Advice From A Patient Advocate

Advice from a patient advocate:

When a hospital offers you a discount to prepay what they calculate is your co-insurance amount...Don't pay it! Their estimates are almost always too high.

Example: Amy went in for a simple procedure. The hospital said that they estimated our amount owed to be $390. But if I was willing to pay it now, they would knock off 20%. I said no thanks and paid them a partial payment of $100 when we were admitted.

The bill came today. The total amount we owed was $189. So we owed the balance of $89. Had I paid the $310, I would now have to wait weeks or months to get my refund.

Higher Deductibles - The Black Hole of Coverage

In a recent post on Health Leaders Media, there was an interesting argument presented that these higher deductibles will backfire on insurers.  The idea is that as deductibles continue to climb, people will feel that they are not really benefiting from having insurance policies.  They will make decisions on health care based more and more on financial impact as opposed to health.  This in turn will force many people to not spend money on less critical health conditions. 

"The problem with high deductible health plans is you are shifting the decision making to the least informed, which is the consumer," says [Mike Ducote, chief operating officer of CirraGroup, a company that assists consumers with healthcare debt resolution]. "We're having to make these calls purely based on the dollars. I don't think that's a good recipe for success."

What does this mean?  Avoiding treatment for less severe medical issues can often lead to serious complications requiring even more extensive treatment.  So instead of reducing the costs of medical spending in our country by catching and treating illnesses at an early stage, higher deductibles are actually contributing to higher medical costs.

This is a nasty Catch-22.  To bring insurance costs down, deductibles continue to rise.  But these could create higher medical spending by discouraging early treatment.  Such higher spending will make the insurance companies look to contain their costs.

How do they do that? Increase deductibles and raise premiums.

Mandated coverage under the ACA was supposed to fix this due to the penalties for not having coverage.  The calculation can be complicated.  But in some cases, as detailed here, it can be cheaper to pay the penalty than it is to have coverage with a high deductible.  The number of such cases is likely to increase as the deductibles continue to rise.  If so, then this would create the very black hole of health insurance that everyone is trying to avoid.  

So, when deductibles are so high that it feels like a person doesn't have any coverage at all, then the consumer demand for such policies will decrease.  Higher deductibles may seem like a viable cost containment strategy when, in fact, it could backfire on insurers in a big way.

I'm sure most people would consider it a victory if deductibles and premiums just stayed where they are without any increases.  It would be more of a victory to consumers if deductibles fell even if premiums rose.  Hopefully there will be some smart people at the insurance companies to realize the diminishing returns of higher and higher deductibles.

The Hospital With No Beds

Fascinating story from CNN Money about a virtual hospital.  This is telemedicine taken to an extreme.  Mercy Hospital is a $54 million facility in St. Louis that offers 24/7 medical via iPads and computers.  It is a prime example of the hi-tech/hi-touch movement.   Using tablets along with biometric sensors, Mercy is able to do almost everything that a traditional home visit used to accomplish.  

It is also an excellent example of how to use "navigators" or "advocates" to help address chronic disease management and readmissions.  Patients of Mercy get "visited" twice a week by navigators. This makes it possible to detect problems early on.  It also reduces unnecessary hospital and doctor visits.  

The Hospital With No Beds

Mamma Said Knock Me Out (But, first, make sure you are in-network)

This week the California assembly passed a bill AB72 that addresses the problem of surprise medical bills.  It awaits the signature of Jerry Brown.  Its goal is to prevent excessive bills from out of network doctors.  It limits the allowable charges for such OON doctors to the average insurer's contract rate or 125% of the Medicare rate, whichever is higher.  Most importantly, it prevents the OON doctor from balance billing for the difference between their rate and the aforementioned limit.

This new law is great, then, right?  Not necessarily.  It can actually deincentivize insurers from negotiating rates if the doctor's rates become controlled by legislation.  That leaves the rates for this part of the health scare system still unregulated.  The result is that these doctors would raise their rates in order to compensate for the lower reimbursements dictated by law.  Who suffers?  The under or uninsured.

What are surprise bills?  The most common example of a surprise, OON bill is for anesthesiologists.  My family has had perhaps a dozen or two procedures over the years requiring general anesthesia.  In every instance, the anesthesiologists were OON even though the hospital and the surgeon were in-network.

