OPINION -- I am on Medicare and was having an elective colonoscopy soon. Always having an interest in the distorted pricing practices of providers, I asked several questions -- How much will you be billing me for this procedure? And, how much will Medicare be paying as full reimbursement?
But, the provider’s representative was surprised that I would care about prices as Medicare as my supplemental insurance would pay 100 percent of the cost, and assumed that was all I needed to know. But I kept pressing for an answer, and here’s what I was told by their billing office.
There are three Medicare billing codes for colonoscopy that come into play: “Routine” / “Biopsy” / “Removal of polyps”
The billed charges anticipated from this provider were $1132 / $1400 / $1468 respectively. And, they are additive creating estimated billed charges of $4,000 if all procedures come into play.
Medicare will pay $393 / $488 / $509 (total $1340 or as little as $684) respectively. This means that Medicare reimbursement will fall in the range of 17 percent to 34 percent of billed charges with a Medicare discount from billed charges of 66 percent to 83 percent.
Who can be so foolish to pay billed charges or anything more than Medicare plus 10 percent.
The provider asked me to sign a financial responsibility document that offered a 40 percent discount from billed charges only if I did not have insurance.
If I did have insurance the payer’s contract governed the discount (keep in mind, there must be very few managed care agreements that are achieving a 40 percent discount from billed charges. If I was insured and without a payer contract, my payer and I would be responsible for full charges.
How many of our employers are receiving 40 percent off billed charges or only about half the discount of what providers accept as full compensation from Medicare? With the will, there is a simple path out of this mess.
Stephen Gregg is a retired hospital administrator and health plan chief of staff. He can be reached at [email protected].
I would expect someone in health care to know that if insured by Medicare, that the financial relationship between a provider and Medicare precludes the provider from billing a patient outright for the total cost of a service. It's pretty well known that a provider can only charge the patient the amount Medicare deems acceptable.
Indeed prices are "distorted", but one has to consider the context in which they are created. They are created with billing an insurance provider, and billing patients as an afterthought. For those that don't know, insurance contracts stipulate that the provider will be reimbursed the lesser of what is charged versus what the insurance company allows. This puts pressure on providers to make sure every service they provide is more than what every insurance plan allows. The only thing keeping prices down is to avoid looking absolutely ridiculous. To take this example to an extreme, a hospital could charge $100,000 for anything and everything, except this would be too apparent. One certainly can't view hospital charges as analagous to automobile manufacturers, who know the exact cost of every component and labor. Hospitals, pharma, physician offices etc., don't know the true cost of anything, just what is reimbursed. Obviously this forces patients to get insurance as prices are more imaginary than real.
Dr Mike Henderson