.”

^{1 CPT © 2019 American Medical Association (AMA). All rights reserved.}