Question for Insurance Experts/Medical Billing

[sam_gordon]

First, there is no issue, this is totally just to satisfy my curiousity.

As I understand, you go to a doctor/hospital/urgent treatment for a procedure. That entity has a "list" price for the procedure of "X" (let's not get into the separate billing for doctors, anesthesia, labs, etc). But, your insurance (Company 'A') has "negotiated" a different price "Y". From that price ("Y"), you pay your deductible and any copay.

Here's my question... for a given procedure, how different is Insurance Company A's negotiated rate vs Insurance Company B vs Insurance Company C? OR, does the hospital negotiate the same price (or close to) among all insurance companies?

 

[SteveMouse]

It has the potential to vary substantially. The insurance company is bringing the insurance company's clients to the table.. The bigger the client pool that may use a particular service from the hospital, the more likely there is to be a more sizable discount. Basically, the insurance company is buying in "bulk" as it were.

 

[lanejudy]

The provider or a provider "group" usually negotiates the cost that they will accept as 100% by insurance. So it can vary widely from provider to provider as well as differing by insurance.

 

[tzolkin]

Yes, it can vary widely. I run a small anesthesia company and for the same case one insurance might pay $125 and another $600. That's why "payor mix" (what percentage of the patients have each type of insurance) is so important.

 

[Pea-n-Me]

It has to do with ‘buying power’, and it’s been going on for decades.

 

[longboard55]

This is why everyone needs solid health insurance.

 

[sam_gordon]

It has the potential to vary substantially.

The provider or a provider "group" usually negotiates the cost that they will accept as 100% by insurance. So it can vary widely from provider to provider as well as differing by insurance.

It has to do with ‘buying power’, and it’s been going on for decades.

I figured it "could" be a big difference in cost. That didn't mean it WAS a big difference. Thank you to @tzolkin for answering AND with an example!

 

[tvguy]

I figured it "could" be a big difference in cost. That didn't mean it WAS a big difference. Thank you to @tzolkin for answering AND with an example!

I had an ablation last June.
The hospital billed $198,000
Medicare paid $30,000
My Private Medigap policy paid $1,200
The hospital said "thank you, paid in full"
So not sure how realistic list prices are.

 

[sam_gordon]

I had an ablation last June.
The hospital billed $198,000
Medicare paid $30,000
My Private Medigap policy paid $1,200
The hospital said "thank you, paid in full"
So not sure how realistic list prices are.

Asked about insurance negotiated rates and you're answering about list prices being unrealistic.

 

[Living42Day]

I had an ablation last June.
The hospital billed $198,000
Medicare paid $30,000
My Private Medigap policy paid $1,200
The hospital said "thank you, paid in full"
So not sure how realistic list prices are.

That is such a difference. And then the price is even different if you do not have insurance and are just paying out of pocket. It feels like all made up numbers.

 

[mom2rtk]

That is such a difference. And then the price is even different if you do not have insurance and are just paying out of pocket. It feels like all made up numbers.

I'm convinced they charge what they think they can get away with.

 

[tvguy]

Asked about insurance negotiated rates and you're answering about list prices being unrealistic.

Yup. You mentioned in your post the list price. This is an example of the list price and the actual negotiated price that the largest insurer in the U.S........Medicare......actually pays. What's confusing about that?

 

[snowwite]

It varies by provider, insurance ppo network, region and cost shifting. Your network is like Blue Cross, Cigna, United Healthcare, Aetna, MMO etc. The degree of discount varies based on how many members (patients) use that provider. Cost shifting is when a provider has a large number of indigent and Medicare patients so they shift the cost over to those people with insurance by charging them more.
For example most of the dialysis centers in the US are owned by two foreign companies. They bill on average $44,000 per week but Medicare only allows a maximum per diem daily rate of approximately $875 up to three times a week. Because they know that once Medicare becomes the primary payor they will not make as much profit they shift the cost to people still on a health plan. There should be a cap on how much a provider is allowed to profit. Some are making 900% or better.
The no surprises act went into effect in 2021 and in 2023 CMS (Medicare) added explanation and link to a tool where you can look up costs. https://www.medicare.gov/care-compare/
Consumers are not supposed to be kept in the dark any more.
I just tried looking up heart attack and could see what cost should be local and national.

