Friday, May 16, 2014

Point of Reference (Pricing)

Over the years, we've documented the phenomenon known as "PARE pricing;" that is, when one is inadvertently treated by an out-of-network provider. For example, you go in for arthroscopic knee surgery, choosing an in-network hospital and surgeon, but it turns out that the anesthesiologist is out-of-network, and you end up being on the hook for full price for his services.

And we've talked about a little known "gotcha" in plans where, even if you choose an in-network provider, you're still forced to pay full price because the procedure or service wasn't a "covered expense." An example of this might be elective plastic surgery.

But what if you go in for a covered procedure, at an in-network facility by an in-network provider, and you still end up paying substantially more than the in-network charges?

This is set to happen under a little known ObamaTax provision called "reference pricing" [ed: well, it might have been better known if the rocket surgeons that passed the bill had read it first]:

"The Obama administration has given the go-ahead for a new cost-control strategy called "reference pricing." It lets insurers and employers put a dollar limit on what health plans pay for some expensive procedures ... One way the new approach is different is that it sets a dollar limit on what the health plan will pay for a given procedure."

Let's stop right there: back in the day, we called these "indemnity plans" (and you still see them around as mini-meds). There would be a schedule of benefits, say $100 for an x-ray, and you were responsible for the balance if the actual cost exceeded this. Fair enough: you knew this going in.

But there is no such schedule attached to "major medical" or group plans, so how is one to know ahead of time? This is especially true for non-scheduled (emergency) procedures.

It may well be a way to "bend the cost curve down," but who sets the "right" price, and how does one determine this ahead of time?

There's another interesting (potential) conflict here: in Ohio, providers are forbidden from balance billing for covered in-network claims. How, exactly, will that circle be squared?

And how many more of these little "goodies" await us in the coming months and years?
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