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Why Don’t Doctors Know How Much Their Services Cost? Print
Saturday, 29th July 2006 (by J.D.)This article is about Funny Money
Three years ago I had surgery on my knee. I’d done a typical out-of-shape middle-aged man thing and played soccer (or football, for you international types) when I was not fit. A wrong step on uneven ground caused me to rip out my ACL and tear up some cartilage.
The thing that amazed me about the medical treatment wasn’t the quality of the doctors, nor the amazing advances in medicine (they took a ligament from a dead person and transplanted it to my knee through a tiny incision!), but that nobody could tell me how much the procedure would cost. It was exasperating.
It’s no wonder U.S. health care costs are out of control. (Are they out of control in the rest of the world, too?)
Given the same information, one doctor’s office told me I had a $15 co-pay for my insurance, while another doctor’s office told me I have no co-pay (despite my insistence that yes, I really did). I was sent for an MRI, but nobody knew how much it was going to cost me.
“You have insurance, don’t you?” they asked. Well, yes, but that’s not the point. Insurance isn’t some magic cure-all that makes the costs just go away, you know? It’s this kind of attitude that drives up costs in the first place, and it’s ridiculous. Insurance doesn’t make health care free. (And my insurance only covered 85% of the costs, anyhow.)
I had an initial consultation with an orthopedic surgeon (Dr. Black — ominous, eh? Not to worry: he was young, probably my age, and he looked like a squeaky clean kid.) The news he had wasn’t good — it was rather depressing actually — yet when I asked him to give me a ballpark estimate for the costs of the procedures he was recommending, he couldn’t (or wouldn’t) give me one. He was a little defensive, actually, explaining that his fee was only a small part of the overall cost. I wasn’t looking to blame anyone for how much this was going to cost me, I just wanted to know in advance. Why was that so difficult?
He told me to call a woman, and she passed me off to another woman, who said she’d try to gather some information for me. I waited for days.
“Why is this so difficult?” I asked. “Is it so rare that people ask how much these procedures cost?”
“Well,” she explained, “Most people have insurance that covers this.”
sigh
Funny, yes, but funny in a sad way.
I suspect that there’s some sort of tacit collusion between all parties. The drug companies charge high prices to the doctors who charge high prices to the insurance companies who charge high prices to the consumers. I know that Health Savings Accounts are all the rage. I hear good things about them, and I hear bad things about them. I don’t know what to believe. Fortunately, my wife has good insurance…
July 30th, 2006 at 12:50 am
Too true - our baby had to go to the emergency room a few weeks back for an urgent but non-life threatening problem a few weeks ago (she’s fine!)… all the while we were there I was ranting to my husband “why can’t I know right now what this is going to cost me?”. I mean, we have insurance and all that, but I know I have to pay something like 20% of the bill usually, plus some sort of deductible at the very least for an emergency room visit - it ain’t gonna be cheap. And heaven forbid there’s something the insurance “doesn’t cover” - but I’ll find out about it later… We still haven’t gotten the bill, hope it’s not too financially debilitating!
July 30th, 2006 at 8:14 pm
The reason doctors don’t know what their procedures will cost you is mainly that whenever they are on any kind of a PPO (preferred provider) network, that means agreeing to reduced rates. The doctor sends a bill to the insurance company and the insurance company sends back what the correct charge is based on the PPO agreement.
Doctors can be on dozens of these networks, and they really don’t tend to know what the agreements specify.
So even assuming the doctor knows their own charges for procedures, they have no way of knowing (a) what the PPO agreement for your insurance specifies, (b) what portion of that you are required to pay in terms of your coverage, and (c) what’s going on with your deductible.
They could just tell you what their charge is, assuming they know it (and I’m sure they always know about what it is), but you’d probably freak out for no reason.
July 31st, 2006 at 11:03 am
[...] Get Rich Slowly » Why Don’t Doctors Know How Much Their Services Cost? [...]
October 19th, 2006 at 10:07 am
Most doctors don’t know the cost at all. I was going to the doctors and wanted to know what it would cost me. “What insurance do you have ?” My reply ” I will be paying cash.” ” Um, I don’t know, you will have to call back to talk to the billing specialist.” This was at two different places. This was just for a routine checkup. Look, I don’t expect to hold them to an exact amount, but why can’t they give me a ballpark figure ?