 

[sam_gordon]

Yup. You mentioned in your post the list price. This is an example of the list price and the actual negotiated price that the largest insurer in the U.S........Medicare......actually pays. What's confusing about that?

The question was... "How much of a difference in negotiated costs is there for a given procedure between insurance agencies?" Saying "Medicare considers $30K for an ablation" means nothing without commenting what other insurance companies have negotiated. I can look at one of my EOBs and say "The list price was $x, and my insurance negotiated $y."

 

[tvguy]

The question was... "How much of a difference in negotiated costs is there for a given procedure between insurance agencies?" Saying "Medicare considers $30K for an ablation" means nothing without commenting what other insurance companies have negotiated. I can look at one of my EOBs and say "The list price was $x, and my insurance negotiated $y."

I can only give examples that I have experienced. And IMHO that is a pretty profound difference between the list price and the negotiated price.

 

[barkley]

It has the potential to vary substantially. The insurance company is bringing the insurance company's clients to the table.. The bigger the client pool that may use a particular service from the hospital, the more likely there is to be a more sizable discount. Basically, the insurance company is buying in "bulk" as it were.

the hmo we used to belong to had a HUGE client pool (biggie for public employees in that state). i figured they had the power to negotiate great discounts but did not know the extent until my oldest had surgery w/a one night stay. normally we never saw any billing information from providers (everything was a flat co-pay) but someone goofed in hospital billing and mailed us the hospital's detailed statement from my kid's stay which broke down everything-the insurance company's negotiated rate ended up being around 10%.

 

[tzolkin]

I'm convinced they charge what they think they can get away with.

In my example above, I had mentioned that Cigna may pay $600 for a case and Medicare may only pay $125 for the same procedure. So, to the $125 patient, it probably seems ridiculous that the "list price" would be over $600-- thinking the profit would be $475.

A logical response might be, well just charge everyone $125. However, for that $125 Medicare case, we paid the provider $200 for the hour of their time, plus other expenses, so we are actually losing around $100 on those cases. So, the occasional "high paying" insurance is not actually profit, it's subsidizing all the other cases that we would lose money on.

 

[tvguy]

In my example above, I had mentioned that Cigna may pay $600 for a case and Medicare may only pay $125 for the same procedure. So, to the $125 patient, it probably seems ridiculous that the "list price" would be over $600-- thinking the profit would be $475.

A logical response might be, well just charge everyone $125. However, for that $125 Medicare case, we paid the provider $200 for the hour of their time, plus other expenses, so we are actually losing around $100 on those cases. So, the occasional "high paying" insurance is not actually profit, it's subsidizing all the other cases that we would lose money on.

My mom worked as a Surgical RN for 40 years for a "not for profit" hospital. The nurses were very careful not to break open packaging on consumable (and billable) items until they were actually needed so that the patient wasn't billed. Her biggest frustration was that hospital had to "reinvest" any profit to remain a not for profit with the IRS. So too often that meant buying new expensive equipment, training on it, and never using it. Five years later, because that equipment was five years old, it was being replaced, so the cycle started again. They would check the use log and discover, other than training use, it had never been used on a patient in five years. Why are they replacing it? Because they had the money. And this was a piece of equipment that cost $1 million in 1985.

 

[sam_gordon]

My mom worked as a Surgical RN for 40 years for a "not for profit" hospital. The nurses were very careful not to break open packaging on consumable (and billable) items until they were actually needed so that the patient wasn't billed. Her biggest frustration was that hospital had to "reinvest" any profit to remain a not for profit with the IRS. So too often that meant buying new expensive equipment, training on it, and never using it. Five years later, because that equipment was five years old, it was being replaced, so the cycle started again. They would check the use log and discover, other than training use, it had never been used on a patient in five years. Why are they replacing it? Because they had the money. And this was a piece of equipment that cost $1 million in 1985.

Too bad someone didn't think about lowering their costs, benefitting the patients.

 

[MillauFr]

I had an ablation last June.
The hospital billed $198,000
Medicare paid $30,000
My Private Medigap policy paid $1,200
The hospital said "thank you, paid in full"
So not sure how realistic list prices are.

I wonder if they can claim a $165k write-off on their taxes when they pull these stunts?