In-network medical billing

Posted by $ WilliamShipley 4 years, 2 months ago to Economics
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In the US, medical billing is a complex system where the same procedure can cost an order of magnitude different from one person to the next. Sometimes it’s hard to know what something is going to cost, and the patient is frequently not in the best of condition to do a cost benefit analysis.

Many people have private insurance policies. These policies typically make a distinction between in-network and out-of-network charges. In-network charges are for services provided by health care organizations which have contracted with your insurance company, offering to provide services for the company’s fee schedule. In return they have access to more patients. This is a voluntary contract between two parties which we should have no problems with.

Many policies allow the patient to freely choose whether to go to an in-network provider or go outside the network and accept the, potentially significant, higher prices. Presumably if you care, you will do your research ahead of time and know that, if you need to go to the emergency room, it would be better to go to hospital A which is “in-network” and not hospital B which is “out-of-network”. You might have to drive a bit farther, but unless you are in cardiac arrest, it’s probably not a big deal.

So you go to hospital A’s emergency room, get handed a big stack of forms, fill out what you can and they call you in for the doctor to see you. The physician doesn’t actually work for the hospital, it is a separate organization that contracts with the hospital – but might not be on your preferred provider list. You will get a bill for his services. The doctor asks you a few questions and then orders some lab tests.

The blood gets drawn and sent to the lab. We’ll leave aside for the moment who the person who draws the blood works for, but it could matter. The blood arrives in the hospital’s lab. However the hospital’s lab may not actually be part of the hospital but a laboratory operating company which rents space in the hospital – and bills you separately. Is it “in-network”? Who are you going to ask? And that thyroid panel the doctor ordered. They don’t do that in-house, they send it to a reference lab which bills you separately. And, well, who knows if it’s in network.

You tell the doctor about your headache and that you had fallen earlier. He decides it would be safer to send you up to get a CAT scan. Who owns the CAT scan? Will you get a bill for that? And the radiologist who looks at the results and reports, “no abnormalities noted” (after all, it was just the Doctor’s CYA) may not work for the company that actually runs the CAT scan. And …

So, how do you do your research to see if you are really “in-network”?

This is the kind of thing that makes people say “there ought to be a law”. And, California being California, there now is one. But we don’t like the government solving problems like this. What is a good free market solution?


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  • Posted by $ CBJ 4 years, 2 months ago
    Rather than trying to solve each of these problems individually, a good free market solution is just that - a free market. The market itself will come up with innovative solutions that benefit health care providers and health care consumers, if left free to do so.

    To some extent, the complexity and inefficiency of the current health care system has been deliberately engineered in order to make a governmental "single payer" system look attractive by comparison. Hopefully we will not go down that road.
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  • Posted by term2 4 years, 2 months ago
    I am disgusted by the stupidity in the medical billing system. I dont know how it started, but government surely wont be able to fix it. Only brutal competition will fix it.

    I dont want to have to get immersed in the details of how they bill. I have money to exchange for the medical services I want, and I will pick the best service at the lowest cost.
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    • Posted by $ 4 years, 2 months ago
      Third party payer is probably the villain. Areas like lasik and cosmetic surgury which is paid for directly have been going down in cost while the rest of the industry has kept rising.
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      • Posted by term2 4 years, 2 months ago
        Nothing like competition !!! Bad for business but great for the consumer
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        • Posted by $ 4 years, 2 months ago
          I'm not sure it's always bad for business. It can be inconvenient and force you to work harder but improving your industry can help it grow. It's well known that having a restaurant near another one increases foot traffic.
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          • Posted by term2 4 years, 2 months ago
            But in the short term it's harder on a business and cuts profits. It also rewards those that innovate at the expense of those who dont
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            • Posted by mgarbizo1 4 years, 1 month ago
              Do we want businesses to earn the consumers' business or fuss about not getting their fair share and ask the government to step in and save their dollar, I mean, day? In business, you either adapt to the changing environment or you die.
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  • Posted by brkssb 4 years, 2 months ago
    In or out does not matter. Take aim at the process starting with government edicts and restrictions and voiding all government-induced insurance contracts. If you have sixteen CT scans in one year for the same symptoms and nothing is revealed to (or by) the doctor, abandon all hope and fire for effect. There ought to be a law? The problem is the laws. What is a good free market solution? You just stated it, a free market and a rational jurisprudence system.
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    • Posted by $ 4 years, 2 months ago
      Clearly the only way we will get a free market solution is if we get a market running again. This means eliminating third party payer. Insurance should go back to being for major expenses and everyone should be paying out of pocket -- and watching the costs.

      Of course, then we would have to actually know the costs! They would also have to be more rational, no $20 aspirin tablets.