October 24th, 2006 at 8:58 am
I went to a podiatrist recently who looked at my foot, said you have a bunion you could get it removed at another facility some time. Appointment over. He charged my insurance company almost $400. What can I do about this? How could this doctor, and other doctors and facilities I’ve been to, get away with this? I know I’m not the one paying it, but somebody is, and I think it’s just wrong.
October 4th, 2007 at 3:57 pm
This is why I get so irritated when people talk about how we can help keep insurance costs down by being good consumers. How can we be judges of that when the costs are so thoroughly hidden from us?
November 8th, 2007 at 7:27 pm
Hello, I am a doctor, I just wanted to note - in this day and age, even primary care offices are not so often owned and run by the doctors. Most medical offices are owned and run by businesspeople, the doctors are merely employees. And because what people get charged is extremely complicated, it is not often so easy to just throw out a figure on cost. After all, medicine is not one size fits all. Most people are going to require different medications, different procedures, different amounts of time for services. The coding and billing processes are mind-blowingly obscure and difficult to understand. Doctors are doctors. We learn how to take care of people. That is what we (hopefully) are good at. They do not teach us about business in medical school or in residency. We are not businessmen, nor would you want us to be concerned with the cost of what we are doing - rather we place patient safety and doing what is right for the patient as the top priority. I would say that physicians often have a general idea of how much a blood test or an imaging test might cost, but to project the cost of a hospital visit would be difficult because there are many variables involved - multiple blood tests, imaging tests, the potential for complications that could raise costs, the prognosis of the patient, etc.
I fully agree that costs should be more clear to the public. But I disagree that we can keep insurance costs down by being good consumers - after all, you don’t choose to get sick, and you should get the treatment that is right for you, not the cheapest treatment. Medicine is not the same as shopping. You don’t place an order and your doctor fills it. We can keep insurance costs down by being a healthy populace - using prevention instead of treatment to battle disease. Another way is by using good generic medications when possible, but that should be for doctors to worry about, not patients.
The cost for paying in cash is usually far higher than the cost if you have insurance, for the reasons noted above. Insurance companies bargain a cost based on their market power. If you are just an individual, you have no bargaining power. The other problem with this approach is that doctors cannot necessarily charge what they think a procedure or service is worth - it doesn’t matter what price is officially put on something, what makes the difference is what insurance is willing to pay.
February 9th, 2008 at 4:06 am
I, too am a physician. Did you know it is illegal for me to charge a patient, with or without insurance, less than the fee schedule Medicare sets for a specific procedure or office visit? Most insurance companies use the Medicare fee schedule to base their fees on, usually a certain percentage above Medicare (ie. We’ll pay you 120% of Medicare). What some companies have started doing is lowering the percentage or secretly paying 120% of the 2003’s fee sched, not 2008’s. Many insurance companies typically delay payment on claims filed for months, despite this being “illegal”. They do it legally by stating the form is incomplete or by “claiming” the service is a covered benefit or that the patients insurance wasn’t in effect at the tie of service, only the “investigate” and determine that payment should have been made originally and then not paying interest of thi “borrowed” money they kept for 9+ months.The Medicare fee schedule is, for a physician’s office, just enough to pay office overhead but not the physicians salary. These delay tactics are so common that the medical community as a whole is the second largest “loaaner” of money in the US, second only to the banking industry, but they get to charge interest. Medicaid pays about 50-60% of overhead, so we loss money everytime we see a patient with this insurance.
I don’t know what a hospital charges or what discounts they offer to which insurances. I could investigate and get the answer, but wouldn’t you rather have me spend my time learning about the latest medical advances? Physicians are consumers and patients too. We want to keep costs down for everyone.
I am curious what the original post meant, “The drug companies charge high prices to the doctors who charge high prices to the insurance companies who charge high prices to the consumers.”
Drug companies don’t charge me anything. Except for the few supplies I keep on hand(vaccines and Demerol and one antibiotic for emergencies). Drug companies charge the patient at the pharmacy. I don’t charge insurance companies high prices, they set the fees I can charge.
February 9th, 2008 at 8:43 am
Some of the information in the above posts from the doctors is somewhat misleading.
