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Extreme out of network fees and lack of transparency are threats to affordable care
A key element in the changing healthcare landscape must be greater pricing transparency. To that end, America’s Health Insurance Plans (AHIP) has released data compiled by Dyckman & Associates showing tremendous disparities between the fees in-network providers receive from Medicare and the fees out-of-network providers charge to individual patients.
In some cases, the fees are staggering. Health plans and members might receive a bill for services that are charged at 10, 20 or even 100 times higher than Medicare rates for the same service in the same geographic area.
For example, one New York physician billed an individual patient $115,625 for lumbar spinal fusion, which is more than 60 times what that physician would be paid under Medicare.
“In the public debate over what is driving healthcare costs, the focus is always on how much are insurers paying and covering compared to the underlying charges,” says AHIP spokesperson Susan Pisano. “In our estimation, the issue [of out-of-network charges] has been a hidden threat to affordability for consumers who want to have the benefits of a network but also would like to have the option of going out of network for care.”
Moreover, as employers increasingly offer-and more individuals purchase-high-deductible consumer-directed health coverage, the need for such cost data will only continue to grow. After all, only when transparent pricing data is readily available to consumers can they fully understand the financial implications of the treatment they are choosing. All stakeholders want to get away from today’s environment where consumers are insulated from the true cost of care.
“Consumers often access out-of-network services without fully understanding what the charges for those services will be or their out-of-pocket exposure,” says Robin Gelburd, president of FAIR Health, Inc., a not-for-profit provider of health pricing information based in New York. “Making cost information available on the front end allows consumers to juxtapose their in-network verses out-of-network financial responsibility up front.”
For example, if a consumer is facing surgery and must decide between an in-network surgeon and an out-of-network surgeon, comparative information provides a critical element of the decision-making process. It also provides a starting point for conversations with out-of-network providers with the goal of reducing the out-of-pocket cost of the procedure before the patient receives care.
FAIR Health specifically tracks usual and customary charges by service and geographic area.
Less work for plans
From health plans’ perspective, when patients are prepared and knowledgeable about costs before they receive care from out-of-network providers, the resulting bills and charges are much less likely to become contentious. When individuals are confused and frustrated about the size of charges and do not understand why their health plan is not paying those bills, “that can cost health plans a lot of administrative time spent sorting out these situations,” says Gelburd.
As more pricing data becomes available from various sources, health plans can play a role in making that data available to customers, evaluating the validity of that data and various providers and sources, and communicating to customers how and why they should be using the pricing information.
For example, health plans can incorporate a glossary of common terms used in billing and pricing information and maintain continuously updated pricing information for use in Web-based tools that help consumers to compare in-network and out-of-network costs before choosing providers.