“I’ve been getting winded lately.”
He’s a middle-aged man with diabetes. This kind of thing is a “red flag” on certain patients. He’s one of those patients.
“When does it happen?” I ask.
“Just when I do things. If I rest for a few minutes, I feel better.”
Now the red flag is waving vigorously. It sounds like it could be exertional angina. In a diabetic, the symptoms of ischemia (the heart not getting enough blood) are atypical. It’s the pattern of symptoms that is the most important, and to have exertional shortness of breath which goes away with rest is a pattern I don’t like to hear.
What he needs is a stress test – more specifically in his case, a nuclear stress test (because his baseline EKG is abnormal). But there’s a problem: he has no insurance. A nuclear stress test will cost thousands of dollars.
I can refer him to the hospital, but I know the financial situation he and his wife face. They have no money because of a chronic pain problem he has. He hasn’t worked in several years, but hasn’t ever been able to get disability either (“I tried, but was denied three times”). Without insurance he’s not able to get his problem fixed, so he’s disabled. But he can’t get disability, so he can’t get insurance to get his problem fixed and no longer be disabled.
But the problem on hand is this: he needs a test he can’t afford.
There are many folks out there in this same situation. It may not just be the people with no insurance, and it may not even be people who don’t have money. In fact, my own family is facing this same problem. Multiple family members (myself included) need dental work done. Some need it done badly, yet we don’t yet have the money to pay for it. So we wait for the money to show up while the problems gets worse.
Many problems are being put off because of high-deductibles or under-insurance. Sure, the ACA has helped people get insurance, but many people got the “bronze plan” and so pay out of pocket for much of their care. What ends up happening is that folks don’t get their blood pressure managed, their diabetes controlled, or their shortness of breath assessed because it simply costs too much to do so.
And so my patient, who has a lot more than cavities, puts me in a difficult situation. He can’t afford to wait to get this test done, but he can’t afford to get the test done. We will do what we can to find ways to find the cheapest way to assess this problem and potentially fix it, but I am not sure exactly how we will accomplish that.
Until our system can figure out a way to handle this kind of thing, we will pay a big price. Waiting for problems to become emergencies is a terribly expensive practice. I’m not sure I know exactly what needs to be done for this, but it’s becoming an increasingly common problem. Some say that a single-payor system will be the remedy, but they ignore the fact that a third-party payor system is what got us in this mess in the first place. Things are far too expensive because patients don’t have to pay for them. That’s why stress tests, which don’t actually cost thousands of dollars to do, are so expensive. That’s why there is $100 hemorrhoid cream. That’s why medications are unreasonably expensive: someone else pays the bill.
I hope the answers are out there somewhere. I’m trying to work on ways to negotiate cheaper prices for my patients for such services, but this kind of thing will take a lot of work and will have to overcome a lot of inertia. It’s going to take time.
Unfortunately, my patient with shortness of breath may not have so much time.
Rob Lamberts is a primary care physician based in Georgia.
If shopping in a free market brings down prices, can we get some
“almost-shopping” tools to help in health care?:
1. Using vouchers or medi-bucks. If these are given to the poor, for example, and these have residual cash-in value if they are not spent, will they act like cash and help bring down prices by mimicking shopping?
2. Can we figure out how to make “spending-down the deductible” equivalent to shopping? Why can’t spending here be to providers who are outside of the patient’s plan? This would be equal to shopping, would it not?
3. Would changing to indemnity-style insurance cause patient awareness of costs and accordingly act a little like shopping? What I mean is that claim money is paid to patient first and the patient subsequently pays the provider.
4. If the patient allowed his doc to be his fiduciary agent, would this be a little like shopping if this spending were limited to all care not provided by this agent-doc?…for obvious conflict of interest reasons.
5. Others I haven’t thought of?
As a taxpayer, I would be concerned that vouchers or medi-bucks would not be used for their intended purpose but might be sold to a third party for a significant discount to their value like gift cards are often sold to brokers who will pay 40%-50% of their remaining value.
Regarding spending down the deductible, I don’t see why insurers, with acceptable documentation, can’t credit members with the amount they spent or what the contract rate to an in-network provider would have been, whichever is less.
