Understanding medical bills and charges

[MJ]

I have been meaning to ask this about medical bill charges. Typically, if you have insurance, an in network provider may charge a rather high price, the insurance has an allowable amount, of that amount you may be responsible for all or part of, depending on your deductible/copay. I was wondering why the provider charges are many times, outrageous. Just received one. The provider charged $8600, the insurance disallowed $7200, leaving me with $1400. Does the provider write off the $7200?

On a similar billing issue. I recently enrolled my wife with a Christian health share. Since I will be self paying the bills, I called one of the main hospital and ask if they discount bills for self payers. I was shocked to hear that a self payer will get 60% off the hospital bill. I called a 2nd time to confirm the answer.

I am confused about these inflationary charges that get either reduced by insurance/medicare or discounted for self payers.

 

[razztazz]

I was wondering why the provider charges are many times, outrageous.

Because someone might pay it. If not, they'll settle for the agreed upon rate

 

[Winemaker]

My past employer was self insured and paid up front monies to different health providers in the 10 counties where 90% of employees lived. These monies might have been to XYZ hospital, where they guaranteed so many patients, for so many procedures, so many times. Therefore, when we received a EOB statement, like your statement, a certain amount was "written off", when in actuality, it was paid for in advance at a previously agreed upon rate.

 

[MRG]

I have been meaning to ask this about medical bill charges. Typically, if you have insurance, an in network provider may charge a rather high price, the insurance has an allowable amount, of that amount you may be responsible for all or part of, depending on your deductible/copay. I was wondering why the provider charges are many times, outrageous. Just received one. The provider charged $8600, the insurance disallowed $7200, leaving me with $1400. Does the provider write off the $7200?

On a similar billing issue. I recently enrolled my wife with a Christian health share. Since I will be self paying the bills, I called one of the main hospital and ask if they discount bills for self payers. I was shocked to hear that a self payer will get 60% off the hospital bill. I called a 2nd time to confirm the answer.

I am confused about these inflationary charges that get either reduced by insurance/medicare or discounted for self payers.

Why?

If there's no real price the price is what we say it is(today).

I just saw a pamphlet for a rec Cannibis dispensary, says concentrates are 15% off everyday. If they have printed media and it's 15% off everyday, what's the price?

 

[NoMoreJob]

Just think of it as 'suggested retail' or the sticker price on a new car. Very few if any ever pay it but it's a starting point. Yes, the difference between the amount charged and the 'allowed amount' is written off in the sense that no one ever pays it.

 

[travelover]

Yea, the list price is imaginary. Hospitals a few miles from each other can vary enormously in price for the same procedure. if you've never read this, it is eye opening. https://www.uta.edu/faculty/story/2311/Misc/2013,2,26,MedicalCostsDemandAndGreed.pdf

 

[zinger1457]

I also learned from a trip to the local Urgent Care center that the cash price can be a lot less then the Insurance negotiated rate so it may be worth asking about it if you have a HDHP and just bypass the Insurance all together. To get a simple cut stitched the cash price was $80, they billed the Insurance $250 and the Insurance allowed $150. The Urgent Care center had a cash price list posted for common services, sure wish that was common practice at all medical facilities.

 

[Tallman4123]

This year 've had the unfortunate opportunity to use both my medical and dental coverage for more than routine care. What struck me about the billing practices of the providers, is that I often received a "You Owe $xxx" type of bill immediately after the services were rendered and BEFORE the charges were submitted to the insurance company. With HDHPs being so prevalent, it makes me wonder if certain providers do this because they know some people will pay a bill they've received without questioning the amount.

In fact, my dental procedure took three separate visits over the course of a month or so and I received SIX separate bills from the dental office over the course of that time. First, they'd send a bill for "charges" without adjustments, then the bill for the second procedure would be sent with "charges' but the first procedure would be adjusted for "allowed" and so on. Ultimately I received a final bill stating that I owed $1300.

