If you are not thoroughly confused about health care, you’re not paying attention! Here are a few common questions and answers to help you navigate through our complex health care system.
Absolutely not. The cost of virtually all medical tests and procedures varied wildly—even in the same geographic area— depending on the facility you choose as well as your insurance. According to Medicare data, for example, the cost of an MRI can vary from as little as $474 to as high as $13,259. It pays to shop around.
How can I find out how much a health care procedure is going to cost?
It’s not easy. The first step is to ask your doctor exactly what treatment he or she recommends. Be sure to ask about:
• The specific codes that will be used to identify the service. These codes include ICD-9 (or ICD-10) codes, CPT codes or, if you’re covered by Medicare, HCPCS codes.
• Tests that you’ll need prior to the procedure.
• Health care providers who will be part of your care team.
• Whether you’ll be under anesthesia during part of the procedure.
• Follow-up medications or treatment (such as physical therapy) to help you recover.
Armed with this information, call your insurance provider or login to its website. Many insurance companies have cost-comparison tools available for members. Check that all providers are in-network and ask about any aspect of your care that might not be covered by your insurance.
If you’re uninsured, check out our Cost Comparison Tools page.
Be sure to compare costs at a variety of hospital and non-hospital facilities. Costs can vary widely between locations.
Once you have an estimate of costs, you can make a more informed decision about how to proceed with your treatment. Don’t forget to save or print the estimate so that you can refer to it after you receive your bill.
Don’t you get what you pay for with health care?
Not necessarily. The U.S. far outspends the rest of the world in healthcare—more than $10,000 per person annually—yet on most measures of quality, including life expectancy, our results are well below those of other highly developed countries.
Many consumers wrongly assume that by paying more and receiving more services, they are receiving higher quality care. But sometimes, undergoing more treatment can do more harm than good.
Unnecessary tests and procedures are driven by a health care system that reimburses providers for each service performed, rather than the quality of those services. In other words, more services equal more profits for health care providers, but not necessarily healthier patients.
The U.S. health care system is beginning to move toward rewarding value and not volume, but we still have a long way to go.
Aren’t scans and tests more reliable if they’re done in a hospital?
Not necessarily. Health care professionals at non-hospital facilities are trained and qualified to deliver the same
quality of services as hospitals do, often at lower cost.
If a hospital advises you that you need an outpatient service (surgery, test or other procedure), ask how much the service will cost and how much will be covered by your insurance. Compare that with the prices of other providers in the area.
My doctor’s practice is owned by a well-respected hospital in my area—doesn’t that mean she’s a better doctor?
Both hospital-employed and independent physicians provide high-quality care. The main difference between the two is cost. Most studies show that the patient cost of seeing a hospital-employed doctor is 20-30 percent higher than seeing a doctor who owns his or her own practice.
Hospital ownership of a medical practice indicates very little about the quality of care you’ll receive. In the end, it’s important to find a doctor who has the training and experience needed to keep you well.
How do hospitals contribute to higher health care costs?
A: Consolidation is the major culprit. Large hospital systems tout the increased efficiency of a larger organization, but evidence indicates that consolidation into large entities gives hospitals the power to charge whatever they’d like for services. A hospital uses its size to extract larger reimbursement rates from insurance companies.
In addition, hospitals are buying up independent physician practices. Doctors employed by hospitals are expected to generate revenue for the hospital by keeping tests, procedures and referrals to specialists all within the hospital system. These services are typically far more expensive in a hospital-owned facility than they would be if provided elsewhere.
What is a facility fee?
If you’ve had an in-office procedure performed at a medical office owned by a hospital, you may see a hefty “facility fee” on your bill. Facility fees are in addition what you’re charged for your doctor’s services.
What’s the difference between a premium, a deductible, a copay and coinsurance?
A premium is the amount your insurance company charges you for the plan you’ve chosen. Premiums are frequently paid monthly, either by individuals or their employers. You must keep your premium payments current for your insurance plan to remain active.
Depending on what sort of insurance policy you hold, you may also have a deductible, copays and coinsurance.
A deductible is the annual amount you pay toward your medical bills before your insurance plan kicks in. You have to meet a new deductible at the beginning of each year.
A copay (or “copayment”) is the flat fee you pay every time you see the doctor or fill a prescription. Copays are generally small dollar amounts. Copays do not count toward your deductible.
Coinsurance is the percentage of your medical bill you share with your insurance company—after you’ve paid your deductible. Because it’s a percentage of the bill, coinsurance is generally a higher dollar amount than a copay.
Note that your deductible, copays and coinsurance percentage all contribute to the out-of-pocket maximum defined in your insurance policy. Your out-of-pocket maximum is the amount you have to pay in a year before your insurance plan begins paying 100 percent of your health care costs.
What’s the difference between an HMO, a PPO and an EPO?
All three types of insurance policies use a network of physicians, hospitals and other health care professionals to provide you with care. Their differences involve cost and flexibility.
An HMO is a health maintenance organization. With an HMO, you pick one primary care physician. All your health care services go through that doctor. If you need to see a specialist, you must get a referral from your primary care physician. And you must select professionals from within the HMO network. Insurance typically does not cover out-of-network professionals.
HMOs are the least expensive of the three plans, but they have the least flexibility.
A PPO is a preferred provider organization. With a PPO, you can go to any health care professional you want without a referral, either inside or outside the PPO network. If you stay in-network, you will get full insurance coverage and smaller copays. Outside the network, you’ll have higher out-of-pockets costs, and some services may not be covered.
PPOs provide you with maximum flexibility in your choice of doctor, but you’ll pay more for it.
An EPO is an exclusive provider organization. With an EPO, you don’t need to choose a primary care physician, and you don’t need referrals to see a specialist. However, your network of doctors and hospitals is limited. Unless it’s an emergency, EPO plans will not cover care provided by out-of-network doctors.
EPOs combine the flexibility of PPO plans with the cost savings of HMO plans. But an EPO’s network of health care professionals is the smallest of the three.
Why choose an independent physician?
In general, independent physicians—doctors with an ownership stake in the business—provide more value.
• They provide excellent care at lower rates, helping to keep a lid on costs, as well as future insurance premiums.
• They are free to help patients find affordable treatment options, since they are under no pressure to refer patients to a high-priced facility owned by their employer.
• They make clinical decisions on their own. They’re not pressured to follow a treatment protocol developed by a business executive or administrator.
Why are independent physicians selling their practices to hospitals?
Practicing medicine independently in the U.S. has become prohibitively expensive. The administrative burdens of running a private practice have driven many physicians to give up their practices to become hospital employed.
Others simply prefer the regular hours and salary of hospital employment, as well as the freedom from insurance matters, billing, and administration.
Since hospital-employed doctors have a boss, however, they do lose some autonomy. They may be pressured to follow standard treatment protocols that the hospital has deemed appropriate, or refer patients to hospital-owned facilities for treatment or testing when a different facility might be cheaper or more convenient.
To remain independent, many physicians are banding together in larger associations to share administrative costs and strengthen their negotiating power with insurers.