Insurance Coverage - Post 1

I know this is the aspect of the whole thing that has interested me the most, mainly because I am the one paying for it (or the balance of it).  And in this year's national discussion on healthcare reform, I thought it would be interesting to find out what happens when a major surgery is required and some of the treatment is in-network (the hospital stuff), some of it is out-of-network (the neurosurgeon), and some of it is in a network that MY network accepts but pays as if it IS out of network (the cranio-facial surgeon).

I will explain that last sentence in more detail as we go.  The actual documentation on this is in a .pdf file that I have linked to the side of my blog.  Look at the top left-hand column of my blog and you can get access to a spreadsheet I created to keep track of this data.

I have not received all the claims yet for this procedure and the hospital bills are not in yet, but there are enough claims in to get a pattern of payment. 

The very first thing that strikes me are the MRI's and CT Scans.  To put this into context, an MRI consists of placing a patient in a machine that may or may not already be paid for.  But it does consume vast amounts of energy that have to be paid for.  The space it takes up in a hospital must be leased out and it must be maintained.  Finally, the tech who works the machine has to be paid and the chemicals they use for contrast have to be paid for, as well as the associated paraphernalia they use to get the contrast into you (needles, gauze pads, alcohol wipes, etc.).  Finally there are the deskworkers who create disc copies of these scans at the radiology front desk for other departments.  Did I forget to mention the film machine that spits out the actual radiological films?  That cost some money for supplies, location, rent, etc.

Now that we have all the associated costs in mind, let's figure out how many they can run a day.  It took about 60 minutes for them to do my MRI.  So, allowing for changing patients clothes, checking patients in, cleaning room between patients, any emergencies that may occur, let's say 90 minutes per patient.  (I may be way off here.  They may schedule them 60 minutes apart and that's why we wait so long).  But at 90 minutes apart, they can start at 7 am and finish at 7 pm, running their techs in revolving 3 day 12-hour shifts.  12 hours divided by 1.5 hours per MRI and you get 8 MRI's per day from one machine.  So how much money do the hospitals make from one MRI?  Well, that's the kicker.  The charged price is all over the place.  It varies WIDELY.

I had 3 MRI's for this surgery.  An initial one at Research Belton Hospital (HCA Midwest-affiliated) that did not get the entire skull and so another was ordered by my neurosurgeon in Dallas.  Then a special MRI that mapped the skull for a GPS-type of device in surgery that helped make sure all the original features were replaced after they removed all that skull.

The MRI at Belton Research was billed out at $6453.00.  They contracted with my insurance company for a payment of $1489.04.  This means at some point, a representative of the hospital and a representative of hte insurance company sat down at a table and dithered over acceptable payouts until an agreement was reached.  This agreement forces the hospital to write off the balance of the charge.  This means that Research Belton wrote off $4963.96 (that is 75% of the billed charge) that they will use as a loss when they file their taxes at the end of the year.  Of that $1489.04, the insurance company covered 100%.  I evidently have pretty good MRI and CT scan coverage.

The next scan I had done was a CT Scan.  CT Scans are almost exactly the same as MRI's.  Big machine, table, insert patient, inject contrast material, take pictures.  Only it is MUCH faster.  A CT scan takes about 15-20 minutes per patient.  So at even 30 minutes per patient it is 3X faster at generating money than an MRI.  That equates to about 24 procedures daily, using the 12 hour day.

I had my first CT scan at St. Joseph Medical Center.  They billed out $1449.85 and were contracted to receive $551.00.  This is about a third of the billed rate.  2/3rds gets written off for $898.85.

It looks like St. Joseph is more in line with what the insurance companies pay, but still, they are overbilling the insurance company 67%.  And if the insurance company did not have a balance-bill clause, the hospital could charge the balance of that money to the patient.  Since they are in-network and there are clauses like that in place, no one has to pay that balance. 

There is a theory out there that says hospitals bill high because they have different payouts from different insurances.  This is true.  Contracts vary widely from insurance carrier to insurance carrier.  Medicare pays out MUCH less than Aetna does.  BC/BS may pay out more.  Humana may pay out even more yet.  If the hospital billed out less than it was entitled to per the contract, they would be leaving money on the table.  Thus, they charge more than the highest payout they get based on the contracts they have negotiated.  That's the theory, anyway.

What do you think?