Is Your Neighbor Paying Less for Medical Care?

medical pricingWhen’s the last time you went to the doctor or was scheduled for a procedure and asked how much it was going to cost? Getting a straight answer is almost impossible. But have you ever wondered why?

Each provider and facility has a set fee they charge for medical services provided. But once this charge is submitted to your insurance company, that’s when the game really begins! Providers and facilities have contracts with certain insurance companies outlining how much they’ll be paid for each service. Here’s the kicker – the “contracted rates” vary between insurance companies and can even vary within the same insurance carrier.

For example, your state may have three Aetna plans – a PPO, HMO and a POS. The contracted rate for an MRI at your local hospital could vary between plans. The contracted rate by the PPO may be $850 while the HMO may be $700. Your neighbor who has a Coventry health plan may get by with a contracted rate of only $500. But how do these contracted rates affect you?

Understanding Your Insurance Explanation of Benefits

Every time you receive medical care and the charges are filed to your insurance company, you’ll receive a notice in the mail called an “explanation of benefits.” On this document, you’ll find one column which shows how much the facility/provider charged for the service. In another column you’ll find the discounted or “negotiated discount” for choosing a participating health care provider followed by the “allowed or contracted” amount.

Your insurance company will then pay based on the contracted rate and according to your plan benefits – whether it’s applied to your deductible, coinsurance, or copay. If you have a $1,000 deductible which has not been met, and the contracted rate is $500, these charges will become your responsibility. If however, your deductible is met and your plan pays at 90 percent, then you would only be responsible for a 10 percent coinsurance, or $50.

As you can see, the contracted rate directly affects your out-of-pocket costs. Because there are so many insurance carriers and various contracts with facilities and providers, you can see why asking for a simple estimate for a service can be such as overwhelming task.

How to Estimate Your Medical Costs

Many insurance companies offer online tools to estimate future medical costs. For example, if you’re scheduled for removal of your gallbladder, or cholecystectomy, you can simply look this up on your carrier’s web site and view the contracted amount. This allows you to prepare for out-of-pocket expenses such as deductibles and coinsurance.

To promote a higher level of price transparency, new websites and facilities are popping up every day to offer health care consumers competition and lower pricing. For example, PokitDok offers an online service where providers can package their services and list a set cost. This creates competition in the market and allows consumers, especially those with high-deductible health plans, to shop for services.

Some surgical facilities across the country, such as the Surgery Center of Oklahoma, are also beginning to offer packages for common procedures. Whereas the typical surgery includes a surgeon’s fee, facility fee, radiology fee and anesthesia fee; these facilities bundle all charges into one set reduced price. You can simply go online, choose your procedure and view the cost – with no hidden fees!

Don’t pay more than you have to for medical care. Be sure to compare facilities before undergoing costly medical procedures – you might be surprised just how much you can save!

Do you have any questions about how insurance repricing works? Do you have any cost comparison success stories to share?

  Date posted: Wednesday, December 10th, 2014
Category: Health Care Reform, Health Insurance, Price Transparency

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