Did you ever wonder why the bill from your medical provider is $3,000, while the insurance company pays only a paltry few hundred dollars?
There’s a reason. Walk with me through the billing office of a self-standing New York radiology center with my friend S. (Here’s our first visit to her office, complete with her rant about insurance companies.)
If you think patient-consumers hate the complexity of the health-care system, listen to S. She agreed to give me her view of the billing office and of the health-care marketplace if I granted her anonymity. Because she is so interesting and so passionate — she’s been on the financial side of the medical system for a number of years — I agreed.
People want to know what a procedure will cost before they have it, I told her. She knows that. She hears it all the time.
“The insurance company won’t talk to you, and they won’t give you pricing,” she says. “I have members call me all the time and tell me they asked the insurance company, and they wouldn’t tell you what the charge would be.”
An example: the lower-back MRI, simple, “without contrast,” has a sticker price of $1,500 at her clinic (Current Procedural Terminology or CPT code 72148).
Medicaid (the joint federal-state plan for low-income and disabled people) pays $542.
Medicare pays $497.
Empire Blue Cross pays $400. That’s the “negotiated rate,” negotiated by Empire with this particular provider.
Yes, $400. Providers often complain that Medicare rates are too low; in this case Empire is lower. Both the government and Empire buy in bulk, and therefore get lower rates. Think of it as Costco pricing for your MRI.
But some insurance plans do pay the full amount, or close to it — the Empire Government plan, for example, pays “up to $1,200” for that procedure, S. says, and so the sticker price stays where it is.
There’s no incentive for the sticker price to approach the “real” price because there is no real price. “If you reduce your rate, the insurance company can come in and say, ‘you’re only taking this much from patients,’ ” she said, and thus further reduce the rate.
But how much will a person pay? It’s often a mystery. For example, if a patient says she’s on a high-deductible Aetna plan, the clinic can’t take payment up front. Rather, they must do the procedure, submit the bill to the insurance company, have the insurance company announce its rate (for example, “we will apply $587 to the deductible”) and then the clinic bills the patient for the $587.
Getting the information in advance by phone, S. says, is hard if not impossible.
“For Blue Cross, there are five different tiers of a PPO [preferred provider organization] payer fee. They put one of them on line. And you’re supposed to guess? How do I know which one is yours? … Each Blue Cross patient who comes to me has a different rate — for example, if it’s a PPO self-written plan owned by the company, it’s written this way.
“The only ones that are up-front and honest are Medicare and Medicaid. Those are the only ones who you don’t have problems with. The others — hiding and manipulation. ‘I can pay it this way, but two days later, I can change it,’ is what the insurance companies say.
“The insurance companies won’t tell you,” she said. “I have patients come in all the time and say ‘I asked the insurance company, and they won’t tell me what it costs.’ And for me, each Blue Cross patient that comes to me has a different rate.”
There is help a this clinic and many others for those who are in need. People who are suffering hardships may ask the billing office for a discounted rate. That discounted rate, which typically is somewhere around Medicare or Medicaid rates, must be accompanied by proof of hardship: a scan of a disability check, for example, if a patient cites hardship based on disability, based on a new rule from the Office of the Inspector General. If you as a provider give a discount rate, you must prove why.
It’s also the insurance paradox: if you’re insured, your “price” for the procedure — if you can count the insurance company’s reimbursement rate as your “price” — is $400.
If you’re uninsured, your price is $1,500, the sticker price. This is also the price that, typically, is billed to you — and recorded as an unpaid debt if you’re uninsured and unable to pay.
If you’re on Medicaid, which means you’re poor or disabled, your “price” is $542.
The Medicare rate, widely derided by doctors as way too low to provide a living wage, is higher than insurance companies’ negotiated rates in some places (the New York City area) and in some places is so low that doctors refuse to accept it. Where S.’s in-laws live, in upstate New York, few providers take Medicare so older people who may have thought Medicare guaranteed payments for medical care must instead go on an HMO policy to get care.
This is what the health-care marketplace looks like from S.’s office. Do you disagree? Have further information?
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