Posted in Access to healthcare, advance-pricing, CPT billing, Economic Issues, Health Insurance, Healthcare financing, Medical Costs, Medicare, Network Discounts, out-of-pocket costs, Patient Choice, Policy Issues, Uncategorized

Fallacy of the Discount: Why Price Transparency Matters

Why is the price of a CT scan 33 times higher in a hospital emergency room than in an outpatient imaging center just down the street?https://www.npr.org/sections/health-shots/2018/04/09/598794123/bill-of-the-month-a-tale-of-2-ct-scanners-one-richer-one-poorer

Hynden was shocked when he got the second CT scan in January, and the listed price was $8,897 — 33 times what he paid for the first test.

Gulf Coast Medical Center is part of his Cigna insurance plan’s approved network of providers. But even with Cigna’s negotiated discount, Hynden was on the hook for $3,394.49 for the scan. The additional ER costs added $261.76 more to that bill.

The higher price from Gulf Coast and its parent company could be a result of their enormous pricing power in Fort Myers, says Gerard Anderson, a professor of health policy and management at Johns Hopkins University.

Lee Health owns the four major hospitals in the Fort Myers area, as well as a children’s hospital and a rehabilitation hospital, according to its website. It also owns several physician practices in the area. When you drive around Fort Myers, the blue-green Lee Health logo appears on buildings everywhere.

“Anybody who’s in Fort Myers is going to want to get care at these hospitals. So by having a dominant position, they have great bargaining power,” Anderson says. “So they can raise their rates, and they still do OK.”

Anderson says his research shows hospital consolidation has been driving prices higher and higher in recent years. And because more and more people, like Hynden, have high-deductible insurance plans, they’re more likely to be on the hook for huge bills.

So Lee Health and other dominant hospital systems mark up most of their services on their master price lists — the list that prices a CT scan at Lee Health at $8,897. Anderson calls those lists “fairy-tale prices” because almost no one actually pays them.

“Everybody who’s taken a look at it agrees — including the CFO of the organization — that it’s a fairy-tale thing, but it does have relevance,” Anderson says.

The relevance is that insurance companies usually negotiate what they’ll pay at discounted rates from list prices.

So from the master price of $8,897, Cigna negotiated Hynden’s bill down to $5,516.14 — a discount of almost 40 percent. Then Cigna paid $2,864.08, leaving Hynden to pay the rest.”

https://www.npr.org/sections/health-shots/2018/04/09/598794123/bill-of-the-month-a-tale-of-2-ct-scanners-one-richer-one-poorer

Posted in Access to healthcare, advance-pricing, CPT billing, Direct-Pay Practice Models, Economic Issues, Health Insurance, Healthcare financing, medical inflation, out-of-pocket costs, Policy Issues, Uncategorized

The Sorry State of Healthcare Financing: “But I Didn’t Get the Memo!”

Memo.LumbergYou pull into a Gas Station and discover that there are no prices listed on the pump, just a slot to insert your auto insurance card…only to find out your State Farm policy is not part of the gas station’s network! You just want to fill up and you are willing to pay cash, so you ask the attendant how much it is per gallon.

The response: “We can’t be sure until we know what your out-of-network benefits are… so you’ll need to pay a $200 deposit until the claim cycles through. If the gasoline is less than $200 you’ll get a refund; if more, then you’ll get an additional bill.”

Or you sit down at a Restaurant, open the menu to discover there are NO prices listed…Not only that, but you have to agree to eat the food and pay whatever price your insurance company says you owe!!!

This, my friends, is the sorry state of healthcare economics and a big reason why Healthcare is so expensive…because it isn’t the cost of care that is the problem; it’s the price we are being charged for the privilege of using our insurance!!!

Posted in Access to healthcare, advance-pricing, Consumer-Driven Health Care, CPT billing, Deductibles, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Health Insurance, Healthcare financing, Independent Physicians, Medical Costs, medical inflation, Network Discounts, Patient Choice, Patient-centered Care, Quality, Uncategorized

Healthcare costs…time to rethink the calculus!

