Jason Shafrin, aka the Healthcare Economist, did an excellent job with this week’s Grand Rounds. One of my favorite posts in this edition comes from Health Business Blog’s David Williams, writing about an EOB he recently received from Blue Cross Blue Shield.
David shows a copy of the EOB, and makes a few great points along the way. For starters, it’s not the most user-friendly document. Our experience with EOBs has been similar. When Jay had knee surgery in 2008, we received all sorts of EOBs. Often they had repeating lines with various amounts, and sometimes they were completely inexplicable. Between the surgeons, the hospital, and the various physical therapists who worked on Jay’s knees, there were an awful lot of codes, fees, billing statements and snafus to iron out.
David also points out that the amounts allowed by his Blue Cross Blue Shield carrier don’t seem to have anything to do with the amounts billed by his physical therapies – the lowest allowed amount on his EOB was for the service that was billed with the highest price tag. We’ve also seen little rhyme or reason (that we can detect, anyway) in terms of how billed amounts and allowed amount correlate. Our son needed stitches in his finger last year, and we noticed that the emergency room charges were discounted very little – we ended up paying nearly as much as the hospital billed. On the other hand, some of the services for Jay’s knee surgeries were significantly reduced, and we’ve also seen large reductions in the allowable amounts for our sons’ well child visits.
My father has been on dialysis for ten years as a result of a rare auto-immune disease that destroyed his kidneys in 2001. My parents live in Colorado and most of his doctors are here, but over the years they’ve traveled to other states to visit with specialists. In each case, they would sign on with the local hospital’s dialysis clinic. Medicare pays the clinics roughly $3700/month for his dialysis. But my parents have had EOBs that show billed amounts ranging from $7000/month to $37,000/month. There’s really no way for a patient to know how much a service actually costs the provider. Are some clinics artificially inflating their billed amounts just so that they can say that Medicare is dramatically underpaying them? Who knows. It’s hard to see how costs for the same basic set of services could actually vary by that much from one location to another.
Another issue of course is the fact that people who lack health insurance don’t get the benefit of having a negotiated rate. They are charged the “billed amount” and nobody steps in with an “allowed amount.” Most providers will offer a discount (usually ten percent) for patients who pay in cash, but people without health insurance often find themselves making payments over a long period of time rather than paying up front to get a discount.