A couple of decades ago or so, indemnity insurance was much more common. It’s essentially a form of reference pricing. This is what we pay for procedure A or test B, we don’t care what our competitors pay and any charge beyond our payment is the insured’s responsibility. This would probably work OK for care that can be scheduled in advance. Even then, though, the insured would probably need to know the CPT-4 or ICD-9 code number(s) to get (hopefully) accurate price information. For care that needs to be delivered under emergency conditions and the patient’s problem or complaint needs to be diagnosed, we need different rules that limit how much can be charged to some reasonable percentage of Medicare. I would put the zone of reasonableness between 115% of Medicare at the low end to 150% at the high end.
On the issue of helping patients shop, doctors need to incorporate knowing about costs and cost differences among providers offering the same service as part of their job. To do that, however, they need user friendly robust price and quality transparency tools to allow them or their medical assistant to access that information easily and in real time if necessary. Defining and measuring quality remains a huge challenge though.
My understanding is that most insurers will not count expenses paid out of pocket toward the deductible and out-of-pocket maximum amount unless they are run through the insurer’s claims paying apparatus. So, a low cash price is great as long as you don’t mind it not being counted toward your deductible and out of pocket maximum.
What’s the definition of third party payer anyway? I’ve heard some suggest that it means employer provided health insurance as opposed to the individual choosing a policy in the individual marketplace that is most appropriate for him or her. Either way, an insurer is involved and very few people can afford to pay out of pocket for expensive surgeries, cancer treatment, organ transplants and other sophisticated care including specialty drugs. That’s why they need insurance. At the same time, I don’t expect my car insurance to pay for oil changes and I don’t think people should expect health insurance to pay for routine primary care.
As for nuclear stress tests, how much should they cost based on the actual cost of performing them and how much does the administrative aspects of dealing with an insurer add to providers’ costs as opposed to just accepting cash? I can’t imagine that it’s a huge number. And how much does Medicare pay for the test as a benchmark? Can providers make money at that price and if not, why not?
You are right that these won’t go toward deductible unless we run them through the insurance company. I’m not sure why they cannot be done that way if we give them the proper documentation of their payment of that fee, and the procedure for which the fee was paid.
I agree that insurance’s practice of paying for everything upfront contributed to the high cost of care. The reality is, however, that a large portion of any procedure goes toward the unreasonably complex billing process. What is the true cost of a CT? MRI? Chest X-Ray? Stress Test? Most of these tests no longer use limited resources (having now gone digital) and so incremental cost of doing another test (given that the facility is already doing them) is relatively small. I’ve heard CT’s cost in the $200 range, yet are paid at least 5 times that by insurers.
Lab tests are certainly marked up as well. We get a “pass through billing” cost of $11 for a lipid profile and metabolic profile on our patients from a local lab. They are not losing money on us doing this. Yet the charge we see sent to Medicare for these same tests is $170. What they are actually paid for them is not clear, but there is SOME insurance provider paying that amount to them.
Your argument holds water if the charges now are somehow representative of the true cost of the care given. The incredible disconnect between real cost of providing procedures and what is charged (and paid) under the secret world of medical contracts makes the “oil change” argument not valid. It would be the same as Jiffy Lube charging $500 for an oil change because your auto insurance covers it. The ironic thing out of all of this is that because I am extremely cost conscious with my patients, I am helping the insurance companies by working to keep patients from spending their deductibles. My hope is that an insurer will realize this and take advantage of their own cost savings and team up with DPC clinicians to offer more reasonable insurance plans.
Thanks for your response.
I agree that there should be a way for insurers to credit insured members for services they paid for in cash by providing receipts and other appropriate documentation as opposed to having to run the charges through the formal claims administration apparatus.
With respect to pricing, I don’t think it’s appropriate to expect imaging centers, labs, etc. to price their services based on marginal costs. These facilities can be quite capital intensive and owners need to cover their fully allocated costs including the cost of capital. To do that, they need to price to breakeven at a reasonable capacity utilization rate of probably 50%-60% and earn an acceptable investment return at whatever the normal operating rate for their business is, perhaps 75%-85%. Capacity utilization above that level will be very profitable due to low marginal costs.
