health insurance

Coping with Your High-Deductible Health Plan

What Is a High-Deductible Health Plan (HDHP)?

Wonder why you’re paying more for a health insurance plan that doesn’t cover what it once did? Join the crowd! Health insurance has become more confusing and more expensive in recent years. Many of us, even if we still have a health plan through our employer, don’t understand what’s happened.

confused-face.jpg

The newest, disturbing trend is the rapid growth in high-deductible health plans (HDHPs) that charge high premiums for reduced coverage.

A high-deductible health plan includes any plan that requires out-of-pocket expenditure of $1,350 for an individual or $2,700 for a family per year before it pays for medical expenses. For many HDHPs, payment doesn’t kick in until much higher deductible amounts (say, $6,000 or more) have been met. Such very high deductibles mean that we’re essentially purchasing health insurance that covers catastrophic situations.

Still, we need to remember that even HDHPs can save money. That’s because they negotiate reduced rates for specific forms of treatment with health care providers.

For example, a provider might charge $500 for a certain procedure, but your insurance company has previously negotiated with the provider a price of $300 for that procedure, saving you $200 even though you’re still on the hook for $300 if your deductible amount is unmet. Without your insurance plan, you would have owed the provider $500 out-of-pocket.

Downsides with HDHPs

HDHPs caught on with insurance companies and employers as a way to reduce the cost of health care. They reasoned that if we were forced to pay more of our health care expenses out-of-pocket, we would think twice before running off to the doctor with a cold or a sore back. For more serious situations, we would have an incentive to shop around to find care for the lowest possible cost. Since fewer claims would result, insurers and employers could reduce premiums too.

Sounds rosy, doesn’t it? But since more employers offer only HDHPs and because many of us, even on the public health insurance exchanges, can afford only high-deductible plans, recent experience has exposed some flaws in the argument for HDHPs.

1.     Many people postpone or avoid altogether getting the health care that they need. A California woman with a $6,000 deductible plan chose not to have surgery to remove what her doctors thought was a benign polyp in her uterus. Months later, surgeons operated, discovered that the polyp was cancerous, and performed a hysterectomy. She continues to be monitored closely, although she appears to be cancer free. Such stories with worse outcomes are not uncommon.

2.     Comparative shopping for health care is very complicated. Health care providers often fail to reveal what care will cost their patients, and health insurers will not disclose their contracted rates with providers. Solid information about quality of care is also hard to obtain.

Suppose you shop around for prices on knee replacement surgery. You will find that prices vary widely, that details of procedures and equipment vary, and that providers often avoid justifying such differences. It’s worse than comparative shopping for a refrigerator or a car!

3.     The distinction between “in-network” and “out-of-network” is tricky. Insurance companies contract payment rates with a list of specific providers (= “in network”). Only charges from in-network providers count toward your deductible.

Charges from out-of-network providers can balloon to very high amounts. And providers can move from in-network to out-of-network without notifying you.

If you are treated by a hospital medical team, some team members might be in-network and others out-of-network. Finding out which doctors are in-network and making sure that only in-network doctors are treating you is nearly impossible. The final bill in such situations can be a nasty surprise!

Untitled.png

Suggestions for Coping

Consumer Reports offers some beginning tips.

Know your freebies. By federal law, health insurers must pay for many preventative procedures at no cost (neither co-pay nor co-insurance) to you. Check out the official list of free preventative services. The list includes annual physical exams and many other services and treatments.

Shop around for both price and quality. This will not be easy. You will need to contact your insurance company (online or by phone) to learn what services are covered and, as much as possible, at what cost in their network. Then you should contact individual providers (physicians, hospitals, medical centers, etc.) to learn as much as they will reveal about possible cost. Finally, check rating services or ask a trustworthy health professional about quality of care. Be persistent.

Talk with your doctor about what treatment or medication you need and how much it will cost. Bear in mind that many physicians do not have accurate or complete information about costs, especially when prices vary widely. And not all physicians are comfortable discussing such matters. But you might remind them that financial stress is also bad for your health.

download.jpeg

Try to schedule expensive treatment early in the year, before your deductible resets. Doing so can save you a lot of money.

Use non-taxed funds to pay for out-of-pocket medical expenses. See if your employer offers a Health Reimbursement Plan. Check into whether you qualify for a Health Savings Account, perhaps one that your employer supports.

