Tallying the Cost to Bring Baby Home

May 7, 2009May 12, 2009 Doug

Another informative article from the Wall Street Journal about the lack of pricing transparency and how difficult it is for consumers to get an estimate of charges, understand the cost, and their portion of the payment.

By ANNA WILDE MATHEWS

Bringing my newborn son home was a joy. Figuring out the hospital bill wasn’t.

Cedars-Sinai Medical Center in Los Angeles provided excellent care and thoughtful treatment during my uncomplicated traditional delivery in December. Then the invoices started coming. The hospital sent one for me, and another for my baby. The doctors billed separately. The total charge for three days: $36,625.

People lucky enough to have good health insurance, including me, don’t have to come up with such sums. Insurers typically pay a lower, negotiated price for hospital care, and patients pay a portion of that amount. Even people without insurance often get sharp discounts from list prices on their hospital bills.

Still, consumers have a big financial stake in the cost of care. People who get health insurance through their workplaces have been paying higher premiums in recent years, and more people have been enrolling in plans that include very high deductibles. A recent survey by the International Foundation of Employee Benefit Plans found that two-thirds of employers are increasing, or considering an increase in, workers’ deductibles, co-insurance and co-payments.

It’s important for patients to get good information about what they have to pay and why. That’s not easy. Before my son was born, it was difficult to figure out what I was going to owe. And I struggled after the birth to learn whether the amounts I was told to pay were appropriate. I could have done a better job at calculating some of my costs. But often, information wasn’t available, or was hard to decipher.

My own health plan is a so-called PPO, or preferred-provider organization, which means I pay less when I use doctors and hospitals that have contracts with Aetna Inc., the insurer that administers my employer’s coverage. For hospital and surgery services from these providers, I am on the hook for 15% of Aetna’s negotiated price. I also have a $400 annual deductible. Fortunately, there is a $2,000 cap on how much I might have to spend out of pocket each year for my in-network care.

From the Wallet

Having a Baby? How to Prepare for the Hospital Bill

My research started before my due date, with a call to Aetna. I asked the customer-service representative how much the birth would cost me, and she didn’t answer the question directly. She did confirm that Cedars-Sinai was in my network. Aetna’s Web site offered typical maternity costs for other Los Angeles-area hospitals, but there was no such listing for Cedars-Sinai.

The Aetna representative did say that I had $1,370 remaining before I reached my out-of-pocket maximum for the year. So I decided to set aside $1,370 toward maternity costs, and hoped that I’d have some of that left over for a crib.

It didn’t turn out that way. In fact, I owed a total of $2,118.90, a sum I arrived at only after adding figures from five separate documents. Why the difference? Along with dark hair and blue eyes, my son was born with his own $400 deductible. Also, the maximum annual out-of-pocket charge for the two of us was $4,000, double what mine alone had been. I should have re-read the fine print of my plan.

Before paying the bills, I wanted to double check them to make sure I’d actually received the services I was billed for. At my request, Cedars-Sinai sent itemized invoices, with 14 items listed for my baby and 34 items for me, not including doctors’ fees.

Those charges I could decipher seemed stunningly high. A “Tray, Anes Epidural” cost $530.29. (After inquiring, I learned this was the tray of sterile equipment used to give me an epidural anesthetic injection.) An “Anes-cat 1-basic Outlying Area” was billed at $2,152.55. (I was told this was the cost of the hospital’s resources related to the epidural.) These items were in addition to the separate anesthesiologist’s charge of $1,530 for giving the epidural. Even though the pain-killing epidural shot felt priceless during my 20 hours of labor, I was amazed that its total cost could run so high.

To decipher other items, I decided to check out consumer services that advise people about medical bills. Candy Butcher, chief executive of Medical Billing Advocates of America, wondered why the hospital listed a price of $2,382.92 for my recovery, when I hadn’t had a Caesarean section. It turned out the charge was for the 90 minutes I spent in the birthing room after my delivery. I recalled lying exhausted there while a kind nurse checked my vitals and cleaned me up. Important help, for sure, but was it really worth that much money?

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Out-of-network Insurance Practices Face Scrutiny

April 1, 2009April 1, 2009 Doug

Great article from The Washington Post about the investigation into deliberate low-balling of out of network reimbursements for consumers. Accountability and transparency is needed in how insurance companies determine out-of-network rates, and patients need to understand how it’s done to avoid sticker shock when they get their medical bills.

By ERICA WERNER

The Associated Press

Saturday, March 28, 2009; 10:01 PM

WASHINGTON — Ever wonder how that bill was calculated if you had to pay to see a doctor outside your insurance network?

Might be a scam, says a senator investigating the issue.

