Monica* had driven herself to the emergency room at a local hospital late at night after experiencing severe abdominal pain. She was worried she might have appendicitis, and her insurance company nurse line had advised her to go to the emergency room. A CT scan, MRI, and blood work were ordered, and intravenous pain medication was started. After several hours, her tests showed that she had a ruptured ovarian cyst, not appendicitis, and she was discharged home.
So here’s the “gotcha” moment, a new twist in paying for healthcare. When Monica was checking out, the clerk asked if she’d like to pay cash for her visit for a 75% discount, or to have the hospital file the visit to her insurance. Her insurance deductible was $2500 and she hadn’t had any healthcare costs yet this year.
Seventy-five percent sounds like a pretty good discount, right? The critical question is: 75% discount off what?
Alone and on pain medication, she still had the wherewithal to ask how much the charges might be. The clerk looked over the summary of what she’d had done and told her that she thought the total charges would come to perhaps $1,000 after the discount was applied.
Here’s how Monica’s thought process went: “I have to pay up to $2500 out of my own pocket. I’ve just been told my total bill should be about $1000. I’m pretty healthy, and I don’t think I’m likely to be sick again this year. So rather than put this through my insurance, and maybe have to pay the full $2500 out of my pocket, I’ll just pay the $1000 and come out ahead.”
In Monica’s shoes, what would you have done?
Our healthcare system, complicated as it has become, is still built on the trust we have with our treating physician and the institutions that support them. When Julius Caesar uttered those famous words, “Caveat Emptor,” (or “Let the buyer beware!”) I’m pretty sure he wasn’t talking about health care, but perhaps he knew something we didn’t.
Stephen Brill, in his 2013 Time magazine article, “Bitter Pill” (http://content.time.com/time/video/player/0,32068,2178453595001_2136781,00.html) described a healthcare term most consumers had been unfamiliar with: “Hospital Chargemaster.” Think of it as the “list” price from which hospitals begin negotiating with payers, whether individuals or insurance companies. His investigation pointed out that not only are hospital charges much higher than might be expected, but a hospital’s Chargemaster isn’t public, and the prices for the same procedures and supplies vary, sometimes dramatically from one hospital to another.
If you have insurance, as we are now supposed to by law, your insurance carrier negotiates an often significant discount off a hospital’s chargemaster rates, what you’ll see on your explanation of benefits statement as the “allowed” rate. However, hospital contracts prohibit them from sharing either their billed charge (their chargemaster rate) or their insurance contracted rates with you until after you’ve already incurred the charge.
Three weeks later Monica got the bill from the hospital. Imagine her reaction when she saw the total billed was over $10,000!
If you do the math, her personal out of pocket expenditure went from $1000 she expected when she was leaving the ER, to over $2500 (75% of $10,000). And while she would have likely met her annual deductible for the year if the charges had been filed through her insurance, she was now obligated to pay that amount but without the benefit of having met her personal responsibility to protect her against another expensive encounter with the healthcare system.
She had called the hospital billing department to remind them that she had been on pain medication when asked to make this decision, her estimated charges had been off by a factor of 10, and to advise that wanted to run the claim through her insurance. She was told that since she’d agreed to pay cash they would not file the claim to her insurance and would not provide her a bill that she could file herself.
When I called the hospital to ask about this policy I was told “This is a judgment call by the patient at the time of service. They can’t just say “I changed my mind and want to file this to my insurance. If they choose to pay cash they are opting out of their insurance benefits.”
While this is technically true, given the lack of transparency in the healthcare system how can you make good decisions when faced with this kind of choice?
1) Even in healthcare, “Buyer beware!”
2) If possible, always take someone with you for an ER visit, or at least have someone there with you when you check out. Clinically, make sure your “buddy” understands follow up instructions, including medicines and doctor’s appointments. Regardless of how you choose to pay for your visit, ask to receive a summary of tests and procedures that were done to review against your actual bill when you get it.
3) Make sure you know what your annual medical deductible is, and set it aside at the beginning of every year. As deductibles increase, we have more individual financial responsibility; some estimates suggest that 60% of the bankruptcies in this country are driven by healthcare expenses that were incurred by people with insurance.
4) If you have insurance, and are offered to pay cash for medical services, understand that those charges can’t be filed to your insurance company once you’ve paid and can’t be considered against your annual out of pocket maximum. Weigh the benefits of contributing toward your deductible against the potential for reduced out of pocket expenses.
5) If you still want to pay cash (and there can be good reasons to), be sure to get an estimate of charges, and remember it is just an estimate. Actual charges can and often are significantly higher. Figure that into your calculations.
6) Contact a private patient advocate if you want to consider negotiating with a provider proactively for a non-emergency cash payment, find inaccuracies in your bill, or need help negotiating payment with a hospital or provider after your visit.
* Name has been changed.