Every medical procedure has a code. That code for that particular procedure is the same nationwide. If a doctor suggests you have a specific medical procedure done, you have the right to request and be given that cost of that procedure. If the doctor refuses to give you the cost, go to another doctor.
Also once you get the code, call your insurance, give them the code of the procedure and your zip code, (what insurance pays for different procedures varies by area) and ask the insurance what is their reasonable and customary payment amount for this procedure.
If the rate quoted by the doctor is higher that the rate quoted by the insurance, then you would be stuck paying the difference, plus your deductible amount.
But if you tell the doctor what the insurance will pay and ask he if he will accept that amount as the total cost of the procedure, he will usually agree to that amount.
Both the doctor’s office and the insurance will try to give you the run around when you ask for these figures, but if you are persistent, you can save yourself thousands of dollars on a procedure.
Also do not hesitate to get prices from more than one doctor if the procedure is a costly one, and what medical procedure isn’t these days. Doctors get very cooperate if they understand that they are competing for your business.
If you take the time to make these agreements before hand, you save a lot of money. If you try to get the situation taken care of after the fact, the doctors, hospitals, and insurance companies are much harder to work with, although in my experience it is still worth the effort.
Even before you go to the doctors office for a routine checkup or a shot, call ahead and ask what it will cost. If it seems to high, call other doctors. Shop for medical care like you would shop for a vehicle. If you are going to pay cash, then tell the medical provider you are willing to pay what the insurance or ppo is paying and request that cost up front.
I believe a major reason our health care costs are so high in this country is that me have been brainwashing into accepting what ever the medical establishment charges. We need to treat medical care costs just as we treat every out cost in our lives, aggressively challenge the costs and negotiate cost just as we would for other costs.
March 16th, 2008 at 9:50 am
Riley,
I guess you will be going for your prostate exam at the local Walmart Automotive Service Center? You are wrong on many levels about physicians as pricing they set. Did you ever hear about medicare insurance and the ongoing costs that physicians pay? It only goes up. Why do you think that there are fewer and fewer physicians staying in the field of medicine, it’s because of insurance companies driving the pricing, and squeezing the physicians, and no I am not a physician. I just understand the reality of the econmics. So go ahead have your proceedure done at home with your craftsman tool set next time. You are very foolish, and ignorant of what is really going on about the field of medicine.
March 26th, 2008 at 11:55 am
I think that there should be a state or federal law dictates that service providers tell how much a procedure costs up the front if they recommend such a procedure to a patient. This is no different from buying services in the marketplace.
Recently I had a regular checkup and the doctor took a blood sample. A few weeks later I received a bill of $300 from Summa Healthcare at Akron for telling me that I am OK with cholesterols. Is it ridiculous? If I was told of the cost, I would have to decide on it.
March 27th, 2008 at 11:17 am
Yeah, I was wondering if anyone could give me some advice.
My husband went to the doctor for an earache. During the examination, the physician removed some wax from his ear. He never mentioned that this was a separate “procedure” or “surgery,” or that it would be billed under another code in addition to the office visit. I freaked when I got the bill. He coded it as “surgery” and charged $150. My insurance has a $100 co-pay (that doesn’t count toward deductible) for “surgeon’s fees,” so now that ear cleaning will cost us a pretty penny.
Do I have any recourse with the physician who didn’t tell us that what he was doing wasn’t covered as part of the exam (it always is for my daughter at the pediatrician’s), or that it was a separate bill/code, and certainly not that it was a “surgical code.” (We would have denied the service b/c if he had told us it was a surgical code we knew at the time about the surgical co-pay). I’m so frustrated b/c I do know my insurance policy, but I’ve never had a physician bill me for something without telling me in advance.
Any advice from someone who has dealt with this before, or is a physician or lawyer in the know? Thanks.