Remember that only in-network charges count toward your deductible or overall cap amounts.

Other Useful Tips

A provider’s flat fee might be lower than a patient’s financial obligation would be if a claim were submitted to the insurer before the deductible amount has been met. Although health care providers are required to submit insurance claims for patients who have insurance, some patients withhold insurance information for routine, non-life-threatening situations for which they must pay out-of-pocket. This might save them money especially if they cannot use funds from a Health Savings Account or can’t afford to contribute to one. (If you have a chronic condition that is expensive to treat, this option might not be advisable.)

Ask your doctor about how you can save money on prescription medications. Sometimes a cheaper alternative medication or a generic form can be used. There might be trade-offs in effectiveness, however. So always ask for professional help in making such decisions. And never reduce dosage to save money without consulting your doctor.

When purchasing prescription medications, decide whether you should use your insurance. For occasional purchases, ask your pharmacist what the cash price would be. Often, it will be lower than what you would pay by using your insurance card, especially if your deductible is not yet met. This is because of the rate that the insurer has negotiated with the pharmacy. The pharmacist is not permitted to remind you or initiate discussion of the cash price with you, but the pharmacist is required by federal law to tell you what it is when you ask. Such purchases will not count toward your deductible.

Save on prescription medications also by using a discount card. Companies such as GoodRx offer deep discounts on prescription drugs. Prices can vary widely, though, by pharmacy. Drug manufacturers also offer discounts, typically for persons who meet certain financial qualifications.

Get medical attention when you need it. Sometimes, of course, a minor illness or injury will heal if given a little time. But you should not ignore symptoms that might indicate a serious condition. Doing so could result in a more severe situation that will cost you a lot more money and, possibly, your long-term health.

Coping with high-deductible health insurance plans for medical treatment and prescription medications is perplexing, difficult, and time-consuming. At Kathy’s Urgent Care, we try to be as transparent as possible about costs to help you manage your health care responsibly.

To add or view comments, click on the title of this article above.

What Will My Drug Prescription Cost?

pills_money.png

Such an apparently simple question does not have a simple answer. Let’s start with “whose cost.” The drug manufacturer’s? The pharmacy benefit manager’s (PBM, a “middleman”)? Your health insurance carrier’s? Your dispensing pharmacy’s? Your out-of-pocket cost? American society’s in general?

Consider Marcia who takes atorvastatin (generic form of Lipitor™) to manage her high cholesterol. A 30-day supply purchased through her Aetna health insurance plan at CVS recently cost $46. When she checked with GoodRx, however, she learned that a 90-day supply purchased for cash without insurance at a different pharmacy would cost only $18. More astonishing, the estimated full cash price with no discount coupon ranged from $29 at Costco to $392 at CVS and $439 at Walgreens. What’s going on here?

Prescription drug pricing is so complicated and so shrouded in mystery that it is difficult to tell why the price of a single drug varies so widely. Worse, if you have health insurance (and depending on other factors), you might actually pay more for a specific drug, like Marcia did, than if you had no insurance. And as more of the cost shifts to individuals (because of high deductible insurance plans, drug pricing practices, prescriptions for non-generic or more expensive drugs, etc.), your out-of-pocket costs can soar.
 

Are Drug Companies to Blame?

Nearly everyone has heard of the EpiPen price increase in 2016. EpiPen is an epinephrine auto-injector that delivers a precise dose to combat allergic reactions (such as to bee stings or certain foods). It is usually sold in packs of two (the second dose should be administered after 15 minutes if the first does not reduce anaphylactic shock) and is considered lifesaving for those who are susceptible to severe allergic reactions. The price of a two-pack in 2007 was around $100. After acquiring ownership of the drug, Mylan raised the price in 2016 to $609. Mylan has since made a generic version available at roughly half the cost of EpiPen. In either case, the medication expires after one year, making annual repurchase necessary. With high deductible insurance plans on the rise, out-of-pocket costs continue to be out of reach for many. Despite heavy criticism from members of Congress, former Mylan executives and employees, and consumers, Mylan has not lowered its price for the original EpiPen (see Outcry Over EpiPen Prices Hasn’t Made Them Lower).

Other alternatives, such as Adrenaclick™ (about $200) which also employs an auto-injector, are available. CVS has teamed up with Impax to sell a generic epinephrine auto-injector for about $109 for a two-pack.

