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A medical cost estimate (MCE), or a surgical cost estimate (SCE), is a report prepared for a plaintiff or defendant in a personal injury case to estimate the reasonable cost of a specific procedure or course of treatment recommended by a physician.* Often an MCE is prepared for a single surgical procedure and may be called a surgical cost estimate (SCE). However, an MCE could cover an inpatient or outpatient rehabilitation program, or a series of injections, imaging studies, and/or physician visits.
An MCE usually covers services that will be delivered over a brief period. The economist or life care planner making the cost estimate signs the report. The physician who made the recommendation can co-sign the MCE or sign a separate report.
In comparison, a life care plan (LCP) is a report prepared for a plaintiff or defendant in a personal injury case to estimate the reasonable lifetime cost of care in current dollars for goods and services needed because of an injury. While a single physician may provide the medical opinions, an LCP usually involves services by physicians in multiple specialties and other providers over many years. A certified life care planner always signs the report. An economist may also sign the report if it includes calculation of future costs based on inflation and calculation of discounted present value. An LCP may be co-signed by the physician(s) providing medical opinions.
There are other differences between an MCE and a LCP. An LCP must include substantial background information and history on the injured party, a summary of medical records, and summaries of interviews with the injured party and others (e.g., treating providers, employers, teachers, etc.). An MCE usually does not have this information, particularly if it is signed by an economist. For this reason, an MCE is much less expensive than an LCP. So, it is worthwhile for legal counsel to decide which type of report is appropriate for each case.
There are several reasons for an adjuster or attorney to retain an economist or life care planner to estimate costs rather than rely only on the physician who recommends the services. Physicians may focus only on the services they provide directly and omit the costs of necessary goods and services. For example, a major surgery requires the services of a surgeon, an anesthesiologist, a pathologist, a laboratory, and a hospital or surgery center. Some surgeries also require an assistant surgeon, neuromonitoring services, a radiologist, an imaging facility, implants, a physical therapist, durable medical equipment, drugs, a skilled nursing facility, an inpatient rehabilitation facility, and home health services. A surgeon may focus on the surgeon’s charges and ignore or be unable to estimate the other charges.
Even if the physician remembers to include these components, he or she may not know their reasonable cost. In the normal course of business there is no reason for a physician to see the bills of other practitioners, facilities, or pharmacies. An economist or life care planner has the expertise to access information on healthcare costs from multiple sources. An economist can make the inflation adjustments to past data to estimate current or near-future costs. RPC also has certified coders to be sure we are using data for the correct procedures.
The adjustor or attorney also may want an economist to calculate the reasonable value of all the healthcare services for mediation and trial. In Texas, the reasonable value is the most the plaintiff is entitled to recover for past medical expenses; it is probably the most for future medical expenses as well. Calculating reasonable value of medical expenses requires knowledge of statistics and of the data sources needed to calculate usual, customary, and reasonable charges and to calculate allowed amounts based on Medicare, workers’ compensation, or private insurance policies.
Whether it is best to prepare an MCE or an LCP depends on the facts of each case. However, the difference in the cost of the two reports justifies careful consideration if a full LCP is needed or if an MCE will suffice.
*RPC notes a medical cost estimate differs from a medical cost projection (MCP), which the International Commission on Health Care Certification (ICHCC) has defined as “a condensed, simplified, abstract document that provides an estimate of items and services that an injured or disabled person will, in all probability, require” (https://ichcc.org/certified-medical-cost-projection-specialist-cmcps). The MCP is more like a LCP. It is based on a medical records review, usually covering the last two years of a person’s medical care. An MCP analyzes all care an injured person is likely to need, whereas an MCE only looks at the costs of specific procedures and services.
Lean More About RPC’s Certified Life Care Planning Services and Medical Cost Estimates Here