Similarly, ER physicians are almost never in network even if an ER facility is.

This has resulted in some very large bills for me because the doctor charges whatever they want and is not bound by any contracted rate with an insurer.  In an emergent situation, an insurer is obligated to process the doctor's bills as in-network and their full amount.  But there's a catch.

If the doctor charges $1000 and the in network contracted rate is $500.  The insurance company will pay 80% of $500 (or whatever percentage is in your plan).  That's $400.  Normally, if the doctor was in network, the patient would be responsible for paying $100.  However, the doctor is allowed to balance bill for the $500 that exceeded the insurer's contracted rate.  So now the patient owes $600!  (Note:  there are restrictions for balance billing in some HMO plans.)

With anesthesiologists, sometimes they will honor the contracted rate and not balance bill the patient.  That has happened about 75% of the time with my family's procedures.  When it doesn't happen, then the patient gets hit with a large bill like above.

So you say, "Just make sure that the ER doctors and anesthesiologists are in network?"  Trust me, that's practically impossible.  I've tried to do this for the local ERs and gave up when no one could help.  For gas-passers, you never know who it is going to be until just prior to surgery.  Surgeons definitely do not like the patient demanding a new anesthesiologist minutes before a surgery.  In fact, they would likely cancel the procedure in such a situation.

Something has to be done about balance billing.  Those bills are a primary cause of medical debt and bankruptcy.  AB 72 is a great start.  However, it is still incomplete and will certainly be challenged in the courts for rate fixing.   I hope that Jerry Brown signs it and we can begin the process to solve this large problem.

The Costs of Not Going to the Gym ($500 Billion)

Most of us know that we should be eating healthier and exercising more.  It's not a complicated formula.  And yet, the statistics on preventable illnesses are staggering.  Here's just a small sampling:

• Nearly 10% of the US population has diabetes (~30million)
• Approximately 1.4 million new cases of diabetes reported annually
• 30% of all Americans are obese
• Obesity related illnesses account for ~$200b per year in health costs
• 17% of all Americans over 18 are tobacco smokers
• Another 16 million Americans live with a smoker.
• Smoking causes $300b a year in health costs and lost productivity
• Cigarette smoking is responsible for 480,000 deaths per year and is the leading source of preventable deaths

(sources:  American Diabetes Association and CDC) 

The statistics on exercising are not very good either:

• 191 million Americans (60%) don't get the recommended amount of weekly exercise
• 25% don't exercise at all (79 million people)
• # of gyms in the U.S.:  30,500
• # of Americans with gym memberships:  58million
• % that don't use their memberships:  67%

(sources:  CDC and StatisticBrain) 

The average cost of a gym membership is about $60 per month.  That's $720 per year.  Many diabetes medicines cost far more than this.

So let's generously assume that there are ~85million people in the U.S. (27%) with a preventable illness.  If the government spent $720 per person on a gym membership for each of them, the cost would be $61billion per year.  

So the big question is:  could this $61b reduce health care spending by more than that amount?  If ~$500b is being spent on preventable illnesses, that means that it would have to result in 12.2% savings.

I haven't found any conclusive studies one way or the other.  But, personally speaking, I prefer the idea of spending $61b on gym memberships as opposed to the same amount on diabetes medicine.  

Of course, the big problem is how to encourage (or require) that people use their gym memberships?  Any solution would certainly be very controversial (just ask any ACA opponent about the mandate).

The Golden Triangle of Health Care

I am a big fan of inspirational quotes.  I even have a few of my own; some of them are even original.  One of them (and I don't think I invented it) is:  

"If money can solve it, it's not a problem."  

 [My Mom has a great variation that she swears that I did create:  "If there is a solution, then it's not a problem."  I think she just misquoted me.  But I like her version better than mine.  So, I'll claim ownership.]  

In the health care system, a lot of people and a lot of companies are spending a lot of money to solve its problems. It's not working.