March 30th, 2008 at 6:45 pm
Dear Mark…insulting Riley…who is actually RIGHT! What Riley said was very smart. I use to work for a doctor and he was scum. All he cared about was how much he can charge. There are a set of codes that is the same nationwide and insurance companies do have a set price that they are willing to pay based on certain factors. and when the doctor does over charge..you DO get stuck with the costs. Not only that but doctors do procedures that are completely un-necessary or charge insurance compaines for procedures that they never did!! When people would call for an estimate price they were normally told that they didnt know. When i answered the phone i told them how much it cost just to walk in the door and its guaranteed to go up from there depending on what he does. He didnt like prices being told over the phone so that when they came in he could do “minor” procedures here and there to boost up the price he was gonna charge. They lie to you and scare you into thinking that something is wrong with you and you waste your time and money. I agree that you should shop around. I ended up getting fired from this doctor because I was making people aware of what he was doing to them and he actually lost business because people found out what he was doing. I told them to get 2nd, 3rd, 4th, even 5TH opinions before agreeing to any treatment. He tried blaming the insurance companies and got away with it too until I opened my big mouth. Prescription companies have nothing to do with the cost doctors charge. Infact prescription companies have to kiss their ass just to have their product promoted. Drug reps have to grovel at their shoes to beg them to meet a quota for the month. The free lunches was the only perk. So when you are sitting on the table of your prestigous doctor getting the expensive surgery that you dont even need…dont ask for any help. you dont deserve it. and Riley deserves an apology.
April 2nd, 2008 at 1:00 pm
Michelle,
I can’t speak for the physician you worked for and his methodology. However, take for example the UK, where they have socialized medicine, and no adequate conditions. Patients get jammed into a cattle call room, asked to remove their clothes, and use sometimes soiled gowns. I find that unacceptable, but that seems to be what some people want. Less expensive services.
As for your comment about prescription companies, I never once mentioned the drug manufacturers. You make uneducated statement. Keep in mind that everyone is either a sales person or a buyer in some capacity. Drug Reps are out there to push their product, like anyone else. Sales is sales, and if they don’t like it they should get out of it. Drug Reps also get paid on the higher of the income scale in sales related positions, and there is very little competition among them.
At the end of the day, why do people like yourself try and justify that a physician overcharges, when they don’t mind spend hundreds of dollars on clothes or shoes. Physicians are entitled to make money too. They are not in it for charity, and your health should always be the first priority.
And I do go for second opinions, when I am unsure of something. There is nothing out there that states you cannot do so, or shouldn’t.
April 2nd, 2008 at 1:36 pm
However, take for example the UK, where they have socialized medicine, and no adequate conditions. Patients get jammed into a cattle call room, asked to remove their clothes, and use sometimes soiled gowns.
Oh, please. I’m from the UK, and that’s hogwash.
The NHS is not without its problems — for example, waiting time for non-critical procedures — but quality of care is not one of them.
June 22nd, 2008 at 5:36 pm
Wow, that poster Mark is amazingly ignorant (and rude). Indeed, the UK actually has a very good, reliable health system. I think Mark might have watched too much Fox News with Bill O’Reilly
You see, dear Mark, when you’ve actually lived in a country with ’socialized medicine’, you have a different opinion than if you’ve just watched a few biased reports on Faux News in the USA. I say that having lived in the UK, Australia, and currently living in the USA, with our wretched health system here.
June 26th, 2008 at 11:10 am
[...] an example of the pitfalls of not having this discussion with our patients, the author of this post describes his takeaway from the healthcare experience from a 2006 encounter with his medical [...]
August 11th, 2008 at 9:02 am
Okay….I read the posting above and would love to share some information. (In case you’re wondering I work for a major medical provider and have some knowledge on physician & insurance contracts).
I you carry you’re own insurance congratulations! You’re already saving thousands a year….if you choose in-network/participating medical providers.
Before I get to in-network/participating let me start by describing the various types of physician practices: individual, partner, small group, large group. The definitions are pretty obvious, but one thing that isn’t is the charges and treatment. Individual providers stand alone and usually have a lot of overhead (assistant, nurse, rent, utilities, ins.) that’s why it’s rare to find this type today. They are acutely aware of the cost of treatment. A partner might have one or two other physicians in the same office but seperate who’s patients are who’s and split the cost of an assistant, biller, nurse, rent, etc… Small and Large groups are pretty obvious but one thing that isn’t is their contractual agreements.
From what I’ve seen, most group practices are owned by one physician or the group as a whole. They have a contracted agreement to make $x amount for the year to see patients on x days from say 9 - 5. They never see a bill or a charge amount. They may get a bonus or profit share if their patients pay the bills.
I always look for group practices for this reason and also if I can’t get in with my preferred physician I can see someone else in the practice. This is my first step.