Sen. Jay Rockefeller, chairman of the Senate Commerce, Science and Transportation Committee, wants answers at a hearing Tuesday from the chief executives of UnitedHealth Group Inc. and its subsidiary Ingenix Inc., a claims database used by insurers nationwide to calculate out-of-network rates.

The inquiry follows lawsuits and an investigation by New York Attorney General Andrew Cuomo alleging that UnitedHealth and Ingenix manipulated rate data so insurers had to pay less and patients more for out-of-network services.

“They’re lowballing deliberately. They deliberately cut the numbers so the consumer has to pay more of the cost,” Rockefeller, D-W.Va., said in an interview with The Associated Press on Friday.

“It’s scamming. It’s fraud,” he said.

In January, UnitedHealth agreed to pay $350 million to settle a suit by the American Medical Association and others over the issue. UnitedHealth did not admit wrongdoing. But, under pressure from Cuomo, the company agreed to pay $50 million toward creation of an independent claims database and eventually close down the Ingenix databases.

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Report Finds Declining Health Insurance Coverage, Urges Government Intervention

March 30, 2009March 30, 2009 J Roberts

A recent report from the Institute of Medicine reveals that the number of people with health insurance continues to drop. Even those with basic coverage are finding that the cost of care is becoming unaffordable. Read the following excerpt to learn more about the growing problem. To read the report in full go to the Institute of Medicine’s website at www.ion.edu and click on the tab entitled recent reports.

The evidence shows more clearly than ever that having health insurance is essential for people’s health and well-being, and safety-net services are not enough to prevent avoidable illness, worse health outcomes, and premature death, according to a new report from the Institute of Medicine. Moreover, new research suggests that when local rates of uninsurance are relatively high, even people with insurance are more likely to have difficulty obtaining needed care and to be less satisfied with the care they receive.

The number of people who have health insurance continues to drop, and employment-based coverage–the principal source of insurance for the majority of Americans–is eroding, a situation that is getting worse with the current economic crisis, the report notes. In 2007, nearly one in 10 American children and one in five non-elderly adults had no health insurance. The average amount employees paid per year for family coverage in an employer-sponsored plan rose from $1,543 in 1999 to $3,354 in 2008. If there is no intervention, the decline in health insurance coverage will continue, the report concludes.

The committee that prepared the report called on the president and Congress to begin efforts immediately to achieve health coverage for all Americans. It also urged steps to reduce the costs of care and the rate at which healthcare spending is rising to make coverage sustainable for everyone.

How to Curb Health Care Costs

March 2, 2009March 3, 2009 J Roberts

Proposed legislation to measure the effectiveness of treatment for diseases and certain injuries is drawing criticism from conservative circles. The following article provides opinion on why standard treatment and protocols may be too costly. The need for increased clinical trials and evidence based medicine could lead to best practices and a decline in health care costs.

Boston Globe – Globe Editorial

In a stimulus package of $787 billion, it is a mere $1.1 billion item that is facing particular vitriol from conservative ideologues. The money would fund a ramped-up effort to compare the effectiveness of different treatments for injuries and diseases. As inoffensive as this sounds, critics of any government role in healthcare see it as the slippery slope to rationing or Washington-mandated protocols for treatment.

One can imagine reruns of the Harry and Louise ads used by insurers to such good effect against the Clinton health plan in 1993. Except this time Harry and Louise would work for the pharmaceutical companies and medical-device makers. Both industries worry that studies on effectiveness will find that some of their prize – and most profitable – products are no better, or even worse, than cheaper alternatives.

Currently, new drugs can gain approval of the US Food and Drug Administration just by proving they are safe and better than sugar-pill placebos. They need not be better than existing – and often less expensive – drugs. Comparative effectiveness studies could help patients and doctors make better-informed decisions about care.

To allay concerns that clinical studies often include too few women or minority-group patients, the stimulus law calls for including those groups in studies. A report filed with the legislation also says the money should not be used to “mandate coverage, reimbursement or other policies for any public or private payer.” But the law itself is not as clear-cut on uses of the research. AdvaMed, the trade association for medical-device makers, says it supports the program but worries about it leading to cost comparisons, which it views as a way to ration care.

If this research can provide credible evidence of the superiority of one treatment over another, professional organizations, hospitals, and insurers will have to take notice. And if that leads to broad adoption of best practices, patients will get better faster – and healthcare costs will decline. Push will come to shove if, in the face of solid research, physicians persist in recommending drugs, devices, or surgeries that get low marks. Insurers, including Medicare, could then require doctors to explain their decisions.

This isn’t rationing – it’s rational. Research of this kind and the stimulus package’s $19 billion for electronic medical records are two ways to curb costs in the $2.2 trillion healthcare industry. Without such measures, the public is unlikely to support President Obama’s plan to provide nearly universal insurance. Both initiatives offer the promise of improved – and less expensive – healthcare for all.