Why?  It's the "Golden Triangle".  It looks like this:

Simply put, the Golden Triangle consists of three options:  Good, Fast, and Cheap.  You get to pick any two.  It often refers to the world of design.  But it can be applied to practically any service being rendered ranging from car repair to restaurants.  Of course, it's not unusual to want all three corners of this triangle. Sometimes you can actually get it.  Usually, not.  More often you get what you paid for.

The major difference between applying the Golden Triangle to health care as opposed to graphic design is that  picking only two corners can end up with undesirable, and sometimes, deadly results.  Fast and inexpensive care would certainly not substitute for getting proper treatment. Nor would excellent care that you could afford but had to wait weeks to receive it.    And yet, when we are sick, we want to receive quality care in a reasonable amount of time and not worry about losing one's savings (or worse) in the process.  These are not unreasonable expectations in my opinion.

Most of the time, patients are more concerned with good and fast.  That is, work on the health issue as quickly and as effectively as possible. Inevitably, that leads to sticker shock when the bill arrives.

Unfortunately, too often, we are only getting one corner of this triangle.  And sometimes, patients get none of the corners.  The latter is often true for challenged populations such as uninsured and low-income patients.  

If you were only allowed two corners of the Golden Triangle for your health care, which ones would you choose?  This certainly will vary from person to person.  And that's why it has been so difficult to make systemic improvements in the health care system.  

Can we solve all three issues at once?  Perhaps not.  So, which corner(s) would you address?  And how would you justify ignoring the other corner(s)?  This is a very difficult decision which providers are wrestling with every day.  

Please let me know your preferred corner.

Deciphering your hospital bill - Good luck with that!

David Lazarus, a consumer rights columnist for the LA Times, just wrote an excellent article about hospital bills and how complicated they are.  In light of my recent post about this very same subject, I thought I'd repost his article in full (in case you are blocked by LATimes.com which sometimes happens).  

This column is also very relevant to me because like the subject in this piece, I had emergency gall bladder surgery in January 2015.  My hospital charges only came to ~$80,000 thankfully.  :)

(Here's the link to the article:  LA Times)

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Denis Robinson wasn’t bothered in the least that he was billed nearly $100,000 by Providence Tarzana Medical Center for the recent removal of his gallbladder.

“What do I care?” he said. “I have Medicare Plan F, the Cadillac of Medicare plans. They covered every dime.”

Actually, Robinson, 69, should care a great deal. Medicare is a taxpayer-funded system, so any claim submitted by a doctor or hospital affects the financial integrity of the entire program. The fact that Medicare paid less than $4,000 for a $97,000 claim — we’ll get back to that in a moment.

What sizzled Robinson’s bacon was the explanation of benefits he received from Blue Shield of California, through which he purchased his supplemental Medicare coverage and which covered about $900 of his massive hospital bill. It features three pages of itemized costs, each listed only as “surgical services.”

Seriously. Three pages of individual charges, ranging from $1 to $66,607, and no way to tell what any particular one might be for, or whether there were any errors or instances of double billing, or just the perverse satisfaction of knowing that $100 was paid for a Tylenol.

I pointed to a charge for $49.50. What’s that for? What about this one for $132.04?

“I have no clue,” Robinson replied. “I have no way of knowing.”

He could narrow down the possibilities. Each listing for a surgical service was accompanied by a billing code. A little rooting around online will reveal, for instance, that code 0636 is pharmacy-related. But it’s anyone’s guess what that may be.

This is, to put it mildly, nuts.

How can a hospital charge $97,000 for a procedure that Medicare and Blue Shield say is fairly valued at closer to $4,500, the total Providence received? Why aren’t all costs made clear to patients in their explanations of benefits, which insurers send policyholders ostensibly to shed light on the billing process?

“The way it’s set up, medical billing isn’t at all useful to the patient,” acknowledged Paul Ginsburg, director of public policy at the USC Schaeffer Center for Health Policy and Economics. “It’s not designed to let you understand things.”

A key problem is that almost the entire financial conversation regarding healthcare goes on behind closed doors between insurers on the one hand and doctors and hospitals on the other. The patient, who typically pays only a fraction of the overall cost, is little more than an afterthought.

However, that system was established before the current era of rising deductibles and co-pays, leaving patients responsible for an ever-growing share of medical costs, and before hospitals started defraying overhead expenses by charging $10 for a Band-Aid, say, or $50 for a piece of gauze.

