Wednesday, May 01, 2019

Transparency is the Word

Gotta love this headline in today’s readings: Doctors: Don’t blame me for high healthcare costs.

Lots of factors are at play when it comes to high healthcare costs. But doctors are sure of one thing: They aren’t to blame.

Physicians instead point to pharmaceutical and insurance companies as the source of high costs, according to a new survey from the University of Utah Health.”

This seems counter-intuitive: of course Doctor’s are to blame because that is who the patient pays for medical care. Yes you, the patient, pay the Doctor for your portion of the appointment, but the Insurance Company determines what is the patient’s portion.

There has been much discussion lately about making the cost of health care transparent. Most of that discussion revolves around the physician appointment and the physician charges but very little revolves around the part Insurance Companies play in determining the cost of healthcare.

To understand how vital a role Insurance Companies plays in healthcare costs, one must understand the relationship between the Provider and the Insurance Company. The Provider agrees to see all the patients in the Insurance Company’s Panel for a certain reimbursement for each Procedure Code that is billed. The Insurance Company agrees to list the Provider as an “in network” Provider and promote that Provider to their panel.

The Provider is given a list of select Codes and the reimbursement for each. Usually, the provider does not know what the reimbursement will be until the payment comes in. Since the provider does not know the exact amount he/she will be paid, charges are set high enough to ensure full payment from the various insurance companies with which the Provider is contracted. The standard charge is set at 150% or more of the Medicare Fee Schedule.

So, a Provider sets a charge high enough to get full payment and the Insurance Company pays the Provider, then why doesn’t the Provider know what the patient will pay. There are two factors:1) The reimbursement from the Insurance Company is always less than the charge (this is known as the write off) and 2) In the Insurance Contract between the Insurance Company and the Patient is defined Patient Responsibility of the cost. This includes a Deductible, Co Payment, Co-Insurance, Out of Pocket, Cost Share and a plethora of other terms to break up the Patient’s Responsibility. Based on all these breakouts, it is impossible for the doctor to know what the patient will end up paying.
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