Price discrimination will exist in every business to some degree. However, to the extent that it does, I think it should have a reasonable basis. For example, if a large insurer could guarantee an imaging center enough business to fill 30% of its capacity, it should get a better price than a small insurer whose members might account for 1% of capacity or less. If someone needs an image on short notice and the staff has to work overtime at a premium labor rate to provide it, a higher price is justified.
I consider the current complete lack of price transparency to be unacceptable, however, especially as it relates to hospital based care where patients often can’t even get a binding estimate of their out of pocket costs.
I wound up in my community hospital emergency room last fall with vertigo. I was there for three hours and they did a CT scan of the head. I had to come back a week later for a follow-up MRI of the head and neck to rule out a problem that they thought might be there. For the three hour ER stay and the MRI a week later, the hospital billed $15,000 dollars in round numbers. Medicare paid about $1,800 which I think was reasonable. If I didn’t have insurance and they thought I had assets, they would come after me for $15,000 with maybe a 10% discount for prompt payment. Give me a break. It doesn’t make any sense.
This is one of the most important posts I have seen on THCB. You hit the big kahuna, Rob: prices. And you also have the big answer: Someone is between me and my provider, handling the money.
Prices are so high now that no health care system will work, even a correct one.
Proximate cause exercise:
1. If not but for third party payers we would have realistic prices that get close to marginal costs.
2. If we install third party payers in any economic sector we can predict that prices will go amok.
The only option is to find a way to negotiate a cash-only system where the patient pays me and I pass the payment on to a vendor with whom I’ve contracted fees closer to real cost. I do this with labs and am working on doing the same with other providers.
The theory seems to be that having insurance will solve all our problems. Problem is, those that have still can’t afford a lot of care, and there are still those who can’t afford insurance for some reason or another. I have yet to see prices go down, although the theory is that with more people forced to pay for things OOP, they can shop and force competitive pricing.
My question would be, why can’t your patient get insurance, Rob? The ACA was supposed to fix that.
I agree with you the 3rd party payor system insulates patients from costs, therefore there is sticker shock when trying to get care.
What is most concerning are severely high costs for chronic care and cancer care of which now we are told almost half the population is at risk for having some sort of cancer.
A follow-up question Rob, would not this patient be eligible for Medicaid?
I do my best to get people on insurance, but my state is one of those who have opted out of parts of the ACA. Hence, adults can’t get Medicaid easily without either being pregnant, or having children in the house.
The problem for me is that the 3rd party payor system artificially inflates prices and makes many consults and procedures cost-prohibitive. These procedures don’t cost as much as they are charged, but the payment system makes providers charge much higher than the true cost. What I need is a larger segment of cash-only providers to band together and get procedures to be closer to true cost in exchange for paying cash.
I can get these patients to go the the marketplace, but most are going to get insurance with very high deductibles, which will leave me in much the same situation. The other problem is that anything we do won’t address the immediate problem of his potential heart problem. The answer we must give is to go to the ER if he gets bad enough. Sad.
“the theory is that with more people forced to pay for things OOP, they can shop and force competitive pricing.”
Yeah. But cause and effect coupling in this area is extremely loose. Moreover, “shopping” for exigent healthcare px/tx needs is not the same as shopping for the best HD TV deal. Lotta people will have BK’d over their acute health expenditures by the time various healthcare costs have come down appreciably.
1. High deductible plans that aren’t coupled with flexible spending accounts (and high enough wages to support setting aside money in a flexible spending account) don’t solve the problem of affordability for routine or chronic care. A low wage worker may sign up for ACA, and still not be able to afford health care with a high deductible.
2. Narrow networks may prevent a patient from price-shopping outside the network, ergo, even with a plan that supposedly encourages price shopping through high deductibles, a patient may not be able to do so, and still receive care within their network.
3. In some areas, especially rural and small towns, a single health system may have a virtual stranglehold on medical services so that a patient would have to travel far outside of the area to be able to price shop.
4. Many consumers are not educated in price-shopping. They go where their doctor tells them to go.