Sticker Shock

It was supposed to be a routine office visit for my patient. Unexpectedly, it turned into a real-world health economics lesson for me, the treating physician. The old adage “listen to your patients; they will always give you the answer” became exceedingly true in this case, even when it dealt with an issue beyond a medical diagnosis, such as lack of transparency regarding insurance coverage for medical procedures.

My patient had recently undergone an interventional procedure to treat severe peripheral vascular disease in order to improve his leg circulation. Usually, patients like him don’t seek treatment for vascular insufficiency until the discomfort associated with activity, or claudication, is severe enough to interfere with their regular rounds of golf. That is the real motivator for these patients. The procedure was a success and a few days following the procedure he was back to his normal activities and was pleased that his leg no longer bothered him as he motored around the golf course.

My patient calmly waited until after I checked his pulses, reviewed his medications and gave him a plan for follow-up before he expressed his real concern, and it certainly wasn’t about whether he could now get an extra 20 yards on his tee shot as a result of the new strength in his leg. Despite my office obtaining all the necessary private insurance pre-authorizations for the interventional procedure, he still had received a bill for approximately $10,000 related to out-of-network charges. I was baffled and my patient was disgruntled about this mix-up. After reviewing with him in the examination room the numerous sheets of paper he had received from his insurance company, it became clear what had happened.

A magical alignment of stars needs to occur for an elective procedure to be pre-approved. Emergency services are covered through a separate and more straightforward mechanism. First, the provider, or surgeon in this case, needs to be within the patient’s insurance network. Appropriate professional credentialing and outcome data are submitted to the insurance company, and if acceptable, the provider can participate in the company’s insurance plan. This tedious process needs to be repeated for every insurance plan in which the physician wants to participate. Second, appropriate medical record documentation needs to be submitted to the insurance company demonstrating medical necessity for the procedure. Third, the intended hospital where the procedure is being performed needs to be in-network, which is completely independent of the provider’s status.

Pre-authorizations in this patient’s case were obtained for both the surgeon’s fee and hospital charges. The particular anesthesiologist utilized for this patient’s procedure – a member of the medical team for which insurance companies don’t require pre-authorization – was out-of-network. It is not customary to obtain pre-authorization for anesthesiologists since almost always the anesthesiologist is in the same network as the physician and hospital. We assume, incorrectly, that if an anesthesiologist is working in an in-network hospital and with an in-network surgeon, that they also have in-network status.

The challenge in this process is the lack of transparency surrounding patient choice regarding anesthesiologist assignment, which is often made by the operating room staff moments before the procedure. Despite the anesthesiologist meeting the patient in the holding area before the procedure, no one informed the patient about his upcoming out-of-network charge related to anesthesia services or gave the patient an option to choose another anesthesiologist who was within his insurance’s network.

Fortunately, the out-of-network anesthesiologist worked with my patient to drastically reduce the cost of his services and they agreed upon a much more reasonable charge and associated payment plan. Subsequently, my office has modified the process to ensure that the anesthesiologist assigned to a patient’s procedure is pre-authorized.

This patient’s case was an eye-opening experience for me and helped me better understand the complex maze of healthcare reimbursement. It also enabled me to see things more clearly from my patient’s perspective. I am thankful that this patient took the time to speak-up and share his financial situation with me. How many other patients have I operated on were put in this situation and suffered financially in silence? I have always prided myself on making sure my patients have a thorough understanding of their disease and upcoming procedure. Now, I take the time to make sure they also have a clear understanding of the reimbursement process. As a physician, it is not enough to relieve the physical pain of a medical problem, it is also our responsibility to help patients avoid preventable financial jeopardy.

On Labor Day Costs of Care, a Boston-based nonprofit, offerred $1000 prizes for the best anecdotes from doctors and patients that illustrate the importance of cost-awareness in medicine. Two months later we received 115 submissions from all over the country – New York to California, Texas to North Dakota, Alaska to Oklahoma. We feel these stories are poignant because they put a face on some of the known shortcomings of our system, but also because they unveil how commonplace and pervasive these types of stories are. To learn more about the contest and read more of our stories please visit www.CostsOfCare.org (Twitter: @CostsOfCare).

18 replies »

  1. I have worked this issue over the years from most sides. As hospital admin, then from the insurer side, and now as a patient advocate. I believe that anesthesia reimbursement is still the lowest for all the specialties. Astounding when one thinks of the importance of their role! From the patient side, there is little to no selection allowed for this critical team member. It is little wonder that anesthesiologists must remain out of network so that they can at least be reimbursed fairly for their time, either from hospital subsidies to insure coverage for their patients (my favorite method in the past-it gave me lots of quality control) or from patient negotiated balance billing methods. The root problem is that Medicare must increase their reimbursements for these folks, then all the commercial plans will follow. If they are paid a fair wage to begin with, there will be less of the ugly side to manage.

