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Fight Against Cost Shifting – Pricing vs Costs

One of my clients was in Mayo Clinic for a very severe illness. Mayo charged $50,000 for the week of care. My client feels that saving her life was certainly worth the cost. However, Medicare allowed only $800 of the billable services. For some of the itemized services, Medicare says the negotiated price was lower and therefore the patient would not owe the difference between the charged amount and what was paid. Her AARP Medigap policy payed the 20% co-pay of the reduced amount, considering that Medicare, the primary payor had negotiated the lower price.

The problem for the patient comes in where some of the itemized services were considered “uncovered services,” meaning there was no code for the service such as the hospital charged for an exam which included doing a test to determine the cause of the patients distress. It makes sense to most people that when you go to the doctor or hospital that first they exam you and then they do some tests based on their initial exam. Not to the insurance companies though. The test was considered an uncovered service because it was done on the same day as the exam. All right, I can see the test being part of the exam, but Medicare paid for the lower priced exam and not the higher costing test, which was needed to understand how to treat the patient.

In the current law which is a part of the Affordable Care Act (ACA) which has already been implemented (and has nothing to do with the mandate or patients using emergency rooms for primary care) the “regulations” (the provisions in the ACA) state that providers can charge the patient for “uncovered services.” So, Providers now realize that since the EOB reads “uncovered service,” they have the right to charge the patient for any “uncovered services,’ according to the insurance policy and the regulations.

Medicare is aware of this issue and their website, http://Medicare.gov states that they are looking into how this has been affecting beneficiaries, but at this time, they regret to say that the patient must pay the bill. This means that the language in the portions of the ACA that have already been implemented have caused this cost shifting.

In another demonstration of cost shifting, a client went to the hospital in pain which was determined to come from a very large kidney stone, which caused a severe infection. After a stinit was put in to hold the stone from causing more damage, the patient was sent home, still in pain with antibiotics to wait for the infection to clear. A week later, she was to report to her PCP to get a referral for a urologist. She waited three hours in the office only to be told that the doctor was too busy and a Physician’s Assistant would write the referral. Another week went by until the Urology appointment. The Urologist made a referral to a facility where a procedure could be done to break up the stone. The patient was in a lot of pain, so she asked the Urologist office if they could do anything to hurry up the appointment process. They were able to schedule the procedure for the following week at a facilty an hour away, which was the only one approved by her plan. Then, the day before the facility was to do perform the procedure, the patient gets a call that they have to reschedule because the patient only had the referral to the Urologist from the PCP and not for the procedure. Specialists cannot give referrals because that might be considered a conflict of interest. So now the patient has to wait another week to see the PCP’s Physician Assistant for a referral to the facility to remove the stone, which they were not qualified to do in the first place which is why they sent the patient to the Urologist. The facility schedules patients a month in advance, so now instead of the expedited procedure, the patient will need to go to the back of the line. Then, the paitent will need to go back to the hospital to have the stent removed. All the while, doctors and hospital are being paid for visits and the patient is paying co-pays out of pocket for visits and medications. In this situation, the insurance company and the patient are over paying due to over-regulation.

Until the doctors (AMA) and hospitals (AHA) do the hard work of determining a pricing mechanism for services instead of allowing the insurers to use a lowest negotiated rate policy, we will continue to see cost shifting with the patients on the losing end.

I am hoping that today’s students are learning how the regulations are developed, so that our new policy wonks will demand a real economic solution to health care costs instead of a political one.

July 12, 2012 - Posted by Aging Icon | Uncategorized | Affordable Care Act, economics, health care costs, health insurance, politics