Yet another alternative, Auvi-Q™, a redesigned auto-injector, is packaged with an audio recording to provide instructions about its use. Auvi-Q provides a link on its website for customers to download a form to be signed by their physician that will allow them to obtain the product through the company’s direct mail program for $0 out-of-pocket expense (to qualify, you must be insured and have a family income of less than $100,000). The list price, however, tops $4,777—an amount that will be charged to an insurance company and much more than EpiPen.

This rather extreme example shows that there is little control over what pharmaceutical companies can charge for their products. Most charge what they do simply because they can.
 

What About Pharmacy Benefit Managers (PBMs)?

Most people (like me until recently) have never heard of pharmacy benefit managers (PBMs). Such a name might lead you to think that they benefit all of us who purchase prescription drugs by negotiating lower prices. But that’s not what actually happens in many cases. PBMs (individuals or companies) are hired by insurance companies, large employee unions, and other institutions that offer prescription drug benefits to their members or clients. The PBMs negotiate pricing contracts with drug manufacturers. The process, however, often results in an increase in manufacturers’ list prices and includes a series of transactions that allows some PBMs to skim profits.

Here’s an oversimplified example of how the cycle typically works. Imagine that APEX is a drug manufacturer that makes NonAnx to control anxiety. RxBroker is a PBM company that has been hired by HealthIns, a major health insurance company. DrugSave is a large pharmacy chain.

  • APEX sets a list price for NonAnx at $3,000 per dose.
  • RxBroker proposes that HealthIns will approve NonAnx for coverage, but only if APEX pays a rebate of $1,500 off the list price.
  • APEX agrees to pay the rebate of $1,500 to RxBroker, and HealthIns lists the drug as approved.
  • RxBroker then tells DrugSave that HealthIns will cover the drug at $500 per dose.
  • (Patients covered by HealthIns would pay only $30 co-pay for a 30-day supply. DrugSave sets whatever cash price it wishes for non-insured customers.)
  • RxBroker (and maybe HealthIns) keeps the $1,000 difference between APEX’s $1,500 rebate and the $500 reimbursement due to DrugSave. (This is the skim.)
  • APEX raises its list price of NonAnx to $4,000 per dose to try to recover lost revenue from other institutional customers.
Screen Shot 2018-01-02 at 6.09.18 PM.png


For most PBMs, no one else knows how much the manufacturers’ rebates exceed what pharmacies charge customers for their prescriptions. This means that insurers and PBMs can quietly pocket the difference. That is why most of us find out what a prescription drug costs only when we go to the pharmacy counter to pay. That is also why some states are seeking ways to increase transparency in drug pricing.
 

What Can You Do?

If you are covered by a high deductible health insurance plan or if you lack insurance, consider taking the following steps.

  • Demand that your federal and state legislative representatives pass legislation that requires greater transparency in drug pricing. Rising prescription drug prices are generally not a partisan issue, and many states are beginning to address the matter.
  • If your insurance plan covers the cost of prescription drugs at least to some extent, contact your carrier to learn what your in-network or out-of-network cost will be. Ask if they have any discount plans.
  • Check with drug manufacturers to see if you qualify for discounts or other assistance.
  • Check with prescription drug discount services such as GoodRx or BlinkHealth for access to lower out-of-pocket prices. Contrary to what you might think, you might pay much less if you don’t use your insurance and take advantage of these programs.
  • Discuss the cost of your medications with your physician or other health care provider. Ask them to prescribe the lowest cost, effective medication possible (usually a generic drug). Surprisingly, many providers lack sufficient information to answer your question.

Individual responsibility for prescription drug costs is rising faster than any other area of health care. We all need to become more assertive in demanding information and transparency about drug pricing and the cost of health care generally.

At Kathy’s Urgent Care, we will be happy to discuss the cost of your prescription medications with you, and we pledge to prescribe or administer the lowest cost-effective medications possible.

What Will your Visit to the Doctor Cost?

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.”

Healthcare-cost-stethoscope-bill.jpg

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

price-transparency.jpg

 

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.
    • Some insurance carriers—for example, Aetna and UnitedHealthcare—provide online tools to help their members find estimates for hospital costs and medical procedures.
  • 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.

Ask Questions

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.