Patients must shop in high-deductible plans
Amy Freedman's 16-year-old daughter was having a major flare-up of Crohn's disease and needed a CAT scan, read by a radiologist with pediatric expertise, to see if emergency surgery was called for. She got it quickly at St. Christopher's Hospital for Children.
The bill came to $14,359. Aetna paid the in-network hospital its negotiated rates, which totaled $9,645. Freedman's coinsurance was $846.
"Because I was a doctor," said Freedman, who works for a drug company, "I knew immediately that number was outrageous."
It was, however, correct. St. Chris just happens to be at the extreme high end of at least a ninefold range of prices for the same procedure at hospitals around the region.
More and more consumers are experiencing such unpleasant surprises as employers shift to insurance plans that leave more of the decisions - such as where to go for a scan - to patients. The theory is that they will shop around, saving money for everyone and slowing the rise in health-care costs.
The federal health-care overhaul, which President Obama signed two years ago Friday, may be accelerating the trend. The pattern is not likely to change much even if the Supreme Court overturns the law; indeed, conservatives tend to favor these plans because they are market-driven and place more responsibility on the individual.
Nor are so-called consumer-driven health plans necessarily a bad thing. For example, many of them carry high deductibles in exchange for lower premiums. Others have "coinsurance," which is based on a percentage of the cost (a "co-pay" is a set - and typically lower - amount). Young or healthy people often save money by never reaching the deductible. But they are taking a risk. And others may delay care.
The plans assume the patient is an expert shopper. There is a lot to learn.
"You get a little burned, and that is the beginning of the education process," said Martin Rosen, executive vice president of Health Advocate Inc., a company that employers hire to help their workers navigate the system.
Someone who lives in Mount Airy and routinely gets blood work at the Chestnut Hill Hospital outpatient lab might not have thought twice in the past about paperwork ("this is not a bill") that showed $837 charged for a PSA test, and $489 from Aetna accepted as payment in full. If a new plan's high deductible had not yet been met, the patient would pay the insurer's amount - or, he could go to Quest, which charges $132 and is paid, by either the patient or Aetna, $27.65.
"In fact, there is large variation in cost among almost all the services you can receive: lab, inpatient, outpatient," said Brian McGarry, president of national accounts for Aetna's Mid-Atlantic region.
Some difference is logical: A procedure at a community hospital typically will cost less - and the consumer's share will be less - than at a teaching hospital. If it is available at a nonhospital location, such as a colonoscopy center, the price will likely be much cheaper.
Other disparity is unexpected: A provider's particular array of services will influence which offerings are priced high, and which are low. Location affects overhead. Patient mix - what percentage is uninsured, or is covered, below cost, by Medicare or Medicaid - plays a role in where else the institution looks for the money needed to survive.
All these considerations affect how much a provider charges and how much an insurer agrees to pay.
A big reason for continuing disparities "is just opaque pricing, so you can continue to charge high prices and the market continues to pay," said Jonathan Kolstad, a health economist at the Wharton School.
Insurers, employers, policymakers, and patient advocates all encourage shopping around. Experts say that an individual patient should be able to get a price, in advance, from a provider. Determining whether it is fair takes legwork.
Online tools, such as www.healthcarebluebook.com, can hint at average costs for services in a region. Although they are very rough, and there may be good reason that a clinic charges more (maybe it has a new machine), they can be a place to start. Some insurers have sophisticated tools for subscribers that can estimate prices for specific providers.
The tools may also offer quality data, like whether a particular surgeon has done enough angioplasties to be considered proficient.
Still, "where to get services is an art form as much as a science," said John Janney, Independence Blue Cross' senior vice president of marketing. "There is individual preference, there is comfort level."
And there are tricks of the trade, said Rosen, the cofounder of Plymouth Meeting-based Health Advocate.
"Let's say you go to Penn or Jefferson" or another expensive teaching hospital. "You could say to the doctor, and this is a legitimate question, 'Do you practice anywhere else?' . . . because the biggest difference for, say, a hip replacement, is not going to be the doctor's cost. It is going to be the hospital and the ancillary fees, which will vary from location to location: anesthesia, lab, X-ray," he said.
Another trick, often a surprise to patients, is negotiating. Hospitals bill at far higher amounts than insurers will pay. They routinely drop the price - but only if asked - for people without insurance.
Rosen said that negotiating a co-pay or coinsurance would likely be more difficult, since the rate the insurer pays is already discounted. Some contracts may also forbid it. Still, there is no harm in trying.
Freedman, who was furious about the bill for her daughter's CAT scan, got prices from five institutions by using her M.D. title and claiming to have a patient with little money. She said the responses ranged from $1,100 at Fox Chase Cancer Center to $9,300 (plus a radiologist's fee) at St. Chris, which is about what Aetna paid.