It took me close to an hour to sort through all their bills and reconcile them with the online EOBs from the insurance company. There were various levels of coinsurance depending on the procedure, etc. When I finally figured out that the final bill was calculated using "charges" for some of the procedures and "allowed" for other procedures (and the coinsurance was incorrect on one bill), I called the dentist's office to point out the errors. They very quickly apologized and with my input, we calculated my final bill at less than half of the $1300.

Keep in mind, I sold employer-based group insurance as an insurance broker for 30 years before retiring last year; this was my field of expertise! How many people would have just paid the $1300? I'd say 25% or more. Total scam.

 

[msieweke]

It's not too hard to understand if you know a few things:
1 - The insurance company never pays more than the billed amount.
2 - The medical provider often has no idea how much an insurance company might pay.
3 - Therefore the medical provider always bills more than any insurance company might pay.
4 - The billed amount is not determined by how much the procedure actually costs.
5 - Your insurance company doesn't necessarily negotiate a good deal for you.
6 - The negotiated rate may be higher than the self-pay rate.
7 - If the insurance company denies the claim, you're on the hook for the billed amount, rather than the negotiated rate or self-pay rate!

I just finished a round of physical therapy, where my COBRA insurance (Anthem/Blue-Cross) expired before the last 2 sessions. I paid the self-pay rate for the last 2 sessions. Here's what was billed and paid (by me, due to $6000 deductible).

Prices for a single session of physical therapy:
$237 - billed amount
$148 - negotiated rate
$85 - self-pay rate

Anthem negotiated a rate $63 higher than the self-pay rate. I paid the higher rate for 10 sessions, so that's $630 out of my pocket that I wouldn't have paid if I didn't have insurance. If this seems a bit insane, I agree. It's part of the reason I signed on with Liberty Healthshare instead of regular insurance when COBRA ended.

 

[pb4uski]

I also learned from a trip to the local Urgent Care center that the cash price can be a lot less then the Insurance negotiated rate so it may be worth asking about it if you have a HDHP and just bypass the Insurance all together. To get a simple cut stitched the cash price was $80, they billed the Insurance $250 and the Insurance allowed $150. The Urgent Care center had a cash price list posted for common services, sure wish that was common practice at all medical facilities.

I have seen this as well.... but the the question becomes if the facility is content with providing the service for $80 and that is public information since they post it... why in the world would the insurer agree to a negotiated price of $150? Are they brain dead? That $150 is what our health insurance premiums are based on.

 

[zinger1457]

I have seen this as well.... but the the question becomes if the facility is content with providing the service for $80 and that is public information since they post it... why in the world would the insurer agree to a negotiated price of $150? Are they brain dead? That $150 is what our health insurance premiums are based on.

That was my thinking and why I initially billed it to my insurance, I expected the negotiated rate if anything to be less then the cash price. When I saw what happened I went to the billing department of the Urgent Care center and they agreed to close out the bill based on the cash price.

 

[meierlde]

That was my thinking and why I initially billed it to my insurance, I expected the negotiated rate if anything to be less then the cash price. When I saw what happened I went to the billing department of the Urgent Care center and they agreed to close out the bill based on the cash price.

Is the cash payment at time of service? If so the explanation is getting paid right now with no form filling etc versus all the forms and effort of getting the insurance company to pay. To start with (although not so big right now) there is the two month wait to get paid etc.

 

[zinger1457]

Is the cash payment at time of service? If so the explanation is getting paid right now with no form filling etc versus all the forms and effort of getting the insurance company to pay. To start with (although not so big right now) there is the two month wait to get paid etc.

In my experience it's more like a couple weeks and because of the deductible I end up having to pay the Urgent Care center directly anyway, the same way that I would if I was paying cash. I'd gladly wait 2-3 weeks for a 100% increase in payment.

