DEAR DR. GOTT: I had an emergency appendectomy 12/13/2011. I went through two different ERs (two CT scans) and one surgery to remove it. I spent one night in the hospital and then was released. A week later I had some problems so I went back to the ER (more CT scans). They found an abscess so I went off to another hospital (more CT scans) to have it drained. I spent four days in that hospital (more CT scans to know all is clear). A week later I was found to have a blood clot (lots of ultrasounds). I’m perfect now.
Now it’s time to pay. According to my account on my insurance company’s website, all the various providers (maybe 15 or 20) requested a total of $122,000. The hospital that handled the abscess wanted $92,050 for the testing, the procedure to drain it, and four days in the hospital. The insurance company paid about $14,000 total to all providers. I paid about $1,000 in various co-pays. And, apparently both sides are now happy. So, who picks up the remaining $108,000? Something is amiss here. Thanks.
DEAR READER: There are standard fees for standard procedures in the medical insurance industry, based on the complexity of the procedure, the area in which the service is performed (rural or metropolitan), and so forth. Physicians, X-ray facilities, hospitals and others can charge anything they choose but they don’t always get that amount. If your total bills amounted to $122,000, the insurance company involved broke down every charge, looked up the “acceptable” fee for that procedure, and forwarded somewhere between 80 and 100% of that acceptable amount to the facilities that submitted the charges. Let’s take Medicare for example. This organization pays 80% of “recognized” charges. The outstanding balance is then forwarded to the patient or his or her secondary insurance such as AARP, Travelers, Anthem, or a host of other companies to pay the remaining balance. If $108,000 remained once your insurance paid, the balance was written off, simply because the facilities involved agreed to “accept assignment”. Physicians have a bible of sorts that is updated annually. In it they can determine what companies believe is appropriate and this is what they base their payments on.
There was a time when physicians were given their choice as to whether or not to “accept assignment” for medical fees. If they chose not to, they billed their patients the full amount directly and were paid directly – sometimes. Most often in my neck of the woods, this meant through minimal payments, hopefully on a somewhat regular basis. Let’s take the scenario of gallbladder removal that might have cost $800. (I said “there was a time”). The patient would receive an amount from insurance and rather than endorse the full check over to the surgeon or medical practice, he or she would cash it, send in $25 at a clip and was essentially off the hook for a month until he or she sent in another $25 payment. The rest of the money? Well, it went for other things. I distinctly recall speaking with one top-notch surgeon in my area who asked for a payment and was told the children needed new school shoes and the parents couldn’t afford both the shoes and the medical bill that month. So, guess who won out?
For those physicians and surgeons who chose to “accept assignment”then, that meant they billed Medicare or a private carrier the full $800 and based on the prevailing rates for surgeons in the area, a standard amount would have been a fraction of that amount, perhaps in the $450 range. This same surgeon to which I refer above always felt it was easier to accept the lesser amount rather than $25 a month. It’s like getting a piece of the pie rather than completely going without.
In summary, physicians and hospitals know what amount will be paid when they submit their fees. They may choose to constantly ask for $118,000 more so their profile will raise the bar a bit in the future, but they will likely not be paid what they would like.
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