The next step is to make sure not only is the group in network/participating with your insurance, but the individual doctors are as well at the address you will be seeing them! The might be in two seperate offices but only enrolled with the insurance company at one address. In-network/participating means that they signed a contract with the insurance company to only take $x amount on a procedure regardless of what they billed. (I recently received a bill from an x-ray tech for my daughter that was billed at $332….my cost $3.99)
Say you went for a strep throat culture at an in-network group practice. You can expect a bill from the group on behalf of the dr sticking a Q-tip down your throat and the lab that processed the culture. Say the group bill was $150. They would bill your insurance co with a procedure code (it’s called an ICD-9 code and they are standard in medical billing…this code will be your key to further savings explained later) which the insurance company would say “you signed a contract for $20 for this procedure”. Your explanation of benefits (EOB) would show the $150 charge, the $130 as the provider’s responsibilty and the $20 remainder as patients responsibility (with traditional insurance, assuming you haven’t meet your yearly deductibleand paid a $20 co-pay at the office visit and that co-pay went for the office visit charge…completely seperate ICD-9) Assuming your deductible was met and your insuranc policy had a 80/20% co-insurance, then the $20 would be reduced by 80% showing as “plan paid $16″ and you would need to pay the remaining $4.
That takes care of the dr, but what about the lab. You must always, always make sure the group practice utilizes an in-network/participating lab. If not you can request a prescription to go to an in-network/participating lab seperate from your doctors office. Do NOT let the doctor state they are unable to do so. If the doctor says they can’t do it, let them know that the lab they use (and are most likely contracted with) is out of your insurance network. Most physicians are aware of the cost for out-of-network procedures. The same procedure will apply to the lab bill as above for the doctor/group.
You just saved yourself roughly $300 for a strep throat culture!!
Also, if you’re facing an upcoming surgery make sure the surgeon, physician, and hospital are in-network. Generally, the in-network hospital is required to obtain a pre-authorization from your insurance company for the surgery. If the hospital fails to do so, get this…the HOSPITAL is responsible for their bill, not you!! This would be the same for your physician and surgeon.
If the original bill to your insurance company gets denied, do NOT call your insurance company unless you get a bill from the hospital/physician. Most likely they are having problems with the pre-authorization. It is NOT your responsibility to get the insurance company to pay the hospital/physician if they are in-network/participating. Use this time to save more money to pay the bill when it finally comes.
If you want to find out a rough estimate for the surgery, get the ICD-9 code from the doctor’s billing office. Most likely the doctor won’t know the code and don’t waste their time asking, they need to worry about patients. Call your insurance company and tell them the doctor/surgeon/hospital name and the ICD-9 code. The insurance company should be able to give you a rough estimate of what you’re charges will be. Please keep in mind it could be off by a couple hundred dollars depending on what other bills are pending with insurance and which bill is processed by the insurance company first.
Also, you have a right to a list of your charges after you leave the hospital. Keep a notebook of what they gave you. When I had my first child they nurses opened a breathing thingie since I had a C-Section (sorry don’t know the techincal name) after I specifically requested not to receive it. Guess what, since they opened it they billed me $152!!!(I had crappy insurance) I saw the same thing at a medical supply store for $5!! I saved it and when I had my second child I brought it with me. The nurses looked at me like I was mad until I told them that they already charged me $152 for this one 2 years ago and I’m absolutely not paying for another!! I requested a charge list from the hospital to make sure they didn’t charge me again.
Also, the $4 prescriptions are not always cheaper than insurance if you have a high deductible plan. Mine will run under $4. If you want more info on this post a reply.
Hope this helps people!!!
February 14th, 2009 at 8:44 pm
I am a surgeon, and I am sometimes asked by patients to estimate the cost of a surgery for them. I honestly answer them that I don’t know.
What I do know is the expected CPT code I will be billing for (and I often provide it to them so they can ask their insurance if it is covered). This code describes the surgery that is planned. I also know the reimbursement rate from Medicare for it.
What I do not know is the hospital fee used to pay for OR time, supplies, nurses etc.. Also, I do not know anesthesiologist fees.
I also do not know how much the patient’s insurance reimburses, what his copay is and what his deductible is. When I get my productivity figures from my employer (I am salaried at a university) , I am confused as to why the same procedure sometimes pays $200, sometimes $2000 and sometimes nothing.
