Lack of transparency in health care prices routinely forces patients to pay more for health care than providers and insurers require, according to advocates who negotiate discounts for self-pay patients.
Slightly more than half of all patients ask their providers how much their services cost, and most patients are confused about the responsibility they share with insurers to pay for their health care, a new survey states.
“The majority of respondents (67 percent) reported that patients do not understand their payment responsibility versus their insurance provider’s responsibility,” according to a survey conducted by Navicure in August and released in October. Navicure is a health care claims and data analysis company.
“Further, 42 percent of respondents noted that estimating prices for services represents another top barrier,” and 56 percent ask how much treatment cost, the survey results state.
One team of health care financial advisors and advocates, The Karis Group, says it expects to help self-pay patients who are members of health care sharing ministries (HCSMs) achieve savings of $30 million in 2016.
HCSM members represent approximately 625,000 of the country’s 27.3 million people who lack health insurance despite the Affordable Care Act’s (ACA) tax penalty for going uninsured and the expansion of Medicaid under ACA in 32 states. The law exempts HCSM members, who help pay for each other’s health care costs for religious reasons, from the tax penalty.
Whereas self-pay patients and HCSM members obtain prices directly from their providers, insured patients typically find out health care prices after providers have billed patients’ insurance companies.
Price Obscurity ‘Immoral’
The Karis Group helps patients close the gap between what health care providers charge insurance companies and the usually much-higher amount providers charge patients out-of-pocket for the same procedure.
Tony Dale, founder and chairman of the board of The Karis Group, says he has spent years negotiating lower health care costs for patients who “are purely self-pay, those who belong to health care expense sharing cooperatives, [and] those with limited medical benefits and a high deductible.”
Dale says the lack of health care price transparency is not merely inconvenient, it’s wrong.
“Medical pricing is so incredibly obscure, it’s beyond ridiculous,” Dale said. “It’s actually immoral.”
Provider-Insurer Price Gaps
Dale says Karis once negotiated an 85 percent discount for a pregnant woman whom a hospital was going to bill $20,000.
“We called the hospital, and we explained who we were and that we were acting on the patient’s behalf and would be willing to help the patient assure [the hospital that she] would pay this before the baby was due,” Dale said. “They told us if we paid before the delivery, they would accept $2,900.”
Obscurity of health care prices can result in providers and insurers gouging patients, Dale says.
“The general public is being completely cheated in what goes on,” Dale said. “It’s in everyone’s benefit except the consumer to have prices obscure. The insurance company would rather make its 15 percent profit on a $1,000 policy than it would a $300 policy.”
Insurance Inflation
Sean Parnell, author of The Self-Pay Patient: Affordable Healthcare Choices in the Age of Obamacare and president of the public policy consulting firm Impact Policy Management, says the health insurance reimbursement approach systemically raises prices for patients and physicians alike.
“The administrative costs associated with processing insurance claims and medical bills are enormous, turning what should be a $50 or $60 visit to a primary care physician into a $200 charge that the insurer will pay $100 for,” Parnell said.
Parnell says restoring more direct-pay relationships between doctors and patients would reduce health care costs more effectively than insurance reform or government transparency mandates.
“Greater price transparency won’t actually make much difference so long as most health care is paid by third parties like insurers and employers or if it’s the government mandating some form of transparency,” Parnell said.
Clearer price information would empower patients to make health care decisions reflecting their own values, Parnell says.
“For self-pay patients who are footing the bill directly, even if they’re being reimbursed by an insurer or another entity, like a health care sharing ministry, greater price transparency will provide patients the missing piece of the puzzle needed to be cost-conscious health care buyers obtaining real value based on their preferences, not those of bureaucrats,” Parnell said.
Ben Johnson ([email protected]) writes from Stockport, Ohio.
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