High deductible health savings accounts have added a new dimension to the medical cost process. How can you find the true cost of medical services from doctors and hospitals using the accounting rules of high deductible health savings accounts? I've been a physician hospitalist for seven years. In that time, my own private insurance has moved from a low deductible copay based plan to a high deductible health savings account.
What does that mean for me? It means 100% of all my medical charges must be paid for out of my pocket before my Blue Cross PPO insurance plans picks up a single dime. You would think that means I have every incentive to search for the best deal out there on nonurgent and elective medical care. I consider myself an insider given my extensive self training on the ins and outs of medical billing and coding. I just didn't know who to ask. Until now. Here's my recent experience.
What does that mean for me? It means 100% of all my medical charges must be paid for out of my pocket before my Blue Cross PPO insurance plans picks up a single dime. You would think that means I have every incentive to search for the best deal out there on nonurgent and elective medical care. I consider myself an insider given my extensive self training on the ins and outs of medical billing and coding. I just didn't know who to ask. Until now. Here's my recent experience.
After a curbside evaluation by some inpatient physical therapists of my atraumatic posterior shoulder pain (which turned out to be a posterior labral tear), they referred me to the shoulder expert in their outpatient physical therapy department at my hospital. I walked to the department and made an appointment to be seen the following week.
A few days later I realized I had no idea how much this visit would cost me. So I started with my hospital's cashier. I asked them what the allowable charge was for an initial and follow up physical therapy visit through my Blue Cross PPO. I wanted to know because my high deductible HSA required me to pay 100% of several thousand dollars in out of pocket expenses before my insurance kicked in at 100%.
The guy behind the counter didn't know. He told me to contact my insurance company for that information. He also referred me to the hospital's "Cash Price Estimate Hot Line" if I wished to know what the cash price would be. I called the hot line. It asked for my name, a call back number, the name of the procedure or current procedural terminology (CPT) code if I had it. I didn't have the CPT code, so I hung up.
Most folks probably have no idea what a CPT is. I had no idea until I learned the ins and outs of medical billing. I wanted to arm myself with all available information before I left my name and number, so I walked up to the physical therapy department at my hospital and told them I had an appointment next week but wanted to cancel it until I had more information on the charges.
I asked the secretary at the front desk of the physical therapy department if she knew what the CPT codes would be for my new patient visit? She had no idea, but she did tell me the hospital's charge was around $190. But she said we wouldn't know until after the service was provided what the exact charges were.
Most folks without any background knowledge would have been frustrated by now and perhaps quit their search for the answers. Not me. I kept pursuing answers to my questions. Certain procedures, such as electrical stimulation, could be added on as the evaluation proceeded. These could add additional charges to the bill. I understood that. I just wanted the basic charges for the E/M charge. I asked what the charge would be just for a new patient physical therapy evaluation and none of the possible add on charges. All she knew was the cash price. So I moseyed on back and asked the physical therapists themselves.
They were able to confirm that the hospital charged just under $200 for a new patient evaluation. I told them I was not interested in the cash price, but rather what my insurance would pay and I wanted the CPT codes so I could call my insurance company directly. So I asked them what the CPT code was for an initial PT outpatient evaluation.
They didn't know, but they looked it up for me. They pulled out a printed power point presentation showing the CPT code for a new patient physical therapy evaluation was 97001. They said they don't do any of the billing and charge capturing. I showed them my responsibilities as a physician for correctly defining my daily CPT codes on every patient encounter I have. They were floored at the hoops I must jump through to accurately submit my charges multiple times a day and to do it correctly without being accused of fraud.
I had the most important piece of information when trying to price a medical service. I discovered what the CPT code would be for my new patient physical therapy evaluation at my hospital and I learned that my hospital would charge my Blue Cross PPO just under $200 for their evaluation. That was the "cash price". But I wanted to know what Blue Cross would actually pay. The Blue Cross allowable charge is what my charge will be under my high deductible health savings account. Once the hospital's charge is run through my insurance, my insurance will deduct a portion of the charge as the allowable charge. The hospital could charge one million dollars for the visit, but the hospital will only get paid what the insurance company's allowable charge says they will get paid. With a high deductible health savings account, I must pay 100% of that allowable charge until my high deductible is met.