The others, she said, were $5,179 at Children's Hospital of Philadelphia; $1,787 at Alfred I. du Pont Hospital for Children in Wilmington; and $4,485 at Temple University Hospital. (It was unclear what charges those numbers represented. St. Chris, like several others, would not give prices to a reporter, although a spokeswoman said that when someone cannot afford care, "we work directly with the patient to develop a reasonable payment plan.")
Armed with the comparative data, Freedman said she went round and round with St. Chris, the only for-profit hospital in the group, which stood by its charges (as did Aetna) but eventually offered to waive her $846 coinsurance. The Yardley woman accepted grudgingly.
It "had already gotten $9,000 from my insurance company, which was twice as much as any other hospital," she said, so the coinsurance "was icing on the cake."
To some extent, Freedman's learning experience is an example of how policy experts say cost-sharing will force habits to change.
But the jury is still out on consumer-driven health care. Enrollment in employer-sponsored plans with a deductible of $1,000 or more for single coverage rose steadily from 10 percent of the market in 2006 to 27 percent in 2010, according to the Kaiser Family Foundation. The percentages are much lower in Pennsylvania and New Jersey.
Research suggests that these plans do reduce costs, but there is also some evidence that people in them put off going to the doctor because they will have to pay the full fee until the deductible - at least $1,000 to $2,000 for an individual and twice that for a family - is met. Delayed care ultimately costs more.
The federal health-care overhaul tries to address that concern, in part, by mandating free preventive care. Experts say the law's impact on consumer-driven health care will vary widely among different insurance categories. Overall, however, it encourages types of coverage that require consumers to share more of the costs as well as to make decisions that could lower or raise them.
And, while the recent trend has been toward these plans, no one really knows whether they will keep growing.
"I think there is a lot of dissatisfaction," said Kolstad, the Wharton economist. When employees are allowed to choose among several types of insurance, he said, "the high-deductible plans have very low enrollment."
Cutting Your Medical Costs
Experts say the trick to managing high-deductible plans is to shop around and negotiate.
Here are some tips from Healthcare Blue Book.
How do I shop around?
If you have insurance, "in network" providers are usually cheaper than "out of network." The following general tips* apply with or without insurance.
Outpatient: If there is a choice of location for the same treatment, outpatient is usually cheaper than inpatient.
Diagnostic tests: Scans, blood work, and other tests are typically less at independent facilities than in hospitals.
Walk-in clinics: Places like MinuteClinic offer some of the same services as a doctor's office at lower prices - and urgent-care centers are cheaper than ERs.
Generic drugs: They always cost less than brand-name.
* These tips assume that cost is the main issue. There may be a reason to choose a higher-priced provider, such as a hospital setting for a tricky procedure.
How do I ask about price?
To get over the fear of asking, prepare in advance.
Know specifics: Write down the exact name of what you will be inquiring about. Also ask your doctor to provide billing codes, known as CPT (for doctor's office visits) and DRG (for hospital treatment).
Find out what others charge: Call around. Web tools, while far from perfect, offer examples. See below.
Call the office: Ask for the person who can discuss pricing (generally not the doctor).
Insurance: If you have it, tell them your company and plan. If you don't, ask for a self-pay discount.
Be thorough: Ask for all components of care; for surgery, that would include at least the surgeon, hospital, and anesthesia. Ask if there is more.
Get documentation: You may want to get the price in writing, or via an e-mail that you can print out.
If it is after the fact: Unexpected sticker shock can still be addressed. Try to get the bill reduced following some of the above steps. If you can't afford it, say so.
If they say no, ask for a higher-level manager.
How do I determine a fair fee online?
Use these web tools as a start - they may not do much more - and then call at least three places to compare:
www.healthcarebluebook.com: For a wide range of services, gives "fair" prices by region for cash payment, purportedly similar to what insurers pay (which is two to five times less than the "billed" amount).
www.njhospitalpricecompare.com: Gives "billed" amount for various procedures at each New Jersey hospital, and averages; 90 percent of the time, they are paid less.
www.phc4.org/medicarepayments: Gives Medicare payments in Pennsylvania for outpatient procedures in hospitals and in ambulatory care centers; Medicare pays uniform rates within counties, and always below cost.
www.hospitalcompare.hhs.gov: Gives Medicare payments for various inpatient procedures at many individual hospitals; amounts are below cost.
Insurance company sites: Some insurers provide detailed help to subscribers, although the tools may be hard to find. The cost estimator at www.aetna.com gives average prices in the area for various procedures as well as specific costs you pay under your plan for specific providers, but not in Pennsylvania; that should be added this year. At www.ibx.com, subscribers can get detailed drug pricing under their plan and average costs for various other services, but not specific providers; they should be added this year as well.
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