More Transparency For Network Negotiated Prices
When Jay had an MRI on his knee last month, we were charged $1200. The EOB tells us that the Vail Valley Medical Center in Vail, Colorado, charges $1600 for the procedure. Our Humana health insurance has a negotiated rate of $1200, which is what we paid (we hadn’t met the deductible yet, so we were responsible for the whole amount). So we paid $400 less than someone without health insurance would have paid. But I wonder what someone with Anthem Blue Cross Blue Shield would pay? Or someone with United HealthCare or Aetna? I don’t know, because negotiated rates are proprietary. Whatever secret dealings that go on between health insurance companies and providers are not public knowledge.
When we help our clients shop for health insurance, we look at price, coverage options, and provider networks, especially if the client has a particular doctor in mind. But we can’t know how well each health insurance company has negotiated pricing on specific procedures with various providers. I understand the economics behind network negotiated rates. Providers can give a better rate when they know they’ll get more volume, and health insurance companies send volume. It’s sort of like buying in bulk – I pay less for my oats because I buy them in 50 pound bags. The store knows they’re going to sell all 50 pounds at one time, so they can charge me less per pound than if they have to make 50 separate sales to sell the whole bag.
But the secret nature of the pricing seems to be to the detriment of the patient. If I call the health food store and ask them how much they charge for a pound of oats, and what the discount is for buying 50 pounds at one time, they will give me both numbers. But try calling a hospital and asking for the network negotiated rates for an MRI for five different health insurance carriers. Could get tricky. Most people find out what the negotiated rates are after they have a procedure done and get the EOB in the mail. Makes it tough to comparison shop for health care procedures and for health insurance.
Network negotiated rates need to be much more transparent. They should be available to any interested consumer, not just someone who already has a particular health insurance policy. Health insurance carrier websites should have detailed pricing lists with billing codes and allowable amounts for a wide variety of procedures. Then consumers – especially people who are interested in high deductible health insurance policies – could really compare apples to apples.
A related issue has to do with transparency of network discounts between two different in-network hospitals. There is sometimes a huge difference — Hospital A may only give a 5% discount and Hospital B may give a 40% discount. So for the same procedure, even though both hospitals are “in network”, the patient could pay much more at Hospital A, than Hospital B. If there is a major difference in quality of care, outcomes, etc. that’s one thing. But otherwise the patient is missing out on some important information.
Insurance companies should disclose to their covered patients if a particular network provider has a discount that is significantly less than the average discount.
I had the same thought/experience last year pertaining to a $6300 PET scan. The CO Surgeon General’s office said that neither party was required to share the negotiated rate. They noted that they get “several calls a day” asking about this. Maybe we should start a site where people can list the quoted cost, the actual cost, the place of service, and the insuarnce compamy? That way we could choose where we have the procedure done and which insurance company might be best for our specific needs?
Susan,
I was thinking of starting up an engine like that last year, but noticed there were already other sites starting that same thing. The best one I know of so far is http://www.carol.com, but it still doesn’t have that big of a database yet.
For two years now, I’ve been trying to help my son decipher medical estimates (Vail Medical Center and Steadman Hawkins) and insurance responses (BCBS), for surgeries and aftercare he has needed since someone rear-ended his vehicle. (Don’t you love the move back to the “tort” system?) I completely agree with the sentiment that it’s so very hard to acquire, let alone argue with determinations. I have the patience and knowledge, and I’m the advocate. But what about a patient in pain, or someone young, elderly, or otherwise ignorant of the system? Regarding rates, though: I have found it very interesting how many providers are willing to offer discounts to patients who don’t have the full amount covered. One therapist’s office actually had a sign stating that they offered a 40% discount for uninsured. I think it speaks to both the exorbitant charges for procedures and the amount of time even providers have to spend to get money out of the insurance companies.