During the health care reform debate all sides trumpeted the need for transparency in health insurance economics and provider reimbursement (payments) as essential for us to understand health care costs.
Have you ever tried to figure out the Explanation of Benefits (EOB) health care insurance companies send you? Each EOB itemizes the care you have received from all providers and the amount the insurance company reimbursed (paid) them. Had any success in understanding it?
As a practicing physician I often did not know what I was going to be reimbursed (paid) until I got the EOB accompanying the check from the insurance company (or Medicaid). Even after 35 years of practice it was nearly impossible to accurately predict my reimbursement (pay) for services to patients because of changing codes, new codes, changing regulations, etc.
I figured that now as a patient any EOB I got listing all my providers and what the insurance company reimbursed (paid) them might be a lot easier to understand. Alas, the lack of transparency is apparent from this side of the fence too.
When I received a Medicare (MC) EOBs about my August 2009 “illness episode” I spent considerable time trying to make sense of them. It was difficult, and I am in the business! I had to pay strict attention to small letter footnotes (a through g), tiny asterisks, long and complex identifier numbers, far-flung-but-important sidebar boxes, and, of course, the always important and easy to miss “other side of the page”. I was able to develop a “translucent” picture at best; think “smoke and mirrors” as the operative term, …and the effort raised more questions than it answered.
Let me share with you a brief summary with as little chaff as possible.
In August I went to my community hospital ER with fever and vigorous chills, teeth chattering rigors. I was in the ER for 6 hours for diagnostic tests and intravenous treatment.
. Hospital charges: $2,564 MC paid: $660.21
- Of 27 medical care items listed, all but 5 were paid at 100% of the “MC approved amount” whatever that is. It is not on the EOB, and we have no access to those MC approved amounts. Even if we did we would know them for one state only. Even though MC is a federal program its approved rates vary by state and sometimes even by county within a state.
- MC reimbursement rates are calculated using, among other factors, “how much MC spent for medical care per person in your region last year”. If MC spent less per person in your region than other regions last year MC reimbursement in your region this year will be lower. The amount spent per person last year might be lower than others because of better health, less utilization of medical care, or more efficient use of resources. Hence, the phrase, “no good deed goes unpunished.”
- The 5 items not paid at the “approved rate” were ER visit ($804 charge), IV antibiotics ($332 charge), Chest x-ray ($175 charge), and EKG ($122 charge) for total charges of $1,433. All lab charges except $22.75 for a prothrombin test which was “not a covered service” for some unknown reason were paid at “approved rates.” The EOB does not make it clear what the $660 payment of the $2,562.44 charges was exactly for.
- In January 2010, 5 months after my ER visit, I received a phone call from Blue Cross (my state’s MC intermediary) asking me if I had, in fact, received a chest x-ray ($175 charge out the $2,564 total) in the ER and…WHY did I think I got it?! I am still perplexed about that call. The caller knew me as a patient, not as a physician.
The physician charges and approved and paid amounts for the same ER encounter were:
ER physician – $236 charges $115.58 approved $92.46 paid by MC
Cardiologist visit in ER – $206 charges $61.92 approved $49.54 paid by MC
Cardiologist reading of EKG later – $27 charges $9.24 approved $7.39 paid by MC
Radiologist reading chest x-ray later – $38 charges $11.46 approved $9.17 paid by MC
- Total physician charges: $507 Total MC paid: $158.56
Two weeks later I had a CT scan of abdomen and pelvis looking for the source of the bacteria in my blood that had caused my symptoms.
Hospital CT scan charge: $4,090 approved rate not listed $588.96 MC paid
Radiologist reading the CT scan charged: $425 $127.59 approved $102.07 MC paid
- Which number is the correct one? Did the scan really cost $4,090 to perform? Why does MC think it is only worth $588.96 or 15% of what the hospital thinks it is worth? Who decides? Is that what the health care reform debate is really about?
In this case, the patient considered the scan “priceless”. - Next time you see an ad for a CT scan or MRI at half the price (charge) of a hospital remember that the charge can be anything. What the facility actually gets paid is up to MC or other insurance company. Marketing your lower price (charge) makes sense when your reimbursement may be completely independent of the charge.
I have to refrain from discussing co-insurance, deductibles, supplementary insurance coverage, coordination of benefits, and the meaning of “you may be billed” on the EOB because I have run out of space, and your eyes are glazing over, and…DON’T START ME on primary care reimbursement!
HUB's LIST of medical fun facts 
Hi Hub! As you may know we recently visited the UK. Here’s a healthcare/insurance anecdote. Our 10 year old daughter complained of the sudden onset of an earache. Having seen this many times I decided to take her to the emergency room though it was 10:00 pm on a Friday night and frankly I was dreading it. We got her registered, and the staff did not ask for insurance information. I figured the paperwork and billing would come at the end. A nurse did triage promptly and then we waited about 1/2 hour in a pleasant, well lit room reserved for pediatric patients. A doctor saw her in about a half hour, confirmed the diagnosis, and told us what to do and said we were done. I asked him about billing, insurance, etc. He laughed and said under the British NHS all pediatric emergency care up to age 18 was free with no necessary paperwork, etc. even for foreigners. Same coverage for all pregnant women too. He said on the way out that “Maybe your Mr. Obama could do this for you back home, eh?”
Although our experience with NHS is not statistically valid to make general conclusions, it was a far cry from the horror stories that propagandists use as part of their fear mongering in this country.
Best,
Jim