Wednesday, May 20, 2015

Not One Penny More

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.  Either way, it'd be a great reality show to watch practice administrators trying to defend the vagueness of their promise versus the expected specificity of yours.

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 problem is well documented.  Charges are out of control.  There is often no meaningful connection between providers' "charges" and the negotiated prices they've agreed to with third party payors.  As long as you have insurance and stay in-network, you don't usually care, because you get the benefit of those negotiated rates.  But if you don't have insurance or use -- knowingly or unknowingly -- out-of-network providers, those charges become very important, since you end up being responsible for all or most of them.

A number of states, including New York, have already taken legislative action on the problem, while others, such as New Jersey, are considering doing the same.  Still, between their lobbyists and billing experts, I fear that providers will figure out ways around such legislative efforts.  That's why I'm intrigued by ELAP's in-your-face approach.

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.

I'd love to know how many times ELAP has had to go to court, and what their success rate has been.  But, boy, I'd hate to be the lawyer who has to defend some of the outlandish charges that patients may be billed.

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.  Many health plans, such as Aetna and United Healthcare use a service called Fair Inc. to set their "reasonable" limits.  Fair was created as part of a settlement with the New York Attorney General, who believed health plans were artificially understating what they used as their reasonable charges (which, of course, meant their members ended up on the hook for more of the costs).

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?   I.e., why aren't they volunteering to stand with the patient -- their customer -- and fight balance billing by providers, in court, if necessary?

ELAP makes it clear whose side they are on; health plans, not so much.

Of course, doing so would give providers yet one more reason for them to distrust health plans, but it's not like there's much trust now.  The recent ReviveHealth National Payor & Trust Survey pegged average provider trust of payors at 51.8 out of 100, with a high of 62.7 (Cigna) and a low of 40.5 (UHC), with all three of those results down from last year.

Both payors and providers should be focusing on earning the trust of their customers rather than each other.  Health plans have long received low trust marks from consumers, but health care providers are not immune either.  Research suggests that U.S. patients' trust in the medical profession has "plummeted" in recent years, and that the U.S. has one of the lowest public trust levels for doctors.  Concern about doctors' motivations was cited as a reason for this lack of trust, and I have to blame this at least in part on this problem with excessive charges.

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.  The attitude leads to the incomprehensible bills that patients often received -- what do they care if patients understand them?  

Then again, if we didn't have provider networks at all, we might be more able to force providers to compete on price and quality, and to give consumers more and better options.  Then we wouldn't have this problem.

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.  Oscar, are you listening?

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