  2. It was great to see this written from a physician’s perspective. As an employer, I constantly have to put together pieces for employees that assumed they, too, did everything right. There is an assumption from their part if the facility is in-network, then all of the care is as well. Often, they are not told they have an option, or they do not have an option.
    Insurers do not provide clear direction to their members as to the required process. Rather, the process needs to be interpreted from long-winded booklets that exceed 100 pages. There doesn’t seem to be any incentive for them to change.

  3. MD maybe if you weren’t so hurtful in how you referred to our contracts we wouldn’t make them so onerous?
    Love prods for example would be a nice alternate reference.

  4. My contract says we have to try to reach an agreement with payors. We are not required (except for Mcare and Mcaid) to accept the shaft from any other payor.

  5. No Nate, I retired in 2003, and my group still has the same provisions in its contract. I am mystified why most hospitals do not do this (of course we have only anecdotal evidence here how many don’t); it’s certainly an easy solution.

  6. Steve, from your side what do you consider good or bad payor mix, is it the ratio of public/private or does it matter which public and which private?

  7. Many hospitals have leverage over their anesthesia groups, they may not use it. In large hospitals, there is usually demand for services that do not reimburse well for the anesthesiologist. The hospital will often contract with the group to provide coverage for the needed service (think Cath lab, IR, trauma service coverage). In areas with a bad payer mix, hospitals will supplement salaries so they can hire. Only in areas with an especially good payer mix, will anesthesiologists not (usually) be in network. My group participates with everything that our hospital does. It makes marketing much easier for them. Fewer unhappy patients.

  8. Paolo in a way they already do this, before you receive treatment from any provider you are suppose to verify they are in network. I don’t think it would be possible for payors to monitor every anesthesiologists at every hospital and advise members which hospital to go to.
    The information is readily available if people would just check the website or call. We also have to be careful about publsihing to much so everything gets lost in the message. I can preach till I am horse in open enrollment meetings to do something but if I haven’t reinforced that message within a couple weeks of the member receiving that care it is forgotten.
    bev M.D. don’t take this wrong but thats been awhile has it not? it was more recent that doctors not employed b y the hospital learned how they could maximize reimbursement by doing this. This was never a problem 10-15 years ago. Starting around 10 years ago I would say we saw the shift and it becomming more common.
    I don’t think it was nearly as common before the great HMO/managed Care screw tighting that hospitals utilized so much outside services, I could be wring about that part though as I might just have over looked something that wasn’t causing me a problem.

  9. I don’t know what hospitals you all worked at, but for all 21 years at my hospital, participating in the same networks as the hospital was a condition of our contract, precisely to avoid this problem! (Pathology)

  10. Perhaps the trend toward hospital employed physicians could be helpful here. Presumably, however, the salary required to induce anesthesiologists to become hospital employees would be quite large.
    In the NYC area, there are also many surgeons who don’t accept any insurance plans.

  11. Nate, why don’t insurers provide information/statistics to their members on which in-network hospitals tend to use in-network anesthesiologists and which don’t? If it is clear to the patient that they have a 0% chance of being assigned an in-network anesthesiologist at hospital X, but have an 80% chance of getting one at hospital Y, then I would think that many patients would choose to go to hospital Y. This data should be pretty easy to collect.

  12. insurers can’t force hospitals to give privalages or allow people to work there. If the hospital works with one anesthesiologists group and they refuse to contract the insurer has no leverage to do anything about it. If your a big player and there are other hospitals you might be able to threaten to drop that hospital but that is the exception

  13. Nate:
    Why don’t employers require that insurers have a full panel of providers (including anesthesiologists) before signing a contract?

  14. PCP has it nailed down. The hospital-based specialties often have monopolies at hospitals and are under little if any pressure from either the hospitals or others to accept participating agreements from ANY payerss. One option my health plan explored was including language in the hospital’s participation agreement making them responsible for holding the patient harmless from any balance billing by these hospital-based specialists.

  15. This situation is far too common. Anesthesiology, radiology and pathology groups often have virtual monopolies at hospitals and, sometimes, for entire cities, and they thus choose not to contract with insurers. For elective cases, the hospital should require that they inform patients in advance if their services will be out of network.

  16. Grayson it is more common then not that the anesthesiologists is not in network then they are. Like Barry said they are impossible to contract with, like ER docs you don’t have a choice so they have little motivation to sign an agreement.
    You don’t need to pre-auth for them just confirm their network status which is a much quicker process. If the hospital has a list oif 4-5 working that day this could easily be done in 5 minutes any number of days prior to the procedure.Unlike pre-auth it doesn’t require sending any medical records or notes, just a TIN.
    This problem causes the payors just as many problems as the providers and members, unfortuently for the amount of money being billed for these charges there is not an easier solution. These providers figured out roughly 7-10 years ago they could make substantially more not being contracted and have done so enmass.

  17. It’s a well known fact that patients generally have no role in choosing radiologists, anesthesiologists, pathologists and emergency room doctors. For this reason, many of these specialists refuse to participate in any insurance network. That way, they can balance bill patients for their absurdly high full list price.