Q: How can I find out ahead of time how much a health care procedure is going to cost?
A: You wouldn’t make a major home repair without getting estimates. You wouldn’t buy a car without comparing costs. Fortunately, in today’s health care market, it’s becoming easier for consumers to take the same money-smart steps when it comes to surgeries, tests and other health care services.
The first step is to talk with your doctor about 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. (Don’t be overwhelmed—simply note the codes so that you’ll have them on hand when you’re talking to your insurance provider.)
- Any tests that you’ll need to undergo prior to the procedure.
- Any additional health care providers that will be part of your care team.
- Whether you’ll be under anesthesia during any part of the procedure.
- Follow-up medications or treatment (such as physical therapy) that will help you recover.
Armed with this information, give your insurance provider a call or log onto its website. Many insurance companies have online cost-comparison tools available for members. Be sure to check that all providers are in-network, and ask about anything that won’t be covered by your insurance.
If you’re uninsured, there are many online tools that are available to all consumers. We have a list of some of the best on our Health Care Cost Comparison Tools page.
As you’re gathering cost estimates, be sure to compare costs at a variety of hospitals 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 when you receive your bill.
Q: Don’t you get what you pay for with health care?
A: Not necessarily. The U.S. far outspends the rest of the world in healthcare—$8,915 per person—yet on most measures of quality, including life expectancy, our results are well below those of all other highly developed countries.
Many consumers wrongly assume that by paying more and receiving more services, they are, indeed, receiving higher quality care. But this isn’t necessarily the case. Sometimes, in fact, undergoing more services and treatment can do more harm than good. Unfortunately, steering patients to additional tests and procedures, beyond what is medically needed, is driven by a system that pays fees for each service performed rather than for the value or quality of those services. In other words, more services equal more profits for hospitals, but not necessarily healthier patients.
The good news is that the U.S. healthcare system is beginning to move toward rewarding value and not volume, but we still have a long way to go. For more information, see The Association Between Health Care Quality and Cost.
Q: What’s the difference between a premium, a deductible, a copay and coinsurance?
A: 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/or 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.
Q: Why should I care if my physician is independent?
A: In general, independent physicians provide more value. Simply stated, an independent doctor is under no obligation to a hospital employer that is expecting him or her to generate revenue for the hospital by ordering tests and procedures at hospital facilities and referring patients to other doctors and providers within the hospital’s system. This kind of in-hospital referral leads to significantly higher overall costs, because hospitals typically charge more for the very same services. (It’s important to be aware that most tests and procedures can be performed just as effectively in non-hospital facilities.) These costs add up—some studies have estimated that hospital employment of physicians results in 30 percent higher overall costs for patients, insurance companies and the government.
Q: Aren’t scans and tests more reliable if they’re done in a hospital?
A: Not necessarily. Many independent physicians offer these services, such as radiology (MRIs, CT scans, etc.) and physical therapy. The doctors and other health care professionals at these independent facilities are trained and qualified to deliver the same services as the hospitals and often do so at a lower cost.
If the hospital advises you that you need an outpatient service (such as a surgery, test or other procedure), ask how much the service will cost and how much will be covered by your insurance. You should compare that with the prices of other providers in the area, or simply ask your independent physician what he or she would charge for the service.
Q: What’s the difference between an HMO, a PPO and an EPO?
A: 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.
Q: My doctor’s practice is owned by a well-respected hospital in my area—doesn’t that mean she’s a better doctor?
A: Both hospital-employed and independent physicians can provide you with high-quality care. However, hospital ownership of a medical practice indicates very little about the quality of care you’ll receive there. Physicians choose independent practice or to be employed by a hospital for a variety of reasons. Some physicians may not want to worry about the business aspects of a medical practice and, as a result, may find the idea of becoming a hospital employee appealing. Unfortunately, if your doctor is leaving financial decisions to a hospital employer, she may not be aware of the cost implications of the tests and treatments she’s recommending for you, and she likely won’t consider lower cost alternatives that are outside her employer’s hospital system.
In the end, it’s important to find a doctor who has the training and experience needed to get you and keep you well. Regardless of where your doctor works, you’re always within your rights to ask about the costs of the care she is providing.
Q: How do hospitals contribute to higher health care costs?
A: Consolidation, under the guise of more efficiency, is the major culprit. While hospitals may tout increased efficiency, evidence indicates that most often consolidation into very large entities gives hospitals the power to charge whatever they’d like for services. A hospital uses its size to extract larger rates (payments) from insurance companies. In addition, hospitals are hiring doctors. 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 all typically far more expensive than they would be if provided elsewhere.
Q: What is a facility fee?
A: If you’ve had an in-office procedure performed at a medical office owned by a hospital or that used hospital-owned equipment, you may see a hefty “facility fee” (or fees) on your bill. Facility fees are in addition what you’re charged for your doctor’s services. (Read more: “Facility Fees Are Surprise Cost For Many Patients”)