“Hospital spending is so difficult to get under control because the patient has no idea about actual costs,” said Craig Garthwaite, an assistant professor of strategy at Northwestern University who focuses on healthcare.

The explanations of benefits that patients receive typically contain “fictional numbers that have no relation to the economics of what’s going on,” he said.

Clinton McGue, a Blue Shield spokesman, demonstrated the lunacy of medical billing by explaining that even though the insurer receives its own receipt from the hospital for all services rendered, spelling out details of each and every cost, Blue Shield feels no need to share such information with policyholders in its explanations of benefits, or EOBs.

“Blue Shield provides industry-standard EOBs to its members,” he said, in effect admitting that the company denies patients helpful information because everyone else does. McGue said that if people want a proper explanation of benefits, they can request one from the hospital.

I pointed out that since Blue Shield is sending out an explanation of benefits anyway, why not include real information?

“We adhere to an industry standard with EOBs,” McGue reiterated. “We will provide the detail if asked, but we think that it is best for the member to review and discuss the services with the provider.”

Patricia Aidem, a spokeswoman for Providence Health & Services, which runs half a dozen hospitals in Southern California, acknowledged that the billing system can be a challenge for most people.

“This is absolutely something that needs to be fixed and Providence is working to create and implement solutions that will make this easier for patients,” she said.

Well, let’s start with Robinson’s bill. Providence charged $97,000 for his operation and then, according to the explanation of benefits, willingly wrote off more than $90,000 as the “amount saved by using a network provider.” That’s a pretty hefty markup for anyone visiting the hospital on an out-of-network basis.

Aidem declined to elaborate on how the hospital arrived at these figures. She said only that “Medicare pays a preset, non-negotiable rate for diagnoses and procedures” and that “hospitals almost always lose money on Medicare cases.”

The federal Medicare Payment Advisory Commission says the average hospital is paid about 95 cents for every dollar spent treating a Medicare patient. Hospitals recoup some of those losses from the rates they charge private insurers. Hospitals also balance their books by charging uninsured patients about three times, on average, what Medicare allows, according to the journal Health Affairs.

If that sounds like a profit grab, Providence’s initial bill to Robinson — the starting price, presumably, for someone without coverage — was more than 20 times higher than what it received from Medicare and Blue Shield.

“This just shows that the system is crazy and that it’s manipulated by healthcare providers for their benefit,” said Alain Enthoven, a Stanford University health economist.

Here’s a thought: How about a requirement that explanations of benefits truly explain benefits, clearly and precisely?

Or we can just keep things as they are, forcing patients to seek explanations for their explanations.

What If Your Hotel Bill Was Like A Hospital Bill

Many people are thoroughly confused when they get a detailed bill from a hospital.  How much was that bandage??  Two Tylenol cost $25??  Here's a video that clearly illustrates how idiosyncratic and arbitrary a hospital bill can appear to be:

Healthcare is the only consumer product that we purchase without knowing the cost in advance.  And even if we did know the price of that saline I.V., would we make different decisions about our care?  Maybe that would apply to non-emergent care.  We might opt for a doctor's visit instead of an ER or urgent care facility if we can wait to be seen.  Or we might choose the urgent care verus an ER visit if we had a facility convenient to us.

But in the hospital environment, we have no choice.  We can't ask for a lower-cost I.V. option or to have fewer bandages used.  We trust that all of the treatment and procedures given in a hospital are reasoned and necessary even if they are not.

The best advice that I can give when reviewing a detailed hospital bill is to look for services that were billed more than once or services that you suspect were never rendered.

Why examine your bill if you have insurance?  One word:  co-insurance.  If you owe a portion of your bill (after they reduce it per contractual discounts), then any amount which can be eliminated from the bill will save you on your co-insurance.  Let's say your co-insurance is 20% and you find a $1000 procedure (the contractual rate) that was scheduled but never performed.  Eliminating that charge would save you $200!

In most cases, the hospital won't even send you a detailed bill unless you request one.  Even if you can't find any errors, it is always good to review your bill because it will increase your health care literacy.  This will make finding mistakes easier the next time you have to review a bill.