I had the most important piece of information when trying to price a medical service. I discovered what the CPT code would be for my new patient physical therapy evaluation at my hospital and I learned that my hospital would charge my Blue Cross PPO just under $200 for their evaluation. That was the "cash price". But I wanted to know what Blue Cross would actually pay. The Blue Cross allowable charge is what my charge will be under my high deductible health savings account. Once the hospital's charge is run through my insurance, my insurance will deduct a portion of the charge as the allowable charge. The hospital could charge one million dollars for the visit, but the hospital will only get paid what the insurance company's allowable charge says they will get paid. With a high deductible health savings account, I must pay 100% of that allowable charge until my high deductible is met.
Obviously, the physical therapists had no idea what Blue Cross allowed for their charge. So I went back down to the cashier and asked the guy at the front desk if he know what the Blue Cross PPO allowable charge was for a 97001. He looked at me like I was nuts. He said the people who could answer that question had gone for the day (it was 4:27 pm on a Friday). He again referred me to the Cash Price Estimate Hot line.
So I called the hot line again and left a message for the folks to call me back. I told them I had a high deductible HSA and wanted to know what the allowable Blue Cross PPO charge was for CPT code 97001. As it was a Friday afternoon, I did not expect a call back until Monday.
So I pulled out my Blue Cross PPO card and called the 1-800 number on the back to see if they could give me the information about what they would pay my hospital for a submitted CPT 97001. After being on hold for a surprisingly short period of time, I was able to talk to a very nice lady named Chelsea.
She first started by saying anything she said could not be considered accurate and for me to please refer to my insurance benefits statement for details. Then she went on to explain that I had physical therapy benefits for up to 60 visits a year and I needed no preauthorization for physical therapy. That's good, since I referred myself.
So I called the hot line again and left a message for the folks to call me back. I told them I had a high deductible HSA and wanted to know what the allowable Blue Cross PPO charge was for CPT code 97001. As it was a Friday afternoon, I did not expect a call back until Monday.
So I pulled out my Blue Cross PPO card and called the 1-800 number on the back to see if they could give me the information about what they would pay my hospital for a submitted CPT 97001. After being on hold for a surprisingly short period of time, I was able to talk to a very nice lady named Chelsea.
She first started by saying anything she said could not be considered accurate and for me to please refer to my insurance benefits statement for details. Then she went on to explain that I had physical therapy benefits for up to 60 visits a year and I needed no preauthorization for physical therapy. That's good, since I referred myself.
I told her the information she gave me wasn't the information I was interested in. Since I had a high deductible HSA, I explained that I wanted to know what my allowable Blue Cross PPO charge would be to my hospital's physical therapy department so I would know what my out of pocket expenses would be.
She told me that information was confidential and they could not tell me what they would pay my hospital, which means she could not tell me what my charge would be. I was floored. Here's a company that gets almost $12,000 a year of my premiums and their policy is to not reveal what they will pay for my services? I told them my hospital referred me to them to get that information and Chelsea once again explained that she was not allowed to divulge what my insurance company was willing to pay for my medical services. But she did say that the allowable charge would be the same for the same CPT for any provider in my town.
By now it's late on a Friday afternoon. Whom have I talked to in search of my insurance company's allowable charge for my physical therapy initial visit CPT 97001?
- The hospital's cashier referred me to my insurance company.
- The hospital's cashier then referred me to the "Price Estimate Hot Line" for a cash price.
- The secretary in the physical therapy only knew what the approximate cash price charge was.
- The physical therapist knew what the CPT code was, but only after looking it up.
- My insurance company told me to contact my provider to find out how much my insurance company would ultimately pay.
Here I am, Friday afternoon and I don't have an answer for my Monday morning appointment. Nobody knows what my insurance company's allowable charge is, except my insurance company, and they won't tell me. It's a good thing I canceled my appointment earlier in the day.
Today is Monday. I received a call, bright and early this morning from a representative of my hospital responding to my inquiry. Good for them. She explained that the hospital's facility fee charge for a CPT 97001 was $192. If this service was paid for in cash, a 25% cash price discount would be applied. If you've read my blog you know what the facility fee is and what it means in relation to what an RVU is and the provider charge as well. She stated that since the physical therapists were employees of the hospital, there would be no additional provider charge. That was the all inclusive fee.
