“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.
Posts
