Did a Health Insurer Pay Ten Times the Cash Price for Surgery?
A story from Arizona is a cloud with a silver lining:
Teresa Anderson was pleasantly surprised how quick and hassle-free her eyelid-lift surgery was at Havasu Regional Medical Center’s outpatient-surgery facility in April 2014.
Weeks later, the bills arrived at her Lake Havasu City home. Her surgeon, anesthesiologist and X-ray provider submitted bills and were paid nearly $2,250.
Only one remained: Havasu Regional’s bill. When it finally arrived last May, what she saw shocked her. An explanation of benefits from her insurer, Blue Cross Blue Shield of Minnesota, showed she and Blue Cross had been billed $38,526 by Havasu Regional for prep work, surgery and recovery lasting less than three hours.
Anderson, who worked for a health-insurance company before her retirement, believes hospital charges like hers explain why the economics of health care are askew. And she isn’t alone. Consumer advocates say such experiences point to the need for more transparency in the pricing of medical procedures.
Before the surgery, Anderson had asked her surgeon’s staff to estimate all costs associated with the surgery. She was considering paying on her own if her insurer denied coverage. The surgeon’s staff quoted a price of $3,500 for the surgery, anesthesia and facility fee if she paid on her own without insurance.
The hospital’s insane bill is really a pretty run-of-the-mill story these days. I am actually not sure that the reporter or the patient have it quite right: The hospital charge is not usually what a health insurer pays. On the other hand, the charge is not usually more than ten times what the real price is.
However, that is not the point of the story I wish to emphasize: The silver lining is that the patient had actually been able to figure out what the cash price would be if she paid directly herself. It has previously been hard for cash-paying patients to avoid being gouged by hospitals unless they are Canadian medical tourists. Whether this story is idiosyncratic or symptomatic of a trend, I cannot say. I hope it is the latter.
Great post…….but do we know how much Blue Cross actually paid? Maybe all they paid was $4000. I have seen that happen.
But I await the facts.
Until more facts are known/shared I suspect the bill is mistaken, e.g., a decimal point error.
It’s not clear what BC has paid or will pay. And billing errors happen all the time. It’s a curious fact that so many of them seem to be overbillings – and that is a problem. But that problem is a very different kind of problem vs a correct billing that is 10X’s the estimated charge. (I suppose it’s also remotely possible that the estimate was off by a factor of 10).
More info.
“On the other hand, the charge is not usually more than ten times what the real price is.”
I think it’s quite possible that the chargemaster (list) price could easily have been 10 times the payment rate. Last October, I would up in my local ER with a case of vertigo. I was there for about three hours during which time I received a CT scan of the head and neck which took less than five minutes. Since they saw something suspicious, I had to return a week later for an MRI of the same area which turned out to be normal. The total bill at chargemaster rates came to $15,000 of which Medicare and my supplemental carrier paid a combined $1,800. So, the list price was 8.33 times Medicare’s payment rate in this case. Ten times the actual payment is not a stretch at all, in my opinion.
What it shows is that chargemaster rates are unconscionable and bear no relationship to either cost or value. Unfortunately, CMS still uses them to help determine outlier payments for complex cases. I think CMS really needs to stop doing that and find another way to determine outlier payments that doesn’t rely on list prices.
Finally, I would ask hospital executives how they would feel if they or a family member were on the receiving end of these bills followed up by aggressive collection tactics if there were no insurance coverage. It’s not rocket science to treat people the way you would like and expect to be treated if the circumstances were reversed.
Thank you. That is where the article is confusing. It seems to assert the insurer paid the chargemaster rate.
Barry, you have cited one reason why chargemaster rates can be ten times the payment rate. A hospital has to be ready for the Medicare outlier case and the Arab visitor with a super high rate.
In a number of states, either by legislation or practice, uninsured persons with below average incomes are offered charity discounts pretty often. In fact the ACA had some actual consumer protection proposals in this area, but many proposed laws have never been enacted.
I read this in the local paper. See link below. The article clearly states “The insurer determined the “allowable” amount based on a negotiated contract with the hospital was $29,170.” I’m wondering if the author knows anything about health care billing.
I find this VERY hard to believe. Ain’t no health plan/payer out there there that’s just going to ‘negotiate’ that kind of rate.
I smell stink.
http://www.azcentral.com/story/money/business/consumer/2015/05/14/arizona-woman-outpatient-surgery-eye-popping-bill/27286193/
Here is an article on the unenforced ACA law to protect uninsured hospital patients from price gouging…..
http://www.thewire.com/politics/2013/12/obamacare-still-hasnt-stopped-non-profit-hospitals-ripping-people/355832/
Thank you. I recall we noted that article in a previous entry on this topic.