Six months after the fact, Christine Jaschinski was still fighting a $4,223 charge for seven stitches. During the phone call, a billing clerk casually let something slip:
“Yes, I know it’s expensive,” Jaschinski said she was told, “but if you pay up-front it would be less.”
As it turned out, the difference may have been as much as 20 times.
Jaschinski had just fallen into the black hole of medical pricing, where billed charges make little sense and the true cost of treatment remains unknowable to the public and even to doctors who provide it.
Hospitals, out-patient centers, medical practices and free-standing emergency rooms spit out a number —the initial billed charge— which is often many times more than what they expect to collect, say health policy experts. What facilitieseventually get paid often bears little resemblance to the original charges, varying wildly from patient to patient and venue to venue for the exact same treatment.
Hospitals and other health care facilities acknowledge wide price differences, but say there are too many variables —from market forces to ever-changing insurance contracts — to make apples-to-apples comparisons of medical charges. “You can’t have a discussion in binary terms,” said Lance Lunsford, the chief marketing/business development officer for the Texas Hospital Association.
Still, the lack of price consistency can trap unsuspecting patients into paying too much — if they ever find out. It also hinders efforts to lower the nation’s health care costs since the system is shrouded in secrecy.
“We don’t have a particularly unified or rational way of finding out what the value of health care is in this country,” said Christen Linke Young, a fellow with the USC-Brookings Schaeffer Initiative for Health Policy, a research partnership between the Brookings Institution and the University of Southern California. “Billed charges are effectively just made up.”
$600 a stitch
In Jaschinski’s case, The Woodlands woman thought she was so careful in picking a place for the couple’s medical care. She liked America’s ER because it was near her home, seemed efficient and, best of all, offered both urgent care for routine treatment and emergency room service for more serious care. It also accepted their insurance.
When her husband, Wolfgang Faust, sliced his thumb while cutting drywall in November 2016, she double-checked insurance coverage and asked for urgent care because the wound was not serious. The doctor closed the cut with seven stitches, gave Faust a Tetanus shot and told him to come back later to remove the stitches.
There were four separate bills from the facility and doctor — the initial visit designated an emergency — totaling $4,223, which was charged to the couple’s Cigna plan. The insurer paid about half, leaving them to pick up the rest, she said.
After the billing clerk’s remark about paying upfront, Jaschinski went to the facility and asked the staff. She said she was told if she had paid cash and not used her insurance, the price for urgent care would have started at $200. For emergency treatment, the cash price would have started at around $700.
America’s ER said in an email Friday it could not comment on this specific case due to privacy laws, but it “does not have a policy of charging insurance companies drastically more than either uninsured patients or patients that opt to pay for the services rendered in cash, by credit or any other means other than their chosen insurance plans.” Further, the company said it does not balance bill patients, strives for price transparency, and determines its fees using Fair Health, a national pricing benchmark based on treatment and location.
To this day, Jaschinski has no idea what those seven stitches were worth. “The prices are just fiction,” she said. After fighting for more than a year, she finally paid about $1,500 to settle the bill.
Used car model
Every hospital or health care facility has its own database of prices, called the “chargemaster”, for tens of thousands of treatments from Band-aids to surgery
These chargemaster prices are sometimes called the “sticker price” or starting point in negotiations with those footing the bill. Critics say the price is set artificially high to give providers more leverage.
When an insurance claim is filed with a health plan, a patient receives an Explanation of Benefits that lists the initial chargemaster price and an estimate of how much the insurer will pay. That insurance payment is the result of a maze of internal and secretive calculations, including the contract and special discounts negotiated with facilities, member demands for specific facilities or doctors, and an insurer’s share of the local market.
Providers have their own set of determinations based on patient and payer mix, profit margins and the likely amount they will get paid and when. Both sides bring their formulas to the table and a payment contract is hammered out.
At the end of the day, though, health policy experts say the final price is often less about the true cost of care and more about what an insurance company or other payer is willing to spend and what providers are willing to accept. If a patient is uninsured or out-of-network, they face a bigger chunk — if not all — of the initial sticker price.
“There is nothing fundamentally wrong with negotiation, businesses do it all of the time,” said Dr. Arthur “Tim” Garson, director of the Health Policy Institute, a think tank at the Texas Medical Center, “The problem is how much profit is being built-in, in relation to their cost.”
Health care facilities, including the free-standing emergency room industry in Texas, counter that pricing is, in essence, set by insurers who have more power. The Texas Hospital Association adds that often a patient picks a facility based on a value beyond simply price, relying on location, reputation and referrals from physicians or friends and family.
Still, others see a widespread market failure.
“You can’t have a free market for health care when patients don’t know the real price,” said George A. Nation III, a professor of Law & Business at Lehigh University and lawyer who specializes in health care policy. “Value is the price agreed upon between a knowledgeable and willing seller and buyer. Patients are neither knowledgeable or willing.”
Nowhere are pricing differences more apparent than when cash enters the mix.
