I was recently at a business meeting where I was the only person in the room actually in health care. The topic of the meeting was individual savings accounts for healthcare and small businesses. The speaker was giving advice on how small to medium sized businesses could put money into these different types of medical savings accounts for themselves and their employees to fund deductibles, co-pays, and pharmacy items, and also contract with insurance companies that offer high deductibles to cover them for inpatient or catastrophic stays.


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Whenever there’s a discussion that involves health care at all, eventually the topic of conversation comes around to how expensive it is, and how hospitals and doctors are billing for all these items and making a lot of money off those who can’t afford good health insurance.

There were two things said that I found particularly intriguing. First, every person in the room had said they’d never seen an itemized bill from a hospital or physician, and that they really had no idea how much those bills were, just how much had to come out of their pockets. Second, three of them said that they’ve never been able to get the cost of any of their services up front from either a physician or a hospital. One guy, whose wife is a nurse practitioner for psychiatric patients, stated that they never know how much they’re going to get paid for any of her services because the insurance companies wouldn’t tell them, and that’s why hospitals never know what they’re getting paid.

I had to say something about this. I stated that every hospital and physician’s billing office knows pretty much what they’re going to get paid up front by insurance companies they participate with. There are fee schedules or contracted percentages so they know how much they’re billing for and they pretty much know when they’re going to get paid. The only determinant they’re not sure about is how many supply items the services that were provided might include, if a procedure might take longer to perform because of complications, or whether a change in diagnosis or DRG (diagnosis related group) will change the amount a claim might be if the patient happens to be self pay or covered by an insurance that doesn’t participate (isn’t contracted) with the hospital.

It brings to the fold the issue of the similarities that exists between those on the receivables side of health care and the patients and guarantors, those people responsible for paying the claims. The truth is that most of the time patient accounting people really don’t have any idea how much a service is going to cost, yet they’re the ones fielding the questions from consumers. And they should because, in some fashion, they have access to the information quicker than those people performing the services. Let me explain.

For physicians, hospitals, and clinics, there’s always a listing of all charges, usually called a charge master, which a particular entity will bill for. Almost every one of these items is priced and coded and ready to go as soon as a patient has services performed on them. Those items that aren’t pre-priced usually have a rate that’s dependent upon something, usually time or cost, and those things can easily be estimated. Every business office I’ve ever been to either has a charge master available, or is able to gain access to the cost of services almost immediately. What they may lack is the knowledge of what combination of items and services might be charged together; not so easy but it can be done.

When I was a patient accounting director and we used to receive those types of calls, we would call the department and was providing the services and ask what items, and approximately how many of them, might go into a particular type of procedure. Then we would go to the charge master and do the calculations and present to the patient an estimate of the total. You can only present an estimate, and it could be higher or lower, but as long as you tell the patient that they won’t feel as if they’ve been lied to. If you can get this information up front for your self pay patients, it offers the opportunity for some negotiation of payment before patients show up for services, or at least helps set up some kind of payment or charity plan.

Next is the issue of how much insurance companies might pay for services. I’ll admit that when it came to insurances we participated with, I would only tell the patient how much their portion would be or possibly be, which we’d know because we always verified with the insurance companies up front how much a person’s co-pay or deductible percentage would be. Physicians offices learn pretty quickly how much they’re going to be reimbursed for their services because what they provide is usually pretty consistent; for hospitals it may be a bit more complicated, but it depends on the payer.

For instance, everyone knows how much Medicare is going to pay because of fee schedules or APCs; that doesn’t say how much money they’re actually getting, but it covers the payment part. Large hospitals have departments that calculate these things out way in advance; smaller facilities may not have the capabilities to be as thorough, but those employees who work with follow up billing usually get a feel for how much actual money certain types of procedures will pay.

With insurance companies you don’t participate with, for your bigger claims, if you’re verifying insurance coverage up front, a part of the verification process should be how the contract covers billed amounts (80-20, 50%, 80% first $1,000, then 100% afterwards, etc), so that there’s no dispute later on as to what the expectations were for payment. Having this information empowers health care providers in contacting the patient and attempting to get payment for their portion early. If this is being verified thoroughly, there should be a process and procedure in place for those insurance companies that are savvy enough ask for discounts, prompt pay or not.

Hospitals need to make sure that every single person in the office with the possibility of answering a telephone understands these processes so they can give good information to patients. Good customer service begins with the reality that the easier it is for someone to get information from you, the better the relationship will be with the patient or guarantor on the back end. Patients need to realize that there’s no way any medical entity that relies on insurance payments can guarantee exactly how much every procedure will be at all times. But if each side communicates well with each other, price scares can be eliminated.
 

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