Customary Charges Are Not Always Reasonable
I’ve been reading through Grand Rounds over at Med Page Today, compiled by Dr. Val Jones. There are lots of great articles, but a discussion about usual, customary, and reasonable charges written by David Williams at Health Business Blog caught my attention. In particular, this point:
“A big problem is that a lot of the “usual and customary” charges are not “reasonable.” There is huge variation in pricing for no logical reason.”
Exactly. Prices vary from one region to another, and even within a single metro area. Health insurance companies agree to different negotiated fee scales for the same procedures in the same towns. Jay saw two local physical therapists last year for rehab on his knees. We had the same health insurance the whole time, and both therapists were in network. But although they both provided the same services, they billed two different amounts and were reimbursed two different amounts.
There’s heated debate at every turn these days when it comes to healthcare reform ideas. Those opposed to any additional government intervention in healthcare claim that such intervention would kill the free market setup we currently have. But the concept of free market requires quite a bit more transparency in pricing than we have in our healthcare system. Pricing varies dramatically from one provider to the next; negotiated reimbursement rates vary even within a single health insurance network, and patients often don’t know what the price will be until after the fact. And as David Williams pointed out, the prices are often far from reasonable. When a non-essential commodity is overpriced, I can live with that. If I think the price is too high, I can do without the tv or the car. But how do we do without healthcare? We can’t, and that’s why unreasonable “reasonable and customary” charges exist.
Let us not forget what a mess Ingenix’ “UCR” database is. And please check out Dr. Wes’s post on the Illinois Fair Billing Act – the table of %discounts off “list price” to be given to uninsured pts by hospital(s)/systems is pretty interesting (not just for the hospitals listed, but also for those not listed.)
Let’s also not forget all the varying reimbursements by insurers. The adage, ‘it takes two’, may be reasonable to state her in this situation of reasonable and customary fees. If insurers balk at the varying prices, they need to take a look at the hypocricy of their balking–there’s quite a bit of discrepancy in reimbursements. Possibly it’s the ‘type’ and ‘cost’ of the plan that the insured buys. But, I’ve seen far too many examples of reimbursements being ‘all over the board’.
So what to take from all of this? One, the issue is a very complex one with probably many reasons by insurers and providers as to why the varying costs, and Two, let’s all just ask ourselves who’s making the money here and who’s really benefitting. If you take a look at the profits of each and every major insurer, you’ll find the answer. It’s certainly not the providers…and I can attest to my own backyard on that one.
These databases (owned by insurers themselves) that ‘gather’ information on helping configure the most reasonable and customary rates for certain procedures, is very circumspect. Check out information on Ingenix and United Health Group to get yourself, as the consumer, properly informed.