Not One Penny More

By Kim Bellard, May 21, 2015

If you've been to a doctor's office or seen some other health care provider, chances are you've had to sign a patient consent form that, among other things, makes you promise that whatever they end up doing to you, and however much they choose to charge you for it, you're responsible for paying.  If your health plan happens to get you a negotiated rate and perhaps covers some of the expenses, that's great, but the provider is still looking to you for payment.

Maybe you shouldn't be so quick to sign.

I don't know which is worse: that providers don't think they should tell you in advance what they plan to do to you, or that they don't want to admit how much they will try to charge for it.  Honestly, why do we keep falling for this?

I thought about this when reading Kaiser Health News' Radical Approach to Huge Hospital Bills: Set Your Own Price.  It profiles benefits consulting company ELAP Services, which goes beyond traditional services like benefits design, direct contracting, and medical bill reviews by also vowing to go to court if necessary to support their customers in disputes over medical bills.

The KHN article cited the example where an employee of one of ELAP's clients had back surgery and was billed $600,000 by the hospital.  ELAP analyzed the hospital's Medicare's cost reports, and advised the client to pay a much lower amount.  "We wrote a check to the hospital for $28,900 and we never heard from them again," said the client's CFO.

ELAP CEO Steve Kelly says "overwhelmingly, the providers just accept the payment."  ELAP has clients write their process for determining reimbursements into benefit plan documents to give greater legal weight.  They already have a federal court ruling in support of their process.  The contract requires them to defend patients from any collections efforts, in return for a percentage of the savings.

Most health plans base their out-of-network payments on "reasonable charges," which is how most health insurance plans worked prior to the advent of network plans like PPOs, when negotiated payment rates became the norm.  

Whether it has worked as intended is not entirely clear, but what is clear is that providers can come after patients for amounts not paid out-of-network by the health plans, all the way up to billed charges, not just to the "reasonable charges."

What I want to know is, if health plans truly believe their limits on charges are reasonable, why don't more of them act like ELAP when providers' charges exceed them?   ELAP makes it clear whose side they are on; health plans, not so much.

I view the charge structure of most providers as a pernicious symptom of much of what is wrong with our health care system.  They rarely have much to do with either actual costs or market forces, and they reflect an arrogant attitude that consumers are there to be gouged as much as possible.  Or, more charitably, if not arrogance, then a certain benign neglect to patients' financial well-being.  

I'd love to see a health plan whose EOBs not only detailed how much they were paying and how much of the remaining balance the consumer had to pay, but also said, "by the way, we think $X is the most your provider should charge you for this service, and we don't think you should pay a penny more.  If they try to charge you more, let us know and we'll help you fight it."

Now that would be a health plan that consumers would think more of, one that is truly on their side.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting