Health Insurance Games

Wurkkos

FlashlightOCD

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I got a bill from an anesthesia service for a whopping $3309.

A rediculously stiff price for giving me one shot, but what confuses me is that the bill says regardless of what my plan says I need to copay, I really only have to pay them $20.

My insurance is an 80/20 PP indemnity [sp?] plan, so I would owe them about $660 assuming my insurance is not in a network with the provider. If my insurance company is in a network plan with them then the insurance company would probably just say $100 is the agreed upon network rate and I would still owe them $20.

What kind of game is going on here? What would I have to pay if I was not insured at all? $100 or $3309.
 

bwaites

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What kind of shot? That is an incredible amount for any kind of work I have seen that only is one shot.

But yes, no insurance, you'd pay the $3309. It has to do with the contracts that are required by Medicare, Medicaid and insurance companies.

Bill
 

FlashlightOCD

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It was a shot to put me to sleep during a medical procedure, one of those nasty procedures you must endure once every few years once you reach a certain age [I don't want to get into graphic detail here], but the bill was just for the knockout shot, not the entire procedure.

I'm not retired so this has nothing to do with Medicare/Medicaid.

Yes, I'm aware of liability and insurance cost that the medical community must meet because of litigation. I do not understand the difference between what an insured person must pay and what an uninsured person must pay.

If you are insured you might be able to pay the entire bill without the very helpful co-pay that the insurance provides, but if not insured your are in over your head.

Why can't the medical community just charge a fair price to everyone [$100], rather than $3000+ that most people without insurance can not possibly afford?
 

bwaites

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If all they did was give you sedation, that charge is way out of line.

Now, here's how it works.

Medicare and Medicaid allow doctors to charge no more than what is charged to them, regardless of what they actually pay. In Washington State, for instance, Medicare typically pays only about 45% of the billed charge, Medicaid (the state version of insurance) pays about 20-25%.

However, because the law says you can't charge less than you charge them to anyone else, people who pay out of their pocket must pay the entire bill.

The insurance companies get charged the whole amount, but they only pay a percentage also, that percentage is supposedly negotiated, buy in reality, they tell the doctors what they will pay and it is a "take it or leave it" proposition.

So, lets say you have 5 people who are going to have a procedure done. The total cost(not what the doctor makes, but the COST) for all the procedures is $5,000. The doctor needs to make $500 for each procedure to make any money. So the cost plus profit is $7500.00 or $1500 per procedure.

2 of the people are Medicare:

Medicare pays 50% of the $3000, or $1500 total

1 is Medicaid:

Medicaid pays 25% or $375 total

1 is insurance, which pays 80%. (They don't usually pay that much, but I'll be generous.)

Insurance pays $1200.

The total paid by those 4 "insurance" programs is:

$1500 + $375 + $1200, or $3075. But guess what, the cost alone was $5000, the doctors profit was $2500 on the procedures, so the cost of the procedures wasn't met, much less the profit.

Guess who gets the bill for the rest!!

The last guy, the one who has no insurance. Since there is no profit, and so far the costs haven't even been met, the doctor then charges the last guy $4000 to try to make it up!

Now this is a vastly oversimplified version, but you get the idea. The insured people and the government have all the cards, the rest, none.

Fair, NO. But that's the way the game is played.

Bill
 

greenLED

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don't get me started on health insurance... /ubbthreads/images/graemlins/mad.gif
I sure hope you can sort things out /ubbthreads/images/graemlins/thumbsup.gif
 

Silviron

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Oh, That truely bites, FlashlightOCD

I'm against socialized medicine, or any kind of government control (beyond just keeping butchers and charlatans out), but the medical industry is definitely "broken" (I blame lawyers for the majority of it).

But, I am not surprised at your experience. 20 years ago I stepped on a needle and it broke off in the bottom of arch of my foot. Thought a doctor could take care of it in his office. (Heck, I could have safely extracted it myself with a razor blade and a pair of needlenose pliers if I could have twisted my leg around enough to see what I was doing. And I have had Army medics do more serious work on me in the field, under fire

Nonetheless, they sent me to the hospital to get it out... Not the emergency room which everyone expects to cost a fortune...I had to make an appointment 5 days in advance....

There, in addition to a orthopaedic surgeon, a was a surgical assistant, a nurse, and an anesthesioligist and a radioligist on standby. As it worked out, A shot of Novocaine, a scalpel and forceps, two minutes of effort on the part of the surgeon and my foot was needle free. A butterfly bandage closed the tiny incision.

My bill? $2,500. And the surgeon's part was the smallest part ($300), even though he was the only one that actually did anything.... and $75 for the novocaine and $ 12.00 for the bandaid.. The rest was just add ons by the hospital that weren't used at all, just "there" in case needed and to protect them from the lawyers. And this was 20 years ago... I'll bet the same thing would cost twice that or more now.

Anyway, I hope you can get this settled to your satisfaction.
 

FlashlightOCD

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Well I don't mind paying the $20 they billed me, and the procedure didn't turn up anything serious so I am happy about that.

I just find it outrageous the way things work, I agree the healthcare system is badly broken.

Typically uninsured = unemployed.

Gouging the uninsured who can't afford it doesn't seem like good practice too me, they will likely just not pay anything. If they billed the uninsured a fair amount to start with [$100 vs $3300] then they would have a better chance of recovering the money, at least that is what I would think.
 

Silviron

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[ QUOTE ]
FlashlightOCD said:
......
Typically uninsured = unemployed........


[/ QUOTE ]

I kind of disagree with you there.... I know of hundreds of people employed full time (or part time at more than one job, or are part time students) by small businesses that don't have health insurance. In my town less than 20% of the businesses provide a health insurance plan. (Most of the businesses here are "Mom and Pop retailers, restrauant & services etc. which just aren't big enough to be able to qualify for a reasonably priced plan.)

And I know a lot of self-employed people who work 60-80 hours a week who can't afford health insurance.

Only if you work for a fairly large organization or a very benevolent small company is health insurance affordable for a person of average income.

And there are many Federal and State (I.E. taxpayer funded) programs which "insure" unemployed people and take care of their medical bills.

It is the hard working people who operate their own small businesses or are employed by those small business owners that get trampled by the broken health care system.
 

FlashlightOCD

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[ QUOTE ]
Silviron said:
I kind of disagree with you there ...

[/ QUOTE ]

You are right, I've always worked for large companies and corporations. My observation is based on my own experience and my statement was tainted by personal experience.

I still do not understand their letter telling me that regardless of what my insurance company co-pay says, they only want $20. I certainly prefer paying $20 over the $660 that my insurance company thinks I owe, but it seems to border on fraud.
 

Hookd_On_Photons

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You will often hear the complaint that the sorry state of America's health care system is proof that the free market cannot be applied to the health care sector. I think the reason health care is so screwed up is that we *don't* have a real free market system.

In addition to what bwaites has described, I would add that the federal government is probably the most powerful influence upon what fees are paid to providers and facilities. Most health insurance carriers negotiate their fees as a percentage of what Medicare pays. Typically, the overall fee structure aims to pay the provider X percent of Medicare reimbursement (where X can be 85% - 130% of Medicare reimbursement). So the cost of medical services is not really subject to the pressures of supply and demand.

Another problem is that the recipient of the service (i.e. the patient) does not bear the full cost of providing the service. There is an inherent conflict of interest built into the system, because the patient is motivated to demand as much as possible because the service is "free" or at significantly reduced cost (e.g. the office visit is perceived to only cost the $20 copay). On the other hand, the insurer is motivated to deny coverage as much as possible, because their profit is derived from the premiums they collect (plus the income gained by investing the premiums), minus whatever is paid to providers or facilities to pay for contracted services. (The percentage of payment obligations to revenue is called the "paid loss ratio"; the insurers typically aim for about 70%, meaning they hope to retain 30% of total revenues).

If you actually had to pay out of pocket for a prescription for Celebrex, you might think twice about having to cough up a few hundred dollars for a month's worth as opposed to less than $20 for a month's worth of tried-and-true ibuprofen or naproxen. While the latter two meds are perceived as "older" and therefore probably obsolete and less effective, there is no medical evidence whatsoever that they are any less effective than the fancy new anti-inflammatories for arthritic pain. So which is the better value? But if your prescription copay is already $20, it might make sense for you to demand the fancier, newer medication because your out of pocket expense is going to be about the same anyway, and your insurer will be stuck with the remainder of the tab.

So why would it be to your benefit to have to pay for a greater percentage of the cost of health care? Because then there would be pressure to drive prices lower. For example, look at refractive corrective eye surgery (e.g. LASIK). It used to be covered by health insurance. After most insurers stopped paying for it, the surgeons charged the prevailing fee (typically in the range of $2500 - 3000 per eye). Due to consumer pressure, the fees charged now average about $1700 (in a range of $500 - $2500, depending upon the exact type of procedure, whether it's "custom", etc.

Of course, price is only one dimension. A savvy patient/consumer is also concerned about quality. But that's a whole other topic, and I could write an entire book about that aspect of health care...

Errr... I think I rambled a bit in that rant. Sorry.
 

Lurker

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FlashlightOCD, I think you are making an incorrect assumption about the price of the anesthesia service you received. It sounds like you are guessing that $100 is the "real" price of the service, based on the provider's request of a $20 copay. By "real" price, I mean the amount of money actually received by the provider. I think that is mistaken. I think what is going on here is that the $3309 is the nomimal price of the service, of which your insurance is paying 80% or $2647. Normally, you would be out of pocket the other 20% or $662, but in this case, the provider is telling you not to worry about the majority of your portion. They are happy to receive the $2647 + $20 copay and close the books on the procedure.

Another way to look at it is that the real price is $2667 (the amount that the provider receives). And your portion is less than 1% rather than the 20% you expected. By billing it this way, the provider saved you a lot of money. You could also think of it as though they gave you a 20% discount on the procedure and arranged it so that the full amount of the discount went to you rather than the insurance company.

If you were a private-pay patient, you may have been presented with a bill for $3309 and been asked to pay the whole thing. Or you may have been offered the 20% discount on it and you would have paid something like $2667.

Some hospitals have gone to a "discounts for everyone" pricing structure recognizing that it is unfair for private-payers to pay significantly more than anyone else. Duke hospital in Durham, North Carolina is a very high-profile hospital that recently implemented this and I am sure some recent news articles about it could be easlily googled.

Now as for why a single shot cost $2667, I am not qualified to answer, but I am guessing that during the procedure you were under the supervision of an anesthesiologist who was responsible for monitoring your vital signs and making sure that you eventually woke up from the anesthesia. This carries a certain amount of liability with it and so you were probably charged a fee that took into consideration the anesthesiologist's time, considerable training, and the cost of his/her malpractice insurance, which is probably quite high. The price may seem ridiculous, but you can be comforted in knowing that if you had died during the procedure, that insurance policy would have paid out a huge, probably multi-milliion dollar settlement to your wife, most of which would have gone to her attorney (who also has high insurance rates).

And by the way, I am not saying any of this is good or bad, but just some of the economic realities of US healthcare.
 

gadget_lover

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There is more at play here than has been mentioned so far.

The "only want $20" regardless of your insurance may well be for tax purposes.

I had a dentist who charged X amount per filling because that's what was reasonable and customary ( R&C) for the area. My Insurance would pay 50% of R&C. If you did not have insurance, he gave huge discount for "cash patients". If you had insurance, he accepted that as full payment, and wrote off the rest somehow. I don't know if it was considered bad debt, gifts to patients, etc, but it worked for him and it worked for us.

A recent overnight stay at the hospital (for observation) produced a bill for $12,000 including a few MRI's and all night long visits from nurses, techs and doctors. The "contracted amount" that could be billed to insurance was $1,100.

Realistically, my 22 hours in the hospital did not take up the full time of even one person, so the incremental cost to the hospital was almost nothing.

I suspect that the extra $10,000 goes on the books as a loss of some sort. I'm equally sure that the hospital routinely settles for cents on the dollar when they have an un-insured person.
 

Hookd_On_Photons

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The provider is almost certainly *not* writing off the difference between "list price" and what is collected. The provider's contract with the insurer probably stipulates that he cannot collect any more than what is paid by the insurer, plus whatever the patient is obligated to pay under his own contract with the insurer.

You can't write off the difference between the "reasonable and customary" fee and what one is actually paid, just as an automobile dealer can't write off the difference between MSRP and the price that is eventually negotiated with the purchaser.

If you *could* write off the difference, there would be a hell of a lot more charitable medical care rendered...
 

gadget_lover

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There is a difference between the car dealer negotiating the price and the hospital forgiving debt. In the once case the price is as negotiated, in the other it's an uncollected debt.

There appears to be something in the tax code that allows deductions for uncollected debt. I sure hope so, since my accountant deducted a bad debt last year.

I also have to wonder how much the astronomical prices have to do with accounting tricks. All of our hospitals are "for profit" businesses now, so there may be some incentive to show multi million dollar per week accountsrevievable.

I could, of course be all wet.
 

FlashlightOCD

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Lurker said:
FlashlightOCD, I think you are making an incorrect assumption about the price of the anesthesia service you received. It sounds like you are guessing that $100 is the "real" price of the service, based on the provider's request of a $20 copay.

You may be correct about my bad assumption, I haven't even seen the EOB from my insurance company yet, but the way the statement was phrased it led me to that assumption. I'll quote [this is not a personal correspondence so I hope it does not violate any board rules]:

"At this time we may not be in network with your plan. Therefore, although your explanation of benefits may reflect a higher amount due, you are only responsible for this copay amount" [$20.00].

I do not know what R&C charge is for this service but I suspect it is well under $3309. I agree $100 is probably too low considering the high cost of liability insurance.
 

James S

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All of our hospitals are "for profit" businesses now

Actually, the figures in America from 2002 (which are the first ones I found) are 70% are non-for profit, 10% are for profit and the remaining 20% are run by the city or county some other public institution. The bulk of the for profits seem to be specialty surgical clinics or specific focus hospitals that specialize in something. There are very few general purpose for profit hospitals, because there is no profit in it :)
 

richpalm

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Do not get me started on a right wing tirade about medical... after working in that field I am very angry and cynical with a major chip on my shoulder.

I had a hospital stay for depression last year-$18000 with no insurance... so what do I do when I get sued? Drink again? Plug a hose into my truck exhaust and overdose after parking in the woods? It seriously looks likely-that's the plan. I'm pretty much washed up and I've lived long enough anyway... don't really wanna stick around. (Since I haven't worked for a year and a half, those nice lights in my sigline are irrelevant now.)

The n*****s, illegal aliens and "protected minorities," anyone other than White folks, get it all handed to them for nothing. Saw it happen all the time.

I don't go to doctors any more-after working with them, in my experience, they're all freaking nuts. They really are, with no personalities at all. Long as I'm dead before I hit the floor.

To be frank, I'm tired of this whole society which takes care of everyone but it's own-if I had half a chance to leave the country, I'd be gone. I'm pretty fed up.

Just a rant-I don't want anyone "feeling sorry for me." Just want out.

Rich
 
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