 

[davebarnes]

1. No one "Understands medical bills and charges".
2. The Steven Brill article in Time is still the definitive read.
3. Welcome to craziest medical insurance system in the world.
4. Don't get sick.

 

[MRG]

Is the cash payment at time of service? If so the explanation is getting paid right now with no form filling etc versus all the forms and effort of getting the insurance company to pay. To start with (although not so big right now) there is the two month wait to get paid etc.

Turn around time in medical billing is one of their KPIs. We sold a few systems, before EMR , to big hospitals based on reducing billing turn around time. They invested millions knowing the systems had a limited life span assuming the EMR vendor hit their dates.

Everyone won.? They saved millions by cutting the average turn around over 50%. We made millions and the price to consumers was unchanged.?

It also makes sense as many payers and providers farm claims out to third parties. They pay by the claim.

 

[audreyh1]

I also learned from a trip to the local Urgent Care center that the cash price can be a lot less then the Insurance negotiated rate so it may be worth asking about it if you have a HDHP and just bypass the Insurance all together. To get a simple cut stitched the cash price was $80, they billed the Insurance $250 and the Insurance allowed $150. The Urgent Care center had a cash price list posted for common services, sure wish that was common practice at all medical facilities.

Yes - I've learned that in many cases you pay more through insurance rather than up front cash. They have to file all that paperwork and wait for payment and copayment.

 

[Gotadimple]

In most places in the U.S., the local providers have a usual and customary charge (what you see as the billed amount). It is what they would charge someone who is uninsured.

They all negotiate a rate for a service or a range of services with insurance companies, and each contract that they hold is different (the allowed amount). To say that a provider doesn't know what the insurance company will pay is disingenuous. The provider knows because they have a contract and their ENTIRE billing system is based on the software they use to enter the visit info and that is what sends the claim to the company.

Some providers are willing to discount below the allowed amount for a cash payment, because it reduces their overhead. As others have discovered, you have to ask, and they have to agree to do it.

The same is true for prescriptions. You have to ask.

That said, figuring out what they billed the carrier, and how the claim was processed is one of the most complex, convoluted, and frustrating processes out there.

 

[sengsational]

Here's the latest trick they're pulling to keep their negotiated rates secret: bundled price on the EOB.

Used to be, if you got 5 things done, they'd have 5 procedure codes, each with it's own billed, allowable and your responsibility values.

I just got an EOB from BCBS that hides the prices of the individual things and provides just a total across all things.

We're doomed.

 

[Yarnstormer]

The Urgent Care center had a cash price list posted for common services, sure wish that was common practice at all medical facilities.

See I asked one of my providers about a cash price and they said that they could not offer one to someone that was had the insurance they had contracted with - that it would get them in trouble with the ins company.

None of the urgent care facilities in my area take my aca plan so I’ll be paying cash at any of those places anyway!

 

[NC 57]

For the free market to deliver efficient pricing there must be multiple competitors, pricing must be transparent to the consumer, and pricing must be available to the consumer before the sale or service occurs. Ideally an informed consumer can then negotiate freely with the seller to arrive at an optimal price.

Our health care system incorporates none of these features. The regulation of insurance companies by the individual states prevents a national market with many providers from forming. Pricing is hidden from the consumer by the health care providers and the insurance companies. Even savvy consumers willing to spend hours researching are unable to determine final cost until after the service is delivered.

Real healthcare reform would allow insurance providers to sell across state lines. It would require healthcare providers to post prices publicly (a price list in the office plus on the provider’s website) so consumers can research costs prior to contracting with a provider. The consumer would be able to go on a website to see the list of services, the list price for each, the discounted price for cash payment, and the discounted price extended to each insurance company by name.

An efficient market would also allow individuals to contract with insurance companies for the basket of services the consumer wants, not a list of services required by the government. A 60 year old man would not be required to buy maternity or pediatric dental insurance he will never use as the current law mandates.

