Part II in the Series on “The Real Price You Pay for Healthcare”  How can it be  so difficult to determine what certain services actually cost? If you’ve received any healthcare services lately, and you are insured, most likely your insurance company paid your bills and you were none the wiser for the details of the transactions that actually occurred behind the scenes.  However, if you are a private pay or cash pay patient, without insurance, trying to find out how much a certain procedure costs can be challenging.

Furthermore, if your insurance somehow “denies” your claim, you may find out more details than you ever wanted to know about how medical procedures are billed, reimbursements are applied, and the various types of charges that can be applied to the same exact type of service.

Here is a real world account of what one patient experienced when he needed a CAT scan in Austin, TX.  John, (he asked us to not disclose his real name), had back pain in August of 2009 and he needed to have a CAT scan performed on his lower back. The procedure was called a CAT Scan of the lumbar spine area and was to be done “without contrast” meaning that there would be no contrast or dye used during the exam.  John had not yet met his deductible for the year and decided to “shop around” for the best price for a CAT scan in Austin, and also was sure to check with his medical provider to make sure that the facility he chose to do the exam had the proper equipment.

real-cost-of-cat-scan Note: It is important to understand that there can be differences in quality of images based on the type of machine that is used in certain medical procedures, so sometimes if you are “shopping” around, you need to make sure that the machine used is of the same imaging quality, and that there are experienced physicians on staff who can actually “read” your exam properly. 

Just as a reminder, with any medical testing that is done the quality of your exam relies on the following three factors 1) The quality/resolution type of machine or equipment used    2) The quality/training/expertise of the person actually performing your exam and 3) the quality ie: expertise and ability of the person who is actually “reading” or interpreting your exam.   This is important for you to understand because sometimes when you are a patient and you hear things like “your exam is normal” or are told that your mammogram was “fine” you may be surprised to find out that another physician’s practice may interpret your previously read “fine” mammogram to be read as “suspicious” or requiring a biopsy. That’s obviously, the worst case scenario but it’s important to know and understand that no test no interpretation is infallible.  We’ll talk more about these issues in a further article, but just know that there are many things in healthcare that are not absolute, and you must not only trust yourself and your own symptoms as a guide when trying to determine a diagnosis, but to understand that there are errors and misjudgments that occur every day in the medical system. Knowing this you can also make informed decisions about when to go for a  2nd, 3rd, or even additional opinions if you have a medical issue that is ongoing and you’ve not found relief from your issue.

Alright, so let’s get back to our CAT Scan example. So John, started investigating options in Austin for Radiology Imaging Centers, hereafter referred to as “Providers.”  Here are the prices that John was quoted for his CAT Scan.

1. Provider # 1: (Outpatient Radiology Clinic) Quoted “Around $1200”.   When John pressed to find out a little more specifically what the scan would cost John was told by the provider to call his insurance company.    So John called his insurance company and was told that the insurance company didn’t have the rates, that John would have to speak with the provider. When John told his insurance company that he was in a “run around” the insurance company representative explained that she would do her best to help him but it was “complicated’.  John asked, “How complicated can it be  to find out how much a particular type of scan would cost! John told the insurance rep that he even had the “CPT” code which is the coding that is used for billing purposes to designate a particular procedure. He asked what could be done to find out the cost of a CAT scan. The insurance agent asked John if he would be open to doing a three way call to the provider and the insurance agent would see if she could get a cost from the provider on John’s behalf. John agreed, and listened in to the call whereby the insurance agent told the provider that she had John on the line and was attempting to get a price for a procedure, the CAT SCAN, and that she had a CPT code. After getting transferred three times and spending many minutes of time trying to get the appropriate person on the line, John and the insurance agent finally ended up speaking to someone in Administration from the provider’s office. Alright, so what is the cost of a CAT scan using this particular CPT Code. It is $932.00 without insurance, meaning that if you were private pay or were not using insurance the CAT scan would cost John $932.00. John asked about private pay options or cash options and was told that if the patient paid in advance for the procedure it would run around $520.00, but this option was not even offered to John until he asked. Then John inquired about the insurance “rate” and was told that if he used his insurance the cost of the procedure would be $360.00 which was the “contracted” rate that the insurance company and the provider had negotiated. Whew…it was enough to make John’s head spin. So, he finally received several “options” for pricing, all from the same provider, and all for the exact same CAT scan. After thanking the provider for the information, John then continued a private call with his insurer and asked why it was so difficult to get accurate procedural cost information, and why there could be such a discrepancy and so many levels of pricing. Especially since if you didn’t know as a patient that you had to inquire about cash payments, or discount options, and/or using insurance vs. not using insurance. One would think that if you didn’t use insurance and paid cash up front that you could at least get the same options as an insurance company would get, especially since the billing and reimbursement times using insurance sometimes drag on for months on end.

So John then was told by his insurance agent that this was indeed a “problem” in healthcare and that the insurer was pushing for more transparency in healthcare pricing. Furthermore, and even a bigger shock was the fact that the way things operate now, providers are not even required to disclose their pricing to a consumer. So you, as the consumer, are not legally entitled to know the cost of your procedure if it is being paid by insurance, unless the provider wants to tell you. At least in Texas!  What a mess. So, let me get this straight John said.  “My lifetime policy has a maximum limit on my healthcare benefits, and in the event that I have a devastating illness at some point in my life and exceed that maximum limit, I will no longer have health insurance. You, as the insurer will drop my coverage.  But, if I am reasonably healthy now, and I would like to choose healthcare providers that provide the best value, quality and service for my healthcare dollar so that I am spending your dollars as my insurance agent, and my dollars in terms of my lifetime maximum limits, wisely, I am not even entitled to know how much a service actually costs?”   “No wonder we have such issues within the healthcare environment, said John. It takes me, as an average consumer one-half of an entire working day to find out the price of one procedure..what a waste of time and effort.   And the next time I check on a medical procedure I may not even be able to find out what it costs?  So I just wasted an entire one-half of a  day of work that I will make up this weekend for my employer because it is not fair to my boss that I just spent all this time trying to find out costs of a test that I needed.”  Absolutely mind blowing, as John described it to me.

2. Provider # 2.  (Another Outpatient Radiology Clinic) This provider was at least more “up-front” with their cost information at least on the initial call. John was told that the cost of a CAT scan would be one of the following prices:

Option A: $250.00 if the patient paid in cash and up-front, on the day or before the day of the scheduled procedure

Option B: $350.00 if the patient makes payments on the balance 

Option C: $278.09 if paid through the insurance company

3. Provider # 3.  Just as a matter of comparison John then checked with one of the local hospitals to find out how much a CAT Scan would cost.  He was quoted $1650.00 for the CAT scan and before he could ask about cash discounts the facility hung up on him. Not a hang up, like you would do on purpose, but just the kind of hang up that is like, “I answered your question, and I won’t ask if you need anything else, I’m just going to move onto my next task.”  Click, hear the ringtone.

In our next segment we’ll share with you which provider John actually chose, and more importantly, what actually happened when he got the bill!