First in a series.
Many people are hugely surprised to know that health-care prices can vary dramatically, by as much as a factor of 10 or more. Just look at our pricing lists, gathered by telephone, for a sample.
If you’re insured, sometimes it’s not an issue, if you know that you’re visiting an in-network provider. But sometimes even an in-network procedure can have a co-pay: for example, this year my insurance plan started charging a co-pay of 15 percent of any lab test deemed to be not routine. They didn’t explain what’s routine and what’s not, which makes an already-confusing process even more confusing.
If you’re visiting an out-of-network provider, or if you’re uninsured or on a high-deductible plan, asking the price in advance becomes much more important.
Most providers have several different charges for one procedure or item. There’s the sticker price that’s listed officially – sort of like the manufacturer’s suggested retail price – which is typically the highest price. It’s also the one that is most often on the bill. And it’s the one that is often charged to people without insurance. That price is seldom paid in full.
Then there’s the reimbursement price negotiated by the insurance companies. Each company has a separate rate, negotiated with the provider on the basis of how many customers (oops, patients) the insurer brings, how many customers (oops, patients) the provider has, where the provider is, and so on. A bigger insurance company can negotiate lower reimbursement rates; a bigger group of doctors can push for higher rates than a solo practitioner, by pointing to market forces. So the insurance companies’ rate of reimbursement may be 80 percent of the billed price, or 60 percent, or 40 percent. It’s rarely 100 percent. In fact, in a recent lab test bill in my household, the billed rate for a test was $401, but the insurance company wanted to reimburse at $24.80. I got the negotiated rate, though I hadn’t met my deductible. I paid, and it was applied to my deductible.
Many providers also have a cash or self-pay rate; if you ask before having a procedure or a visit what it will cost, you will often get a rate that’s lower than the sticker price, and lower perhaps even than the insurance company’s negotiated rate.
If you don’t ask in advance, you may well be charged the sticker price.
The procedure also has a Medicare price, which is the rate the government pays for care for people 65 and over, which is typically a fraction of the sticker price. Lower still, typically, is the Medicaid rate, paid by the joint federal-state program for the poor.
While you might not feel comfortable in asking this question, it can be surprisingly revealing. It’s also revealing if your provider is unable to tell you how much something will cost.
Many of the providers we called in compiling these lists also said they have a rate for hardship cases, for the uninsured or unemployed. “We’re not heartless,” one said. Quite often the hardship rate was half the self-pay rate, or closer to the Medicare or Medicaid rate. Others said “we negotiate that” or “we require proof of hardship.”
Always ask first.
First in a series.
Questions? Suggestions? Let us know: info [at] clearhealthcosts [dot] com.
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As part of our mission to help you save money by beating back your health-care costs, we’re starting a series of posts giving practical consumer advice.
These posts are based on things we’ve learned in our reporting. As always, our posts should in no way be construed as offering medical advice. We are strictly about pricing. Our mission is to bring transparency to the health-care marketplace by talking about pricing. Your decisions about treatment, providers and anything else belong strictly to you.
We’re starting with this list of topics (full list is here). Send us your suggestions: info [at] clearhealthcosts [dot] com.
1. Ask the price in advance.
2. Even if it’s an emergency, ask the price in advance.
3. Some people think you shouldn’t ask the price in advance.
4. Do you really want to make medical decisions based solely on price?
5. Hospital and other rates are regulated by somebody, aren’t they? So there’s not really a great deal of variance. Wait, they’re not regulated?