Look at what has happened with pricing of consumer products since internet shopping developed over the past 20 years. With the transparency of pricing and product specifications globally competition has intensified and prices have declined or rise very slowly. Compare to cost inflation in the highly regulated healthcare marketplace where price discovery is difficult.

Strange that none of the healthcare plans seriously considered by Congress in recent years have permitted a national market for services and insurance, much less complete price transparency.

 

[audreyh1]

I think having a basic standard of coverage spread over everybody is important. We were all born. Just like we all went to school even though not all of us had children, yet we pay property taxes that support education for everyone’s children. Costs are spread across everyone as a way of lowering the costs for each individual.

Sure, people want to only pay for insuring the things they think they might need. For a lot of folks that means not carrying any insurance at all because they don’t need it right away and they prefer not to buy it until after something bad happens. That is not how insurance works and shouldn’t be allowed.

Offering services across state lines - very complicated as providers are local. I’m not sure health care services can scale that way at all even though it sounds good as a sound bite. Couple that with insurance being regulated per state.

 

[NC 57]

The system has several oligopolies that have formed thanks to the ability of industry players to successfully lobby government for special protections from market forces:
1). Insurance companies.
2). Multinational pharmaceutical companies
3). Hospital/provider organizations
4). Bloated bureaucracies in state and federal government charged with oversight of the industry and writing regulations.

All four have protections against competition and transparency written into law and regulations. They function as cartels and the first three spend heavily funding political campaigns and academic studies in addition to lobbing #4. The billions spent on advertising by the insurance and pharmaceutical companies has the side benefit of minimizing unfavorable press by the big media news organizations.

Even AARP, the organization claiming to be the #1 advocacy group for seniors, has a vested interest in this heavily controlled market given it is a significant seller of insurance services. AARP supports government mandates and the complexity of the current system.

With so much money in the hands of organizations having a vested interest in preventing increased competition and price discovery, I see very little prospect for meaningful market reforms in the near future. Not only is healthcare an obscene and unnecessary cost for consumer and government to bear, the complexity of the system results in barriers to access, needless suffering, and in the worst case loss of life. Polls, as well as letter and phone calls from constituents, tell Congress the system is unacceptable, yet as we have seen over the past few years Congress is unwilling to install the simplest marketplace reforms (national market competition and price transparency). It is a deplorable situation.

 

[Car-Guy]

And good luck keeping up with when a doctor (service provider) is "in-network" with lower negotiated rates or "out of network" with full cost.

True story.

We went to a doctor who was listed as "in-network" on our insurance companies web site. When the bill was received at the insurance company, they paid the negotiated rates as a "in-network" provider. The doctor received the payment but said "no", they had dropped out of that insurance providers network a few months earlier. So the insurance company recalculated the payment as "out of network" and paid the higher rates. Of course then the doctor charges us a higher rate too for our co pay. We are disputing the higher rates and particularly the misleading (wrong) information on the insurance companies web site. (Which has now been changed to show that doctor as "out of network")

So if a insurance company says a doctor is in-network (according to their web site) and processes the bill as in-network, but later changes their opinion, who is responsible for the mistake? (hint, it isn't the insurance company or the doctor ). Anyway, we are protesting the billing difference with our insurance company and if that fails, I plan to take this to the state insurance board as an unfair business practice.

Merry Christmas.

 

[zedd]

For the free market to deliver efficient pricing there must be multiple competitors, pricing must be transparent to the consumer, and pricing must be available to the consumer before the sale or service occurs. Ideally an informed consumer can then negotiate freely with the seller to arrive at an optimal price.

Our health care system incorporates none of these features. The regulation of insurance companies by the individual states prevents a national market with many providers from forming. Pricing is hidden from the consumer by the health care providers and the insurance companies. Even savvy consumers willing to spend hours researching are unable to determine final cost until after the service is delivered.

