There have been numerous efforts to increase the transparency of healthcare “costs”, however most of the “cost” numbers shared publicly are based on what the health plans (insurance companies also known insurance carriers) negotiate with the health systems.
When one reviews the charges on the “Explanation of benefits” (EOB) provided by the insurance company (for those who have health insurance coverage), the sticker shock occurs at the “Billed Charges”. These are the charges billed by the Provider (or the health system) to the insurance company on their claim for the service. There is very little to no transparency about this charge and how is it calculated. It is assumed that the service associated with this charge is coded using one or more CPT /HCPCS codes and relevant Revenue Codes in the Provider’s Charge Master.
The current transparency efforts are focused on the math that that explains the cost shares between what the insurance company pays and what the member (subscriber) of the plan pays. The efforts are lacking in pursuing the transparency of the “Billed Charges” and how they are assessed.
Most people with some form of insurance do not pay the “Billed Charges”, they pay what the health insurance company negotiates with the provider adjusted by the cost share agreement offered in the plan. The cost share agreement determines the deductible, co-pays, co-insurance and the annual out of pocket maximums.
It is important to note that the negotiated price only applies if the provider who rendered the service is a provider who is “participating” in the plan’s network; A plan may cover services rendered by a “Non participating” provider, however the cost share borne by the member would be higher than had the provider been a participating in-network provider. The scary part of the provider being a “non-participating provider” or an “out-of-network provider” is that, the provider could bill the patient for the entire difference between the billed charges and what the insurance pays. And that in essence is “Surprise Billing”. Unfortunately, hospitals can and are suing patients to collect the large amounts of outstanding amounts.
Related article
Hundreds of Hospitals Sue Patients or Threaten Their Credit, a KHN Investigation Finds.
For those who have insurance – Here are some helpful questions to ask both the Health Plan /Insurance Carrier and the Provider/ Health System when planning for a complex procedure /treatment that is not an emergency admission –
- What is involved in the complete treatment plan including diagnostic testing?
- Are all the “providers” for the complete treatment in the insurance plan’s network ?
- Is the full treatment plan (including any drugs, medication, durable medical equipment, ho covered by insurance? You may also inquire whether all the CPT /HCPCS and Revenue codes covered by the insurance plan?
- Where possible inquire to ensure that the entire care team including “sub-contracted” providers are covered by the insurance plan
- If there is a hospital stay involved, check how many days will be covered by insurance?
- What are the applicable cost shares (deductible, co-pay or co-insurance) for each component of the treatment plan.
- Always get a second opinion
Efforts under way to increase transparency of healthcare costs:
The hospital transparency rule (https://www.cms.gov/hospital-price-transparency) went into effect on Jan 1 2021, however as of a year after the effective date, the PatientRightsAdvocate.org’s analysis of 1,000 randomly selected hospitals found that only 14.3% were complying with all the requirements of the regulation. Even with the hospitals complying it is not easy for the individual (consumer /patient) to easily access, understand and make informed decisions about their care that are affordable and will ensure healthy outcomes
Coming soon
- Waste in the healthcare ecosystem
- Health equity
- Care journeys
Please submit your questions or suggestions to myhealthq@myhealthq.com
