Fleeting Expletive asked a good question regarding how to read a hospital bill:
I’m now getting the bills for my eye injury and surgery.The bill from the eye surgery center is particularly confusing to me. It runs on for two pages. The first item is a procedure that bills out at $5500, then there is an “adjustment that reduces that amount by $4,295.80.
There are several more entries that do that, the large asking price and then a substantial adjustment. What is the deal there?
There are a couple of things going on here.
The top line number of $5,500 is what is known as the chargemaster rate. That is a rate the hospital generates by itself through some arcane reading of goat entrails. This number has no relationship to reality of the cost of providing the service. It is a maximal ask. It is also the baseline for debt renegoatiation with people who do not have insurance.
The second number is the difference between the chargemaster rate and the insurance company negoatiated rate. An insurer can often have multiple rates for the same procedure performed by the same provider. For instance, Mayhew Insurance has different rates for the Medicaid, Medicare Advantage, CHIP, narrow network Exchange, broad network Exchange, and major Commercial group products.
His insurer has a contract rate of $1,204.20 for the product that he is in. That is the number the hospital has agreed to take as payment in full for that service. The $1,204.20 is then split in a variety of ways. Some component of could be deductible which Fleeting Expletive would be responsible for. Some portion of the bill could be a co-pay, and more of the bill could be co-insurance where the insurer pays most of it, but Fleeting Expletive is responsible for 20% to 40% of the bill. The hospital really does not care where the check comes from as long as they are paid in full within sixty days of the bill going into the mail.
raven
BCBS of Georgia has a website where I can see all the charges and such. I just injured my hand and, along with the stitches, they picked up a lesion on my forearm. They want to rule out cancer so I had two MRI’s yesterday and see the Doc next week. Do I care about the info on the website about costs?
Richard Mayhew
@raven: Yep, you should care about what the specific charge is for the facility that you had your MRIs as that is what your deductible and coinsurance (if any) will be calculated from.
polyorchnid octopunch
As a methodology for managing billing and costs, all of you do realise that this system is completely insane, right?
I mean, zOMGwtf.
I already knew about some of this, but still….
Germy Shoemangler
Can someone explain what is the deal with double billing? Years ago, my son was under the care of an eye specialist. There was surgery followed by repeated visits for followup. The doctor was great, but I noticed we were always double billed. The insurance co would catch it (we only paid the co-pay) but the double billing was consistent and baffling to me.
Danton
Would universal billing and insurance forms be cost saving?
raven
@Richard Mayhew: Ah, thanks. They got for $250 at the ER but the follow-up with the ortho (PA) and MRI’s no one asked for any money. . . yet.
Jack the Second
So the number of people uninsured is going down but not zero. Why?
Do you know the breakdown of the number of people in the Republican gap, the number of people eligible for assistance but not taking it (for whatever reason) and the number of uninsured people not eligible for any assistance obtaining coverage?
Frankensteinbeck
I’m with @polyorchnid octopunch. The system as described is fucked up beyond belief. It reads like the hospital saying ‘We reserve the right to make you pay five times the actual cost if we can find any way to get away with it.’
jonas
We were always told these ridiculous chargemaster rates were a way of making up for having to treat un/underinsured people. Obamacare has dramatically reduced this number — I wonder if hospitals will still be routinely trying to get away with this billing practice.
Silly me. Of course they will.
Howard Beale IV
So much for price discovery and being able to price shop. It’s no wonder that the legal and healthcare professions are at the bottom-thye’re about as antt-‘free market’ as they come.
Richard Mayhew
@polyorchnid octopunch: Yep, it is FUBARed
@Frankensteinbeck: Yep, they’ll ask and push for as much money as possible even if they are already paid in full. That behavior will occur as long as the C-level is not under threat (criminal or financial) to change their behaviors.
@Jack the Second: Lots of different reasons.
a) Undocumented immigrants are not allowed to buy on Exchange nor receive subsidies or Medicaid.
b) Medicaid gap
c) Slow uptake on the Exchanges (especially above 200% FPL)
d) Other
Mary G
I know that a lot of the doctors I see are extremely exasperated because every insurance company has all these different rates of reimbursement and any number of procedural hoops that must be jumped through specific to that company. They have to pay an employee whose only job is to deal with insurance.
Roger Moore
One more example of why integrated payer/provider networks are a better way of doing things. It eliminates this whole obnoxious step of the process.