Real healthcare reform would allow insurance providers to sell across state lines. It would require healthcare providers to post prices publicly (a price list in the office plus on the provider’s website) so consumers can research costs prior to contracting with a provider. The consumer would be able to go on a website to see the list of services, the list price for each, the discounted price for cash payment, and the discounted price extended to each insurance company by name.

An efficient market would also allow individuals to contract with insurance companies for the basket of services the consumer wants, not a list of services required by the government. A 60 year old man would not be required to buy maternity or pediatric dental insurance he will never use as the current law mandates.

Look at what has happened with pricing of consumer products since internet shopping developed over the past 20 years. With the transparency of pricing and product specifications globally competition has intensified and prices have declined or rise very slowly. Compare to cost inflation in the highly regulated healthcare marketplace where price discovery is difficult.

Strange that none of the healthcare plans seriously considered by Congress in recent years have permitted a national market for services and insurance, much less complete price transparency.

+1

Look at what HealthSherpa.com did in the early days when the ACA website was struggling. We need a national health care consumer-sponsored website that has the ease of use of HealthSherpa.com with the reach of GasBuddy.com. Shoot I'd even be willing to pay a subscription fee to such a service.

 

[NC 57]

I think having a basic standard of coverage spread over everybody is important. We were all born. Just like we all went to school even though not all of us had children, yet we pay property taxes that support education for everyone’s children. Costs are spread across everyone as a way of lowering the costs for each individual.

Sure, people want to only pay for insuring the things they think they might need, for a lot of folks that means not carrying any insurance at all because they don’t need it right away and they prefer not to buy it until after something bad happens. That is not how insurance works and shouldn’t be allowed.

Offering services across state lines - very complicated as providers are local. I’m not sure health care services can scale that way at all even though it sounds good as a sound bite. Couple that with insurance being regulated per state.

audreyh1,

Whether coverage of some type is mandated or not, price transparency will work to lower costs. As long as prices are hidden or disguised prior to the service being delivered, buyers of services (medical care or insurance) cannot make informed choices. There is no downside to consumers being able to see and compare prices.

In my state there is only one insurance provider in the private marketplace. Blue Cross essentially tells the state regulators how much it will increase prices each year and threatens to pull out of the state if it doesn't get the increase it wants. My cost for private insurance has increased over 20% per year for the past four years. In 2018 my wife and I will spend $2100 per month for healthcare insurance premiums (plus $7500 each in deductibles), up from $630 per month five years ago for a "catastrophic" policy with $5000 each deductibles. These increases were the direct result of increased regulation of the marketplace by government and the resulting reduction of competition.

I fail to understand why creating a national marketplace for health insurance will result in more competition. Worst case, it will not improve the situation. Best case more competition results in lower prices and a broader array of product choices.

As to insurance being regulated by state, what is the advantage to the consumer of services of each state restricting access to its market? None that I can see. Since the current system is creating monopolies perhaps state by state regulation should be eliminated for a national market for insurance. There is certainly significant costs of having bureaucrats at both the state and federal levels adding thousands of pages of regulations per year which no single human being can begin to comprehend and which do not seem to be improving costs or delivery of services. Take out state bureaucrats and let the states spend the millions of dollars in savings on public health programs that directly benefit people.

With respect to the assertion offering services across state lines is complicated as providers are local, even in the heavily regulated healthcare industry that is changing. The Novant system in North Carolina is currently buying up hospitals and creating affiliations with doctors in Virginia, and South Carolina. The Mayo Clinic has locations in three states (Minnesota, Arizona, and Florida) and the Cleveland Clinic operates in multiple states. Some of the national drug retail chains, as well as Wal-Mart, are testing doctor offices in stores. Costco provides eye care services in many of its locations. Eliminate the state bureaucracies regulating healthcare and you might be surprised at how quickly national chains and/or alliances of local providers form using modern technology to drive cost efficiency and improved services in a national market.

Competition and price transparency works in every market where it is permitted. The only reason to restrict competition and disguise pricing is to protect the profit margins of entrenched players in a market.