The Life Transition Blog

Medical Claims Made Complicated By Secret Prices

There was a terrific article over the weekend by Carla K. Johnson of the Associated Press regarding the lack of price transparency in health care. As Ms. Johnson writes, "Finding out how much a medical procedure costs is more difficult and mysterious than buying a new car. With a new car, there's a sticker price. With health care, there's no starting line for haggling. The deal making happens behind closed doors long before patients get involved ... For the uninsured, the hopsitals and doctors charge more -- sometimes much more -- than what they charge insurance companies." (check out the article at www.associatedpress.com and search for "Health-care marketplace thrives on secret prices")

As a medical billing advocate, I can tell you first hand that the lack of even a "suggested retail price" for medical services makes it so difficult for even informed consumers to make rational decisions when purchasing care. Consider this case study:

You find out you need surgery. Your doctor recommends three surgeons. Two of these surgeons participate in your preferred provider plan. Your doctor's first choice does not. Since you trust your doctor, you call her preferred surgeon first. You speak with the office manager, who tells you that the surgeon's fee for your type of case is about $50,000 and does not include the hospital or the anesthesiologist, etc., but she quickly adds that she will "work with your insurance company to get your case processed out-of-network." After you take a deep breath to recover from the sticker shock, you ask her to get clearance from your insurance plan before you schedule a pre-op consultation.

About a week later, having heard nothing from the surgeon's office, you call back to speak with the office manager once again. She tells you that she has submitted the "codes" to your insurance company and they have agreed to cover the surgeon out-of-network. She then tells you that you will need to pay a deposit prior to surgery "just in case", but that the insurance companies "always" pay her doctor in these situations. You decide to proceed, pay a $7500 deposit, and have your surgery.

About a month after your surgery, you receive paperwork from your insurance company, indicating that the "allowed amount" based on "usual and customary" for your surgeon was just under $5,000 and that your "patient responsibility" is the balance of the charge, since the provider was out-of-network. Imagine your shock when you realize that you STILL OWE nearly $40,000! How can this be? The surgeon's office told you that your insurance plan had agreed to cover your case. What gives?

The first issue is that "usual and customary" (UCR) is a closely guarded secret. Even if you had called your insurance company upfront with the specific procedure codes, they might not have told you those amounts. If they had, you would have found out that UCR in your surgeon's zip code was about $8,500 nowhere near the $50,000 your surgeon charges. Had you know that, you would have known that your plan would only pay 60% of UCR since that is all your out-of-network benefits cover. You could then have made an informed decision about whether you were going to use that particular surgeon.

So what is an informed medical consumer (otherwise known as a patient) to do? Ask questions up front. Lots of them! And if you need help, consider engaging an medical billing advocate before you make any of these decisions.
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