What will be your out-of-pocket cost for your next doctor’s appointment? Unlike most other transactions, learning what a health care procedure will cost before you receive treatment is extremely difficult. Providers charge different prices. Health insurance plans vary. Various aspects of health insurance coverage are difficult to understand. And much of the confusion might be intentional to boost corporate profits. Public discussion of these issues often centers on “transparency of health care costs.”
How Health Insurance Coverage Varies
Most of us are aware that the health insurance landscape has changed. Premiums have increased for people insured by their employers and for those who purchase insurance through the Affordable Care Act (ACA) exchanges. In addition, higher deductibles (the amount that an individual must pay out-of-pocket before insurance payment kicks in) and higher co-insurance (the percentage of health care costs for which an insured person is responsible) amounts have shifted more of the financial burden to individuals. This shift has focused our attention on how much or how little our insurance will pay for particular treatments.
Your insurance carrier can inform you about your deductible amount, your co-payment, your co-insurance rate, and specific details about which treatments are covered.
Insurance companies also negotiate varied rates of payment with different providers—what is called a contracted rate. Sometimes the amount paid by insurance companies to clinical providers could vary by several thousand dollars, ranging from $12,000 to $75,000 for joint replacement surgery, or $1,000 to $6,500 for cataract removal. If your deductible or co-insurance amounts were high, you could be faced with large out-of-pocket expenses, depending on which provider performed the service.
Insurance companies typically do NOT publish their contracted rates for clinical providers.
Because of contracted rates, insurance companies often pay substantially less than the full price that a provider would otherwise charge. This is true especially for providers who are listed as “in-network,” that is, who have negotiated specific rates with insurers. If a patient receives treatment from an “out-of-network” clinical provider, however, the amount charged by the provider could rise to a sum close to what uninsured patients would have to pay.
Insurance companies inform their clients about the differences between in-network and out-of-network payments, but charges assessed by out-of-network clinical providers can still be far above what an insurance company will pay.
Medicare and Medicaid establish fixed rates of reimbursement to clinical providers for specific conditions and treatments. Most providers accept these rates, but a small number of providers have opted out of accepting Medicare or Medicaid rates altogether. Further information can be found at the Kaiser Family Foundation website.
Why Providers Charge Different Prices
Clinical providers often add to the confusion by charging different amounts. Reasons for such differences among providers include the type of practice or institutional setting, the geographic location of the provider which might reflect drastic differences in overhead expenses, including the nature of the clinical staff and medical equipment that must be maintained.
Sometimes, providers’ fees differ because of the professional qualifications of clinical staff who actually conduct a procedure. Differences in overhead expenses are often reflected on your bill as a “facility fee.” Most providers will not itemize the details contained in their “facility fee.” These differences go far to explain why services rendered in a hospital’s emergency department or in their own urgent care centers are so much more expensive than when delivered by an independent urgent care clinic.
Because of such disparity among providers, it is always wise to check with more than one to see what they would charge for the procedure that you require. Some providers might be reluctant to give you such information, or they might claim that they cannot foresee what the final charges would be because they cannot predict whether complications might arise. You should therefore be prepared to make a decision based on an estimate of what the charges might be.
What Transparency Means
Confused? You should be! Understanding the ins and outs of insurance coverage and the differences among providers perplexes even health care experts. But some insurers and clinical providers have begun to provide relevant information in simpler form. And some states have started to require greater transparency in health care costs and even to provide tools to help those who need care and help with paying for it. Here is what such transparency should mean:
- Insurers and providers should provide accurate, relevant price information, including what is and is not covered by insurance.
- You should be able to obtain information about quality of care and patient experience for different providers.
- Your clinical provider should include considerations of cost when advising you about undergoing certain procedures or treatments. These considerations should include costs of referrals to other providers and procedures not covered by insurance. After all, crushing debt due to unexpected medical expense can be toxic!
- Do not presume that higher price means better quality of care. For a list of several resources that you can use to check on quality of care, go to the Commonwealth Fund’s Quality Matters Archive.
Of course, if you are confronting an emergency, there is no time to ask questions. Otherwise, do not be surprised by your health care bill. Take charge. Ask questions. Assume responsibility for your financial as well as physical well-being.
The Healthcare Financial Management Association (HFMA) has prepared a complete and useful guide in plain language for you to learn what questions to ask and how to ask them: “Understanding Healthcare Prices: A Consumer Guide.” Click here to download the guide free of charge (also available in Spanish).
At Kathy’s Urgent Care, we try to be as transparent as possible about pricing, payment policies, and insurance. For more information, check out our Payment Policies and Insurance page, or call us. We’ll be glad to respond to any questions that you have.