Today is Monday. I received a call, bright and early this morning from a representative of my hospital responding to my inquiry. Good for them. She explained that the hospital's facility fee charge for a CPT 97001 was $192. If this service was paid for in cash, a 25% cash price discount would be applied. If you've read my blog you know what the facility fee is and what it means in relation to what an RVU is and the provider charge as well. She stated that since the physical therapists were employees of the hospital, there would be no additional provider charge. That was the all inclusive fee.
If you are trying to discover the price of your medical care, remember, there will usually be a charge for the physician services and a charge for the facility/ hospital/ outpatient surgery/outpatient endoscopy center from which you are receiving services.
If you are admitted to the hospital for an elective removal of your gallbladder and you experience no complications, the price your hospital quotes for the surgery will rarely include the cost of the physician's charge or the anesthesiologist's charge or the pathologist's charge.
If the physicians are employed by the hospital and do not do their own billing, then you may be able to get an accurate global fee. But remember, often times the anesthesiologist, pathologist, hospitalist, surgeon and other subspecialty medical doctors are independent of the hospital and have their own offices from which they charge for their services. These are often charges not discussed on the front end of a defined medical need. And there is no guarantee that the doctor is a member of your insurance plan and their fees would then be subject to your out of network fee schedule.
By now, I'm making some headway in my search for the price of my physical therapy visit. If I were to pay cash, my discount would be $48 and my out of pocket price would be $144. It's great to know that my hospital has an established cash price discount program for folks without insurance. But I wanted to know what the allowable charge would be for running my service through my Blue Cross PPO. At that point she explained I would have to talk to another individual in the billing department, however, she assured me the allowable Blue Cross charge was very close to the cash price discount.
Finally the answer I was looking for. My allowable charge from Blue Cross PPO would be pretty much the same price as the cash price discount. This brings up a very interesting position. In my case with my CPT 97001, there is no value in first dollar insurance coverage in folks like me who have high deductible health savings accounts. It appears folks like myself with high deductible HSAs are being given the same pricing power as the uninsured. In other words. None.
If in fact, my insurance company is paying the same price for the same service across all local providers of that service, as they claim, there is also no price competition in my community and HSAs do nothing to force competition and reduce the price of services. Where is my benefit in calling multiple offices if Blue Cross is going to pay them all the same? There is none. If Blue Cross will pay all physical therapy offices the same $144 for a 97001, there is no benefit for me to go price shopping.What is the right price? It is what the insurance says it is. That's not pricing competition. That's price fixing.
What I do get with my HSA is the right to pay the cash price discount on a tax free basis. Depending on one's tax bracket, these high deductible first dollar responsibilities can mean a further reduction of 10%-30% or more in actual out of pocket expenses, depending on the tax bracket and tax benefit one may find themselves in.
That's the real benefit of HSAs. They represent a great tax shelter for income above and beyond the yearly deductible limits. Right now, HSA contribution limits are around $6000. If your yearly deductible is around $3000, you can grow $3000 every year tax free, forever. Eventually, these monies can be used to pay Medicare premiums in future years. HSAs represent an excellent opportunity for the rich folk to get in on the action, since they'll all be paying the taxes necessary to fund FREE=MORE government subsidized insurance for the next 100 years.
In case you are wondering, what is the Medicare allowable charge for a 97001? Approximately $70 in my state. My Blue Cross pays double what Medicare pays. The cash paying public pays double what Medicare pays. And Medicaid often pays 50%-70% of what Medicare pays. Medicare and Medicaid are great insurance programs, if you are a patient. Hospitals and doctors would go out of business if they depended on Medicare or Medicaid as their sole source of income.
What is the right price? Is it Medicaid's $50? Is it Medicare's $70? Is it Blue Cross's $140? Is it the cash paying public's price of $140? Nobody knows because the pricing is fixed. If you are a Medicare or Medicaid patient, you should fear the current health care reform. If I am a physician, and I have an entirely new population of Blue Cross patients mandated to purchase their own insurance, my business model dictates that I increase their participation at the expense of Medicare and Medicaid patients because they pay double what governments will pay.
The next time you need health care and you want to know how much it's going to cost you
- Know your CPT code. If you don't know it, find it. That's how everything is priced. Everything.
- Know if your doctor or hospital is an in network or out of network provider.
- Know which doctors will be taking care of you and whether or not they will be submitting their own bills.
- If you don't have insurance, always ask for the cash price discount
- Maximize your HSA contribution. It's a great tax shelter and the money can be used after you retire to pay your Medicare premiums, if such a program still exists
- Don't expect your insurance company to help you.