Gene108
Gave me a good laugh in the morning and is probably one of the more statistically accurate descriptions of hospital pricing.
japa21
Richard, even though I am in the business, working in the field of provider network development, I always enjoy your posts and find myself learning more from them at times than the so-called training classes we get here. I sometimes wonder if we work for the same company.
This post has myself and one of my co-workers laughing uproariously, particulalry at the “arcane readin of goat entrail” line. As my coworker noted, those of us working in this field know just how accurate that is.
As a side comment, I can see the impact your posts are having on the commentariat here. The questions being asked are more and more zeroing in on very specific issues. Which means, to me, you have done a good job educating us all.
As to the question above as to if providers may reduce their chargemaster as they get paid more and more, I highly doubt it. In some areas of the country hospitals are very insistent on working on a straight percent of billed charges basis from payers, unless the payer happens to be BCBS. They want to keep that cash cow providing the milk.
That being said, a large system in MN has actually reduced its chargemaster in the past year, so it may just happen.
catclub
@Danton:
The question, as always, is for whom would the universal billing NOT be cost saving. And how effectively can they resist that change.
shawn
“difference between the chargemaster rate and the insurance company negotiated rate”
a semantic note here – this sometimes known as billed amount versus allowed amount – in 5+ years in the industry working on both the provider and now the insurance side I have never heard the word “chargemaster” – not saying it doesn’t exist, just that it isn’t ubiquitous
Richard Mayhew
@japa21: What time zone are you in :)
I really don’t know if providers have ever reduced their chargemaster voluntarily. That was a side of the business I was aware of but not a part of if you understand what I mean there.
And if the goat line made you and a co-worker laugh, I am glad I did not go with my initial metaphor of the chargemaster being the equivilent of a hospital asking for first date anal on the “Why the hell not” principle.
@shawn: Yep, Billed v. Allowed is the more common expression. Billed comes from the chargemaster, and the allowed is the negoatiated rate. I went a bit more into the weeds (or why I really need an editor if I am ever going to write a health policy book)
The Golux
I see what you did there.
WereBear
Plenty of raw talent running around here. Like I tell all my writers… DRAFT IT. Don’t look back.
The fiddly bits come later.
askew
@japa21:
Now, I am wondering if you work at the same place I do. I work in provider fraud at big insurance company.
Richard has really done an amazing job of explaining the health care industry and ACA.
cahuenga
A couple years ago i had a ‘scope ACL reconstruction from a volleyball injury. The MRI showed a clean break of the ligament and undamaged meniscus, and after surgery the doc said the meniscus was clean. Great!….. Then the bill.
Right at the top of the bill there was a $5000+ charge for a meniscectomy. When I inquired about the charge the doc said he saw a ‘frayed edge” while he was in there and trimmed it off. Insurance codes make no distinction between a quick trim and a complete radical reconstruction. So, no doubt this surgeon trims every patient. So to speak.
Upcoding is rampant in the medical community. If you want to find where the bucks are going, this is a good place to start.
tybee
@Howard Beale IV:
yup. or even knowing up front what the cost will be for any procedure.
Gindy51
Same thing happened to us with a colonoscopy. Husband was charged $1300 bucks after the insurance kicked in. We paid it as we always do BUT when we submitted the claim later to Tricare (secondary insurance after employer’s insurance)’ we were told by Tricare that we had been over billed for the service and that the hospital owed us the money back. We called them up and within SECONDS they refunded the money. They pull this crap all the time and they think they can get away with it because most folks do not check nor do they have the time like retired farts to dig deeper. Also the weight of the Tricare system and just the mention of a call from them pushed the hospital billing dept. to pay back our money.
tybee
@cahuenga:
my opthamologist told me that knowing how to code was the difference between making money and making big money.
IdahoFlaneuse
@Richard Mayhew: Richard, I did some work for a residency program (family medicine) some years back. In the beginning they had one chargemaster and along the way they ended up with at least three versions. (General, Medicare, and Medicaid) It was done for cash management reasons. They had a large percentage of Medicaid and Medicare patients and didn’t want to inflate the AR when they knew that they wouldn’t get the money. I don’t know if it would be considered as reducing the chargemaster but it did result in lesser contractual adjustments in the later years..
cahuenga
@tybee:
Yup, before the ACL reconstruction noted above I made an effort to determine my out of pocket before I the procedure. With the exception of the anesthesiologist I ran into quite a bit of resistance from all other providers. The one interesting result of this exercise was I found across the board I was first asked whether or not I had insurance, almost as if this greatly influences cost…. So I asked what the difference was and quickly found the quoted price was considerably cheaper if paid outside of insurance.
