With the changes in health insurance these days, Obamacare causing high deductible insurance for employer based health plans, and the increasing responsibility for patient payments caused by these changes, the first dollar of healthcare usually comes right out of a patient’s own pocket. So patients need to choose their healthcare providers wisely.
Where healthcare is delivered can save thousands of dollars!
You can see a doctor and have tests in a hospital setting, or you can see an independent doctor. The doctor visit to a hospital-employed doctor will cost you roughly 80% more than to an independent doctor because of charges tacked on by hospitals called hospital facility fees. Hospitals don’t like to talk about these fees ahead of your visit, possibly because you might go somewhere else if you knew how much more your services cost at a hospital owned location.
Overall, testing done in a hospital outpatient department, like an MRI, costs about three times as much as it does when it’s done in an independent doctor’s office, like the Rowe Neurology Institute, which doesn’t charge facility fees. This is important because the first hundred, or maybe even thousand, dollars could come right out of your own pocket, if you have high deductible insurance.
How Health Insurance Works
Let’s say you go to see your doctor for a problem, like headaches, neck or back pain, memory loss, or sleep problems. That doctor or provider will evaluate you, and many times will send you for tests.
1. You give your ID and insurance card to the receptionist at the doctor’s office and to the receptionist when you go for the test.
2. In a perfectly transparent world, the business office of the doctor, and also the one where the test is done, will call your insurance company with the information on your card to verify plan benefits and let you know ahead of time what all that will cost. (You may have to read the fine print and look for signs posted in hospital-associated offices in order to know whether they charge facility fees and require services from other doctors. The doctor’s office should tell you all this ahead of time, but they often don’t do that and later “surprise” you with extra charges and bills from doctors you never see, like radiologists, for reading an MRI or X-Ray, for example.)
3. You will receive a bill from the doctor or provider’s office, or the testing location, or both, for the evaluation, testing and treatment you receive. These bills will show how much your insurance paid and how much you need to pay. If you bought a high deductible insurance so you could save money on premiums, the entire amount for the doctor’s visit and the testing may come right out of your own pocket.
4. The business offices of the doctors, providers, and testing locations collect the remainder of the charges allowed by your insurance company directly from your insurance company, but you will be responsible for the entire amount of your deductible if your charges are more than that.
5. You will also receive an Explanation of Benefits (EOB) from your insurance company, that shows what your insurance paid and why, and the status of your deductible, and how much you have to pay. Oftentimes, if a doctor or facility is “out of network” and you have no out-of-network benefits, you could be responsible for the whole thing! This becomes really important for the narrow or extremely narrow network plans, like Medicare Advantage products. You may have to travel many miles to get any care at all. That’s why they’re so profitable for insurance companies.
Each time you see your doctor, or have a test, you may have to pay something called a CoPay. This is a fixed amount that the insurance company requires you to pay out of your own pocket for prescriptions, office visits and other services. This is a ploy designed by insurance companies to try to make sure you don’t “overuse” health services. It’s not a very intelligent ploy, really, because most people don’t take the time and trouble to go to doctors’ offices and go through expensive tests and procedures unless they believe they really need them to improve their quality of life. But it’s one more charge you have to pay every time you receive medical care.
Health insurance usually also includes Co-Insurance, which is a percentage of the remaining bill (after your deductible) that remains your responsibility after your primary insurance pays their portion of your bill. Some people have a secondary insurance policy that covers this.
Example from an Employee’s Family Recently:
Shoulder Arthroscopy Total Charge $5,800
You pay your $500 deductible upfront leaving a $5,300 balance for Insurance.
Your Co-Insurance on this type of procedure is 10 % so your insurance company will charge you ($5,300 X 10%) or $530 in addition to your deductible.
Note: A typical Co-Insurance percentage is 10% to 20% but can vary for different plans between 0% to 50%. Additionally, Co-Insurance percentages can vary for different types of charges (surgery, diagnostic testing, etc) even within the same plan.
Out Of Pocket Maximum
Most health plans include an out-of-pocket maximum which limits the total amount you will be responsible for during a calendar year.
Example from an Employee’s Family Recently:
Hip Replacement Surgery $12,000
You pay your $1,000 deductible upfront, leaving an $11,000 balance for insurance.
Your Co-Insurance on this type of procedure is 20% so your insurance company will charge you ($11,000 X 20%) or $2,200 in addition your $1,000 deductible: Totaling $3,200. But if your plan has a $3,000 Out Of Pocket Maximum you would only pay $3,000. [$1,000 deductible + only $2,000 of the $2,200 Co-Insurance]. Additionally, any further charges, like physical therapy and other procedures and testing, would be paid for by your insurance company, for the rest of the policy year, because you’ve met your annual out of pocket maximum with the hip replacement surgery.
Note: Most companies count the Co-Insurance amounts you pay towards your out of pocket maximum but it is common that CoPays will not count.
High Deductible Insurance Plans, HSA’s, HRA’s, and FSA’s
Many high deductible insurance plans are now being offered (and purchased) with $4,000, $5,000 and $6,000 deductibles. There are options and tools that help fund or assist with these High Deductible Insurance Health Plans (HDHP) like Health Savings Accounts (HSA), Health Reimbursement Arrangements (HRA) and Flexible Spending Accounts (FSA) but that is an article for another day.
The Bottom Line—Payment for Healthcare is complicated.
Our society desperately needs increased transparency and improved communication with patients about healthcare costs, BEFORE THEY ARE INCURRED, since patients are really the ones paying the bills, one way or the other.
People don’t use healthcare unless they need it, and one size doesn’t fit all. The vast majority of healthcare is outpatient care and doesn’t require a hospital at all, yet the hospital-based systems encouraged by Obamacare have resulted in a considerable economic burden on members of the working middle class. Unfortunately, Obamacare did nothing to reign in the record charges and profits of expensive hospital-based systems, and virtually guaranteed record profits for insurance companies.
There are various laws in the works in many states that will require much more transparency on the part of hospital based systems regarding hospital facility fees and other extra charges. Connecticut already has one , and Kansas has one that is still in committee, that will make it much easier for you to find out ahead of time if you are going to be charged facility fees. You may want to contact your Kansas representative to support this bill, SB 122. True “Real Time” EOB’s with the requirement of patient notification ahead of time would also help in the transparency of healthcare costs.
In the meanwhile, you can save a lot of money by choosing your providers wisely. Look for a provider who is independent from expensive hospital systems. That provider will not be conflicted about where to send you for tests and other therapy. They will not have to “keep you in the system” when your needs are better served elsewhere.
At RNI, we have no facility fees. We foster cost transparency with our patients, and those who want to be evaluated by us. We welcome questions ahead of time, so patients don’t get “surprises” from their insurance companies or their providers.