Patients Clueless About Insurance Coverage | Guest Blog

The consequences of a lower-premium, higher-deductable policy are often misunderstood — so who is to blame?

Not long ago, I blogged about a plastic surgeon who aggressively pursues patients who refuse to pay her bills. The state is suing her to make her stop and also considering lifting her medical license. You may want to take a look at that post to get the details, but the central theme is that she makes her ED patients sign a form stating that they will pay her, although it is unlikely that the patients are aware of the amount of the fee upfront. Then she won’t accept what insurance considers a reasonable reimbursement and goes after the patients with lawsuits and liens on their houses, ignoring the fact that balance billing of emergency department patients is illegal in her state.

A number of doctors have defended the surgeon. Many have said that the patient should have asked what her fee would be. In my experience, that is rare. I’ve been a surgeon for four decades, and I can’t recall a single patient asking me what the fee for an elective operation would be. I hardly think a patient would ask at the time of an emergency.

Most patients either don’t think about it or don’t consider it an issue. In many cases, they don’t understand how the system works at all.

Here’s an example of the above in action: A new patient arrived for an appointment with the doctor. At the time he called to schedule it, he was told that the doctor did not accept his insurance. At check in, the secretary reminded him of this, and having amnesia for the previous conversation, he was taken aback and said, “I thought everyone had to accept WeDontCare.”

Further questioning revealed he had a $5,000 deductible policy, and he had not used any of it yet this year. Even if the MD had participated in WeDontCare, the patient was shocked to learn that he would have had to pay for the office visit. He was then told that the fee for the comprehensive new patient examination would be $250. When he balked at this, the nurse asked him why he chose such a high deductible if he didn’t want to pay for visits out of pocket. He said it was because the premium was so much lower.

The nurse explained that the point of a high deductible policy was that — in exchange for the lower premium— he accepted the risk that some or all of the money saved might have to go toward paying for medical care, probably a reasonable risk for someone in good health. He didn’t seem to understand that unless he paid out of pocket for more than $5,000 worth of medical care in a year, he was ahead of the game.

The patient then began to see the light. If this man, who was a retired financier, had never thought this through, how would anyone expect the average patient to do so?

Skeptical Scalpel is a recently retired surgeon and was a surgical department chairman and residency program director for many years. He is board-certified in general surgery and a surgical sub-specialty and has re-certified in both several times. For the last two years, he has been blogging at SkepticalScalpel.blogspot.com and tweeting as @SkepticScalpel. His blog has had more than 325,000 page views, and he has over 4,000 followers on Twitter.

 

  • Jerry says:

    I consider myself a reasonably intelligent and educated person, but the insurance bill is still confusing. There is billed, contracted rate, deductible, co-pays, and more. There are multiple bills from the same proceedure- one from the lab, the pathologist, the xray doc, etc. I would love a straight forward estimated cost, this is what ins pays, this will be what you owe. As a health care consumer I would consider shopping around hospitals for competitive rates, but this information is not available. Now add to the mix billing departments that are in error a large amount of the time and it’s no wonder regular folks don’t have a clue.

  • SkepticalScalpel says:

    Jerry, I agree with you. Estimates of charges by hospitals and what will be covered by insurance are not forthcoming. There was a great article about this in the NY Times recently, but I can’t find the link.

  • Meredith says:

    “He didn’t seem to understand that unless he paid out of pocket for more than $5,000 worth of medical care in a year, he was ahead of the game.”

    Actually, it’s even more complex than that, and that’s not accurate either. In order to come out even or ahead, the premium on the high-deductible plan plus out-of-pocket expenses would have to be less than the price of the premium for the regular plan plus out-of-pocket expenses for that plan.

    Let’s say, for instance, you save $2,000 on the HDHP premium compared to the premium for the other plan, and the deductible for that plan is set at $5,000 as in the case above. If your out of pocket expenses on the other plan are less than $3,000, you still come out ahead. Therefore, you wold only need to spend $3,000 (not $5,000), to come out behind on the high-deductible plan. Most people won’t take the time (or don’t have the time) to figure out all those expenses. (I’m certainly not spending money on $250 dinners or fancy cars either!) [This example uses the most simple circumstances. As you are more aware than I, many of them are more complex than this.]

    I was lucky enough in a previous job to be able to choose either the HDHP or a regular plan and did it recently when choosing a private plan. My jobs are part time, I have preexisting conditions and wouldn’t have healthcare otherwise. Plus, before ACA, if I didn’t live in the state I do now, those conditions wouldn’t be eligible for coverage if I had a gap in care. Luckily, there was a tool that I could use at the old job to figure out the cost of the scripts out of pocket on both plans. It took me hours to figure out, and I still came out way ahead on the regular plan.

    Bear in mind that I’m exactly the type of person that they market these plans to. I’m only in my early thirties; I’m very healthy (aside from allergies, well-controlled asthma in the winter, and some very common mild psychiatric conditions for which I take maintenance meds). I’m single, so I don’t have a lot of family obligations and therefore had the time to figure this out; but I really can’t see the average person doing so.

    I’m not a healthcare professional, but I stumbled on this site because I’m a medical transcriptionist (not billing or coding, though). These plans are designed to save the company’s money, not the patient’s money; and a person on this plan has an incentive to NOT seek medical care they may need. I’m not sure what the solution is as far as patient eduction. In terms of demographics, I probably look about average for a patient my age, but I’m brighter than and even I have a hard time with it.

    • Skeptical Scalpel says:

      Meredith, thanks for correcting my misinterpretation of the facts. You are correct that I did not allow for the cost of the reduced premium.

      I agree you are brighter than average for figuring this out. Certainly, you are brighter than I am on this subject.

      You do reinforce my point that the average person is clueless about insurance.

  • Meredith says:

    Grammar correction:

    *I’m brighter than average, and even I have a hard time with it.

  • Skeptical Scalpel says:

    Yes, what you describe is very common. Everyone expects the “rich doctor” to give away services. People say they can’t pay, but have no problem blowing $250 on a nice dinner out or driving a fancy car. Don’t get me started on this.

    I agree that electronic medical records have added cost and complexity to care and not reduced the amount of paper.

  • mj says:

    yes. I think the point of this story is this pt financier puts his value elsewhere and is confused because he resents probably paying anything for his healthcare. I just saw a brunch in a hotel advertising for $95 per person brunch and there were a lot of takers. the surgeon should tell him–you get what you pay for.

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