I agree with the original poster that it should be easy to obtain. But I can assure him it is not doctors who are obfuscating. Rather the system is a mess.
April 15th, 2009 at 6:39 am
I hope Obama successfully cleans all of this crap up with his medical overhaul plans.
April 15th, 2009 at 6:48 am
My wife took our son to a specialist recently to have his hearing checked. (She was referred by our son’s pediatrician.) Just before this, we lost his health insurance, so she called ahead to ask for an estimate on how much the tests would cost. She was given this estimate, but it turned out to only be for one of the two or three tests that was done. This cost was to be $80-something; instead, we were billed for over $260. Is there anything I can do? I figure that it’s the clerk’s word against ours, so we’ll have to pay the bill, but should I report that office to someplace like the Better Business Bureau? Or is there a better or more appropiate entity for making such complaints to?
April 15th, 2009 at 11:31 am
Tony,
I’m sorry to hear that your son needs to see a specialist and you were charge an amount larger than expected. It sounds like you were quoted a price for only one test/procedure instead of the multiple that were provided.
I do not believe you have any reason to contact the BBB and here are my reasons:
1. You did not ask what type of tests or how many were needed before they were done or you would have been able to get the appropriate price
2. You still don’t know what tests or how many were done (based on your post)
3. You might have been able to negotiate a lower rate for the testing prior to it being completed
4. You could have choosed a different lab to run the tests that might have been cheaper (this is sometimes an option)
5. The “clerk” might have given the price of a basic screening…without knowing the exact codes that would be billed she would have been unable to give any more information.
While I agree that $260 seems like a lot of money, but these are highly skilled and educated individuals who have a high level of overhead and responsibility. Your energy would be better directed fighting auto shop labor costs.
I would call the provider’s billing center and get on a payment plan. You could also negotiate a reduced price as payment in full or ask for a compassionate care reduction/elimination.
Bottom line….it’s your kid and your responsibility to pay the bill.
April 15th, 2009 at 1:30 pm
Michelle, as an insider, I can understand why you would be afraid of clients having the right to hold medical staff to their word. That said let me respond to the points you’ve made:
1. We did ask for an estimate of the total cost of all the tests to be performed (“the entire visit”) but were presented with the cost of only one of the tests as the total amount. I think any rational person would agree that how much of a medical education my wife and I do or do not have or how much we knew ahead of time about the minutiae of each test is irrelevant to the topic. If we had been given a truer estimate, then we could have talked about the payment options you mention… or gone elsewhere.
2. We do have a pretty good idea of which tests were done. My wife has compared her memory of the tests to the itemized bill we received. Regardless, this is also irrelevant.
3. This is moot if you are given a grossly inaccurate number before the tests are done.
4. Again, moot.
5. If the clerk didn’t know what she was talking about, then she should have said so.
Thanks, but no thanks, and please don’t insult my intelligence again.
April 16th, 2009 at 7:48 am
Tony,
An intelligent person would have gotten it in writing prior to allowing anyone provide them services which they will later receive a bill.
Do you shop for other services the same way?
I know it’s frustrating to get that information because my child needed to see a specialist too. But you know what, I got it…oh, and it was prior to obtaining the services. See, it can happen!! MAGIC!
April 16th, 2009 at 8:18 am
Oh yeah, like you’ve never made mistakes in life. If our legal justice system was based on the premise that the only victims who receive justice are the ones who never made mistakes for criminals to take advantage of in the first place, then there would be only one judge, who would promptly dismiss all cases brought to him, and victims would soon be pursuing justice through vigilantism. My understanding of the Better Business Bureau is that they are good for recording complaints when a victimized consumer doesn’t have enough evidence to bring a lawsuit against a business. That is why I am considering leaving a complaint with them. If this office continues to say irresponsible things to their clients over the phone, and enough complaints are filed, then it’ll come back to bite them. I may also search for a website where one can leave complaints about a business, or specifically a medical provider, for other potential customers to peruse.
Now see here, Michelle: You seem to be the only person replying to my inquiry, and you only have ugly things to say. Since nobody is giving helpful advice, I’m going to unsubscribe from this post and look elsewhere. Goodbye and good riddance.