Patti Joiner and her 83-year-old mother went to SignatureCare Emergency Center in January 2017 when they both had the flu. Same doctor, same exam, same diagnosis, even the same room. The only difference was the older woman also had a chest x-ray.
Since the west Houston facility did not accept Medicare, Joiner paid the quoted price of $300 for her mother’s treatment on the spot with a credit card. For her visit, she handed over her Blue Cross and Blue Shield of Texas card and assumed the exam would be covered. Months later, she got a bill from SignatureCare for $1,220, the amount after insurance because she had not met her deductible.
“This isn’t right,” she complained to the facility. “My mom’s bill was only $300. Why am I being charged $1,200?”
“You didn’t ask for the cash price,” she said she was told.
“I didn’t know to ask for a cash price,” she shot back.
After repeated phone calls, the facility offered to lower her bill to $800. She countered she said would pay $300, as she had for her mother. She never heard from SignatureCare again.
Dr. R. Joe Ybarra, legislative liaison for the SignatureCare in Texas, acknowledged the company sometimes offers sharply discounted cash prices as a courtesy if it seems that is all patients can pay or circumstances warrant. “We lost money on her Mom’s care,” he said, adding that more goes into treatment than a patient sees.
Joiner scoffs that any facility would lose four times the price of a treatment. What truly galls her, though, is that without her mother’s price to compare, “I never would’ve known,” she said. “We consumers are left in the dark.”
‘No price anymore’
“Prices for MRI and CT scans have some of the greatest price variances in health care,” an online health care pricing tool warned. “The most important factor impacting the cost of your care will be which facility you use.”
“No kidding,” Mia McCord thought. Try a $60,000 difference.
Last fall, the Austin woman had recurrent dizzy spells along with terrible headaches. Her primary doctor found muscle weakness on one side of her body and said she needed an MRI immediately.
McCord hurried to a nearby independent imaging center, which her doctor said was part of her insurer’s network and would cost less. She had two scans of her brain which, much to her relief, showed no sign of stroke. Her husband’s Blue Cross and Blue Shield of Texas state employee plan was billed $5,920, of which the insurer paid nearly all.
McCord’s out-of-pocket cost was about $650. She thought they got off easy. About a month later, though, a Dallas doctor mentioned he could have sent her to a facility where the cash price for the same MRIs was a few hundred dollars.“It bugged me a lot,” she said.
She reasoned that if her insurance overpaid, the cost was getting passed to other plan members through higher premiums as well as to taxpayers, since the state paid for the coverage.
She dove into researching the price of MRIs in her area. She signed into Healthcare Bluebook, a subscription online tool that compiles prices for specific treatments based on location, and found that MRI prices ranged from $826 to $4,780.
She then logged onto to the Texas Department of Insurance’s website pricing tool. There, the average billed charge for in-network MRIs in her zip code ranged from $1,807 at a physician’s office to $5,751 at an outpatient hospital facility.
The big shock came when she looked at out-of-network billed charges, where pricing is less constrained. The same procedure on average had a billed charge of $36,009 at a physician’s office and a staggering $63,053 at a “free-standing” facility, which the state agency defines as an independent imaging center.
“It’s like there is no price,” she said, “We don’t know what health care costs anymore.”
In January the Trump administration revived a little-known provision in the Affordable Care Act that requires hospitals to post their chargemaster prices online. In theory, the move is a step toward greater transparency. In practice, it does little to shed light on true costs or promote competition, health experts say.
For one thing, the prices can be difficult to unearth on hospital websites. Even if found, they are usually expressed in abbreviations and medical codes. Unless patients know the specific code for each element of a procedure, the numbers are gibberish. Also, they are sticker prices that typically change after negotiations.
While the Texas Hospital Association says it favors price transparency, it finds the Trump measure “unhelpful” to patients because health care pricing is too complex for easy comparisons.
The White House last month also floated the idea of forcing hospitals to disclose confidential prices negotiated with insurers, which providers argue are proprietary and the move could lead to price-fixing.
In Texas, free-standing emergency rooms are exempt from the federal requirement, but new state laws have been proposed this year to demand more transparency from these facilities in pricing, advertising and insurance status. In one proposed measure, if prices at a free-standing facility are 200 percent more than the average hospital charge for the same treatment, it would be considered “unconscionable” and violators could be referred to the state attorney general.
The Texas Association of Freestanding Emergency Centers said in a statement it supports price transparency and some of its facilities already post prices.
Late last year, an independent poll commissioned by Blue Cross and Blue Shield of Texas, found that 97 percent of registered voters believe patients should be told before treatment how much they will be charged for tests and procedures, and how much they will have to pay out of pocket. The poll also found that nine out of 10 believe health care providers who price-gouge in emergencies should be criminally prosecuted, and nearly three out of four want a state law to cap the prices doctors, facilities and other medical providers charge.
Young, of the USC-Brookings Schaeffer Initiative, said the ground appears to be shifting as patient anger grows, driving policy makers to intervene and consider tighter price controls on health care. “I do believe there’s hope,” she said.
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