For anyone still laboring under the myth that insurance carriers are motivated to hold down costs in healthcare OR that health insurance is expensive BECAUSE health-care is expensive OR that insurance helps PROTECT us from high billed charges, consider the following facts and figures presented in this common Gynecologic surgery example.

Let’s compare a not-for-profit hospital-owned facility that has in-network insurance agreements with that of a physician-owned private facility that does NOT have any insurance contracts for payment such as Surgery Center of Oklahoma.

A broker consulted me on cost-containment strategies on behalf of a client/patient who needed a hysterectomy (CPT codes provided).  She has a high deductible indemnity plan and a faith-based health share plan. The surgeon’s (Gyn physician) fee was $7,000.  The hospital facility charge for O/R suite was estimated at $30,000 and they required $15,000 payment upfront.

Based on analysis of claims payment, it would be reasonable to assume the reimbursement would be around 60% of billed charges (+/- 10%).  So the final payout could easily be between $18K – 26K. That total does NOT include anesthesia and may not include surgeon’s fee. What a fantastic discount! In some markets, we see hysterectomy reimbursement as high as $54K.

The all-inclusive fee at SCO is $8,000 and includes an over-night stay if needed.  That price includes everything needed to perform the surgery, including professional fees.

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All of the effort, time and resources at SCO go to medical care; not buying practices or employing physicians or 7 figure CEO salaries! And no fake discounts designed to foster dependence on the same products that keeps prices higher than they need to be.

That is how you reduce the cost of healthcare!

 

Posted in Access to healthcare, advance-pricing, Economic Issues, Healthcare financing, Medical Costs, Network Discounts, Policy Issues, Uncategorized

Carrier Networks and the Cartel-ization of Healthcare

Agenda-May-15-margins-of-error-figure-2.pngby Robert Nelson, MD

 

When we have a situation, as we do in healthcare, where the networks have cornered the market and control the pipeline of patients, along with the magnitude & directional flow of money in the system, that which follows is a de facto CARTEL of very unequal participants; one where the disconnect between the ability of the supply side and demand side to send meaningful price signals to each other is necessarily suppressed by the financial design of the network payment/reimbursement mechanism.

What characterizes the network as a consumer/buyer benefactor by way of “negotiated discounts” for services rendered, in reality ends up suppressing the only forces (price signals) which are capable of determing value and controlling prices. All this being to the detriment of end users and/or first order buyers of healthcare resources.

Posted in Access to healthcare, Affordable Care Act (ObamaCare), Consumer-Driven Health Care, Defined Contribution Benefit Plans, Direct-Pay Medicine, Direct-Pay Practice Models, Doctor-Patient Relations, Doctor-Patient Relationship, Economic Issues, Employee Benefits, Employer-Sponsored Health Plans, Essential Benefits under the ACA, Health Insurance, Independent Physicians, Individual Mandate, Medical Practice Models, Organizational structure, Patient Choice, Policy Issues, Price Tansparency, Risk Adjustment, Risk Corridors, Tax Policy, Third-Party Free Practices

Components of Optimal Health Insurance: #4 – Contract Free Healthcare Zones | Robert Nelson, MD | LinkedIn

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Robert Nelson, MD

Does anyone else see a problem with this arrangement? And yes, it is all very legal. But that doesn’t mean it is prudent or even ethical to continue this convoluted, monopolistic, expensive, and restrictive method of accessing and paying for healthcare!

Look carefully at the characteristics of how health plan networks operate and follow the money flow from start to finish. What holds it all together? Despite its byzantine complexity and 40+ years of being entrenched into our national psyche, there is one linchpin that holds the whole perverse system together: It is the physician contract!

The provider (or provider’s employer) buy-in is what propagates and guarantees the survival of this behemoth. Without provider network agreements, the whole thing collapses like a house of cards!

via Components of Optimal Health Insurance: #4 – Contract Free Healthcare Zones | Robert Nelson, MD | LinkedIn.