      We also need to get the government out of controlling how care is performed and modernize it to make it affordable. We could do a lot with software, but laws about practicing medicine without a license limits tools for patient use.
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  • Posted by $ rockymountainpirate 4 years, 2 months ago
    As the person who spends every day billing insurance companies, in my opinion have only a major medical policy and pay cash for the rest. Most doctors have a discount for time of service cash payment.
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    • Posted by CircuitGuy 4 years, 2 months ago
      Sometimes I have to say it several times until I get someone who understands the very concept of paying. If I don't get frustrated I usually find the right person. They're usually good people, and when they realize I'm giving them money they think in a new (to them) non-bureaucratic way. They actually think when I ask, "do I really need this $400 test?" It's unfortunate it takes effort to find people who will use common financial sense in healthcare.
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  • Posted by mgarbizo1 4 years, 1 month ago
    What an interesting example, I say so, because up until 3 years ago, I had no idea how complex the health insurance industry had become. I always assumed, if you had a reputable health insurance, and you knew your deductibles and copays, then you knew what your expenses should be based on in network providers. It didn't take long for me to realize that a trip to the ER (to play it safe based on my worsening condition and with my own logical thinking to err on the side of caution and visit the ER instead of waiting 3 days to see the primary) would later have bills from 3 separate companies that my insurance company wanted nothing to do with regarding payments, sticking me with all the bills on top of paying a $250 copay that I thought would cover my ER visit in full. Silly me, I had much to learn that year. But now I wonder if CBJ was on to something, what better way to make a single payer system look attractive to all of us, than to destroy the current system from within forcing us to think that the only possible solution would be to let the government take over another aspect of our lives permanently.
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  • Posted by $ Thoritsu 4 years, 2 months ago
    Insurance or not, require that the money be placed in the hands of the patient to use for the provider or choice or keep.
    That will drive the whole industry to a cost effective resolution to the present artificial insanity.
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  • Posted by LarryHeart 4 years, 2 months ago
    Shakespeare had the Solution.

    When confronted with:

    CADE (Our Politicians)
    I thank you, good people: there shall be no money; all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers and worship me their lord.

    DICK (the butcher)
    The first thing we do, let's kill all the lawyers.

    In his time Lawyers represented justice and order. Today the lawyers represent corruption , deception and tyranny. While Killing them is immoral, the solution to health insurance woes. is to Kill the lawmaking.
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  • Posted by $ jbrenner 4 years, 2 months ago
    The hospital/insurance company in my neck of the woods has tried to buy up as much as they can, and forced doctors, etc., to become part of their network (as opposed to being either subcontractors or independent) precisely because of the in-network medical billing problems you state, William. For that, they are being sued by the one remaining competitor for monopoly status.
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  • Posted by coaldigger 4 years, 2 months ago
    The free market solution is that clients will choose insurance policies that cover this obvious and recurring problem. If hospital A wants customers from XYZ insured patients they should have access to other services in XYZ's network use them accordingly. Get stupid bureaucrats out of the equation and it will work itself out. Consumers are smarter than these dolts think and if not duped into thinking someone else did the thinking for them, they will more carefully make their buying decisions.
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    • Posted by $ 4 years, 2 months ago
      It's hard to see how you choose an insurance policy that covers this problem other than get the one with the biggest network you can and hope that all the players are members.

      On the other hand, the patient's decision is primarily which facility to go to. While you can ask everyone you meet if they actually work for the facility, you don't meet all the people who will be providing services on your behalf.

      I suppose if consumers demanded that Hospital A disclose whether any of the services they contract with are not in the patient's network that would help, but consumers are unlikely to do this without significant education.
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      • Posted by coaldigger 4 years, 2 months ago
        There is a lot of effort involved in choosing for oneself but we say we are willing to die for freedom so having to think is the lesser of the evils. I might add that perhaps I live in a different world. I had private insurance through my employer. When I had to go on Medicare my employer provides my supplemental and pharmacy insurance so I have noticed no difference in the transition. I live in a surburban town with a decent hospital system, Frederic Memorial Hospital. Under their umbrella, they have FMH labs, FMH Imaging, FMH Rehab and other services. All the doctors I know have a relationship with FMH. This may not exist everywhere and everyone may not be able to afford the breadth of coverage but this evolved in a semi-free market to meet demand (don't dwell on the Medicare aspect because to me, the service was the same before and my employed pays the premium).
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  • Posted by CircuitGuy 4 years, 2 months ago
    I think contacts that don't provide some indication of an amt (that just say any and sll charges incurred) should not be enforceable. They should also get rid of the mandate that insurance cover piddling things, making it morr like insurance against other perils such as car accidents.
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    • Posted by $ 4 years, 2 months ago
      Medical costs are so uncertain that often even the facility has no idea what it was going to cost. There was a study at the University of St. Louis that tried to determine the average cost of a hip replacement. They were only able to get answers out of 10% of the 102 hospitals they contacted (2 in every state and in the DC.) And they actually knew what CPT codes were involved. The normal patient would find it harder.
      For the places they got answers, the number varied from $10,000 and $125,000!

      https://www.washingtonpost.com/news/w...
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