Contributor’s Corner: Charges Really Do Matter; Just Ask Me!

Health Wolters Kluwer Law & Business will periodically feature posts from outside contributors who are members of our Advisory Board. Today’s post comes from Allan P. DeKaye, MBA, FHFMA.

There’s been quite a hoopla over the recent report of the disparate range of charges to Medicare for some of the most common procedures and medical conditions.  It’s been covered and reported in most healthcare news services and journals—and even in the mainstream media.  It follows on the heels of the Time magazine issue devoted to this subject a few months ago. This topic shouldn’t come as a surprise to most healthcare professionals.  It’s been there ever since the Medicare provision related to the “…lesser of costs or charges…” was established that led providers to be sure that their charges exceeded costs to maximize reimbursement paid for the cost of care.  Suddenly now, the collective conscience has been awakened to raise awareness.  Some will argue that DRG payments will neutralize these excessive charges, and even that payers may only pay UCR (usual, customary and reasonable) charges regardless of the bloated charges levied for procedures.  Hey—but wait a minute—what about me—it’s costing me more!

 Yeah—a lot more—and for patients with Medicare Part B (physician and outpatient services) coverage, and especially anyone who has seen their out-of-pocket costs rise with now having to pay “coinsurance” amounts—that is a portion (usually a percentage) of the (approved) charges—not just a copayment and/or a deductible will find little solace is the industry speak of DRG payments and negotiated rates.  No longer is it just the $15 or $25 copay—it could now be $30, $45 or $50 or more per service.  But it’s the 10%, 20% (or more) of covered charges that adds an unknown amount to a patient’s bill.  We (especially those healthcare professionals likely to read this blog) might simply shrug off the increased copay amounts—or even the higher premium costs employers have been passing along to employees.  Just wait—it could be you having to pay an amount you never ever knew about.  After all, when was the last time you (or one of your organization’s patients) asked how much the MRI or CT scan that is needed costs?  How about adding the cost of the contrast, too?

 The literature is replete with having consumers (read patients) becoming more educated and involved in their care decisions knowing more and asking the right questions to help bend the cost curve.  High-deductible health plans should help—right?  Wrong.  However, consumers, now patients, will learn that an MRI or CT scan will very quickly use up the $2,500 high deductible, and may also trigger a coinsurance amount due, as well.

The consumer has a much better choice shopping for a new car than for a needed healthcare procedure.  Let’s face it, you can go to two or more dealers (even online) to comparative shop:  add leather, moon roof, GPS, etc., and receive competitive pricing.  Try that with an MRI, CT scan or other procedure.  Many hospitals still can’t provide reasonable or accurate cost estimates.  And you’re not likely to consider anesthesia to be an “optional” add-on for a surgical procedure.  Uninsured patients will have even fewer choices, and are likely to rely on neighborhood hospitals, especially those with a municipal or safety net status for the care they need.

 If you’ve not experienced these situations firsthand, ask an elderly friend or relative with Medicare Part B coverage.  Chances are they’ve had a recent procedure.  For example, two different MRIs at different providers may have had $2,000 and $2,200 charges respectively (as an illustration).  If the covered charges were $1,600 and $1,800, respectively, then the 20% Medicare Part B coinsurance would have resulted in either $320 or $360 in out-of-pocket expenses.  That’s a difference most seniors would have felt and certainly noticed.  Multiply the out-of-pocket cost by the number or complexity (read cost or charges) seniors are likely to have, and you’ll see that the outrage needs to be more vocal. 

 But wait a minute-it’s anybody with a policy that has a coinsurance provision—not only seniors.  I’ve already felt it–and it could be you, too.  So the next time the conversation of charges and disparity comes up, don’t focus on only the margin—but the care delivery mission to the community and improved customer (patient) understanding, too.  Bending the cost curve can start with providers taking a hard look at (and begin lowering) the charges for the care they deliver!

 

Allan DeKaye is the author/editor of The Patient Accounts Management Handbook (Aspen, 1997), and is presently developing a new book entitled: My Medical Bills are Killing Me©.  He is also a member of the WKLB Healthcare Editorial Advisory Board.