By: Kelly Dempsey, Esq.
If you’re paying any attention to the news these days, you know that the healthcare industry as a whole has been facing some pretty large issues. In addition to “repeal and replace,” we’re also faced with the skyrocketing cost of healthcare in the United States. Both topics are focused on money – either loss of money by insurers who are now threatening to leave the Marketplace or the high costs of new drugs that have hit the market, that have the potential to cripple employer health plans. While both of these are clearly issues that need attention, let’s look at something other than the turmoil in the Marketplace or shiny new things that are also fueling the fire.
What about the costs of standard medical procedures? When your doctor says you need a medical procedure and you actually think to ask “how much will this cost,” do you get a straight answer? In some cases, you might. Maybe you’ll get a ballpark figure. But most of the time, the response will be wishy-washy because the procedure is unique to you and the providers cannot foresee complications that may change the projected cost.
You may be thinking, “Ya, ya, ya. I’ve heard this speech about price transparency before.” In the past I had the same thought, but then I experienced the radical difference in charges for the same service and my view has been forever shifted. I received the same procedure two years apart, at two different facilities, in two different states. It’s been quite a while since these procedures happened, but I still think about it often.
A few years ago (ok, maybe more than a few, but who’s counting), I had flu-like symptoms and also some sharp-shooting pains on both the left and right side of my abdominal area that I just couldn’t shake with extra rest and sleep. My mom (a nurse) suggested that my issues may have been related to my gallbladder, so I took some over-the-counter medicine and my symptoms disappeared. But a week later, I was back to where I started despite still taking the medication. I reluctantly went to the doctor (in northeast Ohio), who said that there were many possibilities, but that it could be appendicitis. My doctor told me that the last time she had seen someone with sensitivity to the abdominal region (i.e., sensitive to the touch), she didn’t send them for a CT scan, but the end result was appendicitis and emergency surgery was performed. I didn’t have the classic symptoms of appendicitis, but a CT scan was ordered just to be sure. I won’t bore you with the details, but the CT scan showed that it was appendicitis and I had a scheduled surgery to remove my appendix. Weeks later the bills started rolling in, including a bill for the CT scan…$1,900. I’d never had a CT scan before, so I had no idea what to expect, but $1,900 clearly wasn’t it (and I think this was after the PPO discount).
Two years later, I found myself feeling under the weather. I went to the doctor and an ultrasound was ordered. Of course my appointment was on a Friday and it was a holiday weekend, so I had to wait to get the ultrasound, but I had a trip to Niagara Falls planned and I wasn’t cancelling it. Unfortunately before I could have the ultrasound done, I woke up early on a Saturday morning with more sharp-shooting pains, but this time more in my side and back. Being out of state, I didn’t know where else to go except to the emergency room at the hospital in Niagara Falls, New York. The doctor who saw me took one look at me and said “kidney stone, but we’ll do a CT scan to confirm.” A few hours later a kidney stone was my official diagnosis. I spent six hours in the emergency room before I was discharged. By this time I was working in the industry and dreaded the bills I knew I would be getting. To my surprise, the bills weren’t nearly as large as I had anticipated. Of course there were three: the hospital, the ER doctor, and the interpretation of the radiology report, totaling a little over $3,000. This wasn’t nearly as high as I anticipated. The hospital bill was itemized, and as I read through it, I stumbled upon the CT scan charge… “$234.” I thought to myself, “ummmm, excuse me? That can’t be the only fee for the CT scan.” I decided that this couldn’t be accurate and waited for another radiology bill to arrive. No additional bills ever arrived.
I’m not a medical professional and I’m sure there were differences in the CT scans (maybe the type of machine, etc.), but how could I be charged $1,900 for a CT scan and two years later be charged $234 for a CT scan? Considering the second procedure was in New York, and Niagara Falls is twice the population than my tiny suburban city outside of Cleveland, Ohio, I was sure the New York charges would be higher, but they weren’t. The difference in charges for the same (or very similar procedure) is an issue that has stayed with me.
In doing more research and looking at the figures, it’s amazing to see the variances in the cost-to-charge ratio (i.e., how much a provider charges compared to how much it actually costs them to do a procedure) from provider to provider. The ACA’s price transparency provision really never got off the ground and other proposed bills haven’t had much success – it’s also unclear if the current administration is motivated to support price transparency. As the self-funded industry looks at cost containment measures as a whole, medical tourism is growing in popularity, especially when there are high value providers that are willing to offer services at lower costs and be more transparent with pricing. Medical tourism and other cost containment methods, as well as consumer education, can help employer health plans contain costs; however, there is a need to look at the bigger picture and strive for more price transparency to help stabilize and support our fragile healthcare industry.
…Is what a Hospital VP of Accounts Receivable said to me when I called to discuss a reference-based pricing (RBP) claim that was referred to The Phia Group for handling. Upon review, the health plan had issued a reasonable percentage above Medicare on a large claim, and this was perfectly in line with the Plan Document’s language. In fact, payment for this episode of care was subject to a percentage above a particularly high Diagnosis-Related Group (DRG) pricing, so the payment greatly exceeded the average commercial insurance reimbursement at this facility.
You see, hospitals report their complete financial information to the Centers for Medicare and Medicaid Services (CMS). This publicly-available information is submitted in accordance with generally accepted accounting principles, and verified by the hospital to be accurate. At The Phia Group, we use Medicare payment rates along with this data to assess the fair market value of services (what payors actually pay).
Back to my story. I would have understood had the Hospital VP said “I am sorry, Jason, but I have a policy that requires me to balance-bill the member,” or “We can’t write off the balance but let’s explore ways to close this account together,” or anything like that. I get it – there are always policies to follow. But to say “It will be my pleasure to balance bill the patient 1.3 million…” Come on.
There is a lot of rhetoric out there about no one being happy with “the way things are” and how everyone wants to “do the right thing” as the market changes, but I don’t believe that. I routinely see the ugliness of corporations gorging themselves on unreasonable reimbursements at the threat of destroying patients’ credit scores. Patient credit is the ransom in exchange for payment of ridiculously high charges. Thankfully, this generally proves to be the exception, as I deal with reasonable and helpful providers all the time; to those valued and reasonable healthcare providers: I salute you.
This particular interaction really shook me, and it stands as a stark reminder of the issues we need to address in achieving transparency and affordability in healthcare.