EP370: How Do Some Health Systems Manage to Charge 6x the Cost of a Specialty Pharmacy Med to Infuse It? With Erik Davis and Autumn Yongchu

How Hospitals Hide 6x Markups on Specialty Drug Bills, With Erik Davis and Autumn Yongchu. The Billing Tricks Behind 6x Markups on Infused Specialty Pharmacy Drugs. Episode 370.

Stacey Richter talks with Erik Davis and Autumn Yongchu of USI Insurance Services about how some health systems manage to charge up to six times the cost of an infused specialty pharmacy drug—and the specific billing tactics, from miscellaneous J-codes to bare revenue codes, that make those markups nearly impossible to catch.

WHAT YOU'LL LEARN

✅ Why Medicare Part B caps buy-and-bill markups at ASP + 6% for commercial-like patients, but no such guidance exists for commercial payers negotiating off chargemaster rates

✅ How J-codes identify the specific specialty drug used in a procedure—and how hospitals obscure markups by billing a vague "miscellaneous chemotherapy" J-code instead

✅ How revenue codes function like a menu category header, letting a hospital bill for "some seafood" without disclosing which dish or how much

✅ Why requesting line-item charges, per Marshall Allen's advice in Never Pay the First Bill, is the essential first step to catching inflated bills

✅ How hospital charges make up over half of many employers' healthcare spend, making these opaque billing practices a high-stakes problem

✅ Why coding opacity, more than any single contract term, is what allows 6x markups to survive scrutiny

WHY THIS MATTERS

A patient's coinsurance and an employer's premium both scale with the size of the bill, so when a hospital bills a vague code instead of the actual drug used, no one downstream—patient, payer, or auditor—can verify whether the price is fair. Davis and Yongchu's breakdown of J-codes and revenue codes gives plan sponsors the specific vocabulary needed to demand transparent, auditable bills instead of accepting opaque ones.

MENTIONED IN THIS EPISODE

EP369 with Keith Hartman, RPh: Apple Podcasts | Spotify | Other Apps

=== LINKS ===

🔗 Show Notes with all mentioned links: Episode Page

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00:00 Introduction.

07:33 How do hospitals maximize inpatient bills?

08:05 How can hospitals upcode on specialty pharmacy products?

09:44 "It's really not uncommon to be overbilled and overcharged."—Autumn

11:11 Why do marked up bill charges actually affect the price commercial payers pay?

12:49 "If your payer's not double-checking … how do you know that fraud's happening?"—Autumn

12:52 "If the payer doesn't have the detail to validate what that drug actually is, then are they really checking?"—Autumn

13:33 Why is it so hard to verify what you're actually paying for on a hospital bill?

16:28 How do hospitals maximize profit with outpatients?

17:12 "Really it comes down to contracts and how [the] contracts are written."—Autumn

21:54 "There are … silos within healthcare, and none of them actually talk to each other."—Autumn

24:56 "There are these rules out there, but there are also big loopholes out there."—Autumn

26:13 How can hospitals maximize payments for Medicare patients on drugs that have been out for a while?

29:30 "We just have a tendency to assume … that Medicare has a rate for everything, and Medicare doesn't."—Autumn