In the end I found the estimates, again with the exception of the anesthesiologist, were wildly off. When it was all said and done the bill to insurance was nearly twice what they estimated, and there were zero complications.
Ruckus
@Mary G:
Dr office I went to a few yrs ago had 2 Dr 3 nurses, 6 people doing insurance billing. All filling out forms and the Dr used computerized records. Either that or she was playing solitaire while talking to me.
Ruckus
@catclub:
It’s not that they wouldn’t be cost saving for everyone, it’s that it wouldn’t be as profitable for some.
@Richard Mayhew:
Might there also be a possibility that providers are using the chargemaster as their base for tax purposes? If you say your cost is X and you get paid 1/4 X by whomever, is that then a loss for taxes? Especially if they can get some to pay the chargemaster price, therefore setting, in this case the ceiling. I realize that in say, a retail store you have basic costs, goods/services, utilities/insurance, payroll/rent and there isn’t as much wiggle room, but where prices are set by the use of goat entrails and costs can vary drastically for the same service this seems ripe for tax rip off. Especially as I remember reading that hospitals lose money, yet manage to stay open for decades.
The Raven on the Hill
F— the “health” “care” “system.”
It sounds like a sensible Randian response to this, if one is stuck directly paying the system out-of-pocket, is to drag out payment as long as possible, and negotiate the lowest payment possible.
Let’s hear it for rational economic actors!
The Raven on the Hill
“renegoatiation” is a wonderful spelling error, BTW.
RaflW
This was really where I discovered the value of insurance, even before the deductible is met. I needed an urgent CT scan a few years back, and the ‘retail’ price was about $5,000. I think I paid somewhere in the $700-800 range for it.
I realized at the time how f*ed people w/o insurance are. How would they know what net price to push for in negotiations. Would they even know to push for that? Our pricing system is a tota disaster.
Morat20
You want fun billing? Let’s examine an event from my recent past. I have, despite much fervent work to prevent it, a high-deductible plan.
My wife has surgery. The doctor and center in question is used to performing work that is not covered under insurance (ours was), so they have a straightforward “cash up front” approach with rebates (most of their work is fertility stuff). So my wife needs certain surgery, covered under insurance, and they quote us 3k for everything. Payable up front.
I pay my 3k, surgery goes fine, My insurance gets the bill, processes it out of network (I’m appealing, there was a lot of confusion) and that’s where the fun begins.
3k is the actual cost of the surgery. I went and priced it all around, and that’s right around median. It’s short, simple, although under general anesthesia. 3k covers everything.
They bill my insurance company 24,000 dollars. My insurance company negotiates it to 14,000 dollars, which they then apply to my ridiculous out-of-network deductible (which is, of course, more than 14,000 dollars). I, in a panic, call the surgery providers thinking 3k ballooned into 14,000 dollars and I am FURIOUS because I know the actual cost, if I walked up without insurance, to another center would be roughly 3k.
I get assured that no, I don’t owe 14,000 dollars. They’re not billing me 14,000 dollars. I’m free and clear.
But in the end, my insurance company thinks I’ve shelled out 14k. If it was in network, apparently my company would shell out 14k. 14k of work was NOT done.
I am literally unsure of who is getting scammed here, which means it’s probably me but I’m not sure whether it’s my insurance company scamming me or the surgical center, which is odd because nobody is asking me for 14,000 dollars. It’s just a magical number floating around.
Like I said, I appealed to move it in network (odds of success: 0%) and the surgery has to be repeated late this summer (not due to error. The problem at hand often requires two cuts at the problem, so to speak. I have spoken with third party doctors and done my research).
So that’s where I stand: My new company plan meant I had to scramble to find 3k (half the maximum you can put into an HSA) in March, which means I had to dig it out of savings even if I can slowly repay myself as my HSA fills. I have a weird 14k bill floating around, the 3k I paid, another 3k due later this year (to another center, probably) and the feeling that someone is breaking the law or getting scammed and it’s probably me. I am meanwhile putting off medical visits and ignoring lab bills as I frantically wait for my next paycheck and the payment into my HSA so I can COVER those stupid bills. And I chose the lowest deductible plan my Fortune 500 company offered, and placed the max into my HSA I am legally allowed to.
Best healthcare in the world
pseudonymous in nc
Of course, it’s fucking insane bistromaths.
For contrast’s sake, in countries with sane health insurance systems like Germany, there’s an annual negotiation between providers and insurers of what the reimbursable cost will be for each procedure, and that’s what the tariff for the year. You can charge more, but the primary insurance isn’t going to cover it.