I am thinking that we might really need to just burn the healthcare system to the ground and completely start over.
Although I am pretty experienced with healthcare, the financial piece is one that I haven’t really been as involved in since I am still on my parent’s insurance and they pay the bills. Knowing that I can’t do that forever, I have been starting to pay more attention. Last weekend, I was home in Tampa, and my mom was muttering something about our new insurance and the bill. So, I decided to take the opportunity to learn more. I don’t know if others know how this all works, but I didn’t, so I am going to explain what I learned. Brace yourselves. It’s ridiculous.
Due to my rare disease, I get two infusions in the hospital each month. I am admitted to the hospital for about 23 hours. It is the same treatment every single month. Exactly the same. Every once in a while I might need more meds for nausea or an extra lab test or something minor, but essentially it is always exactly the same.
Hospitals (and doctors in general) create this thing called a Chargemaster that has the rate for every procedure or group of procedures that they bill insurance companies and self-pay patients. Medicare has standard rates for all procedures, however those rates get increased in some areas because they are more expensive areas, such as New York or San Francisco. However, these rates are all based on a base payment and just adjusted for the city. But, the hospital knows that some insurance companies will pay more than others and they don’t want to limit their payment if someone will pay more, so they jack up the rate that they bill for everyone. So, let’s say Medicare will pay $100 for something like a Chest X-Ray. Well, Cigna might pay $150, Blue Cross might pay $135, Aetna might pay $200, and some insurance company that they don’t have a contract with might pay $300. So, the hospital makes the rate something like $700 to be absolutely sure that they charge more than the highest possible amount someone might pay. Then, they write off the $500 difference between the $700 and the $200 for Aetna, and the $400 for the insurance company that they don’t have a contract with. The self-pay patient has to negotiate with the hospital, and hopefully they get a rate at least 25 -50% of the $700. But there is no requirement for the hospital to have a self-pay rate that is any specific rate.
So, what freaked my mom and I out this weekend is the difference that my hospital was paid for the EXACT same medications, with the EXACT same doctor, at the EXACT same hospital with the EXACT same nurses. I have had three insurance companies in the last 12 months. The pictures and table below show what they have paid at the same hospital and treatment.
|Insurance Company||Rate Charged||Amount Written Off||Amount the Hospital Received|
|GEHA (Aetna Contract)||$28,405.99||$7,669.62||$20,736.37*|
|Blue Cross Alabama||$29,756.15||$25,930.71||$3,827.45|
*$4,260.90 was what I (the patient) had to pay ** $221.82 was what I had to pay
The difference in cost to the system is $202,907.04 a year just for me!
I understand the value of having negotiated rates, and I get that insurance companies can argue that they bring patients or offer some other competitive reason for the hospital to give them a discount. BCBS and Cigna were fairly close with about $500 difference or 13%. However, I cannot possibly imagine how one insurance company has to pay 5.41 times more for the exact same thing! Literally over $16,000 more!!
So after all this you might be wondering how why does this really matter to me if it only makes the insurance companies pay more in some cases? This is actually one of the biggest causes of heath care being so expensive because the insurance company paying more means that your family will need to pay more in premiums and in out of pocket expenses. NO WONDER HEALTH CARE IS SO EXPENSIVE.
But wait… there’s more.
So, I asked my mom to get me some more examples. My dad started searching through the millions of Explanation of Benefit or EOB files we have (by the way, why are these still sent by paper??). These EOB reports are what explain this whole system of what was billed, what is allowed by the insurance company contract, what the insurance company is paying, and how much the patient owes.
Over the years, I have had this exact same treatment now at three different hospitals and with multiple different insurance companies. I wanted to see how much these vary. These additional ones are shown in pictures and the table below.
|Hospital||Insurance Company||Rate Charged||Amount Written Off||Amount the Hospital Received|
|EAMC||GEHA (Aetna Contract)||$28,405.99||$7,669.62||$20,736.37*|
|EAMC||Blue Cross Alabama||$29,756.15||$25,930.71||$3,827.45|
|ACH||Blue Cross North Carolina||$18,279||$8,832.23||$9,447.79|
I know it is a lot of numbers, and it has been mind-blowing to me. So, just to make sure we are all on the same page.
- I had the exact same Cigna plan for three different hospitals. The charges for the same infusion at the three hospitals were $28,755, $47,171, and 19,491. I never knew that it was that different.
- The reimbursement from the SAME insurance company for three different hospitals was $3,319, $17,736, and $9,745. I never knew that picking a different hospital could make THAT much of a difference. In fact, the cheapest one is where I have felt I have gotten the best care, had the best nurses, and had the least amount of complications.
- The reimbursements overall ranged from $3,319 to $20,736. How is that possible? Why do we allow this?
- Two different Blue Cross Plans paid drastically different amounts – $3,827 to $9,447. I would have thought they would be similar since they are both Blue Cross?
The thing that has me wondering the most is how can we help patients understand this? How can we choose hospitals that have the best rate AND the great quality? In my case, I think the lowest price is actually also the best quality, but it could have been that the lowest reimbursement was lower quality. How can we help people evaluate this? How can we get the difference in fees to be lower? Maybe everyone should post their bills? Can we require hospitals or insurance companies to publish their rates?
I have seen on twitter that hospitals had to post their prices. I went looking at these three hospitals but I couldn’t figure out the charges. Even if I had, I would have thought All Children’s (ACH) was the best deal because it had the lowest actual charge, but the reimbursement rates in their contracts were actually higher.
I am starting to understand the basics of why the financials of our healthcare system are such a mess. I have focused on improving the patient experience, keeping patients safe, and improving treatment options that are available. I guess now I need to learn more about the financial aspect of health care. And just from researching this in one day, I can already tell that it is just as messed up as the rest of the health care system.
I wish there was an easy to use app that would let me compare prices and quality so that I could easily make a decision on where to go. Instead, I have to attempt to decipher what the vague numbers on the hospitals website actually mean and try to guess which insurance company pays the best rate to the hospital. Surely we can do better. We must do better.
I am sure there is a lot I don’t know. Please share comments!