This is something I know a little bit about, I gave a more detailed explanation in the parent comment. I'm not a fan of this bait n switch practice either. As you pointed out one reason it's done is to increase access and/or reduce costs while maintaining quality. I don't know to what extent that's true, it's just what we are led to believe.
In your example, the hospital very likely billed the same services and charge amounts. This is standard practice. Also, captured on the claim form they submit to the payor is who rendered the services and also other modifiers/adjustments that indicate you were seen by a mid-level provider that was overseen by a physician. Regardless, what ultimately matters is the negotiated rate. As a general rule of thumb, payors reimburse mid-level providers (nurse practitioners/physician assistant/etc) at 80% of the physician equivalent reimbursement. So if a doctor gets paid $100 for a wellness check, then a PA would get $80 for a wellness check assuming everything was the same.
This all can get a little hairy / confusing as each state has different laws around what nurse practitioners and physician assistants can or can not do (which then impacts billing). Some states allow little to no oversight by a physician, where as other states it is more strict.
I have no idea about other tradeoffs (quality, access, etc) regarding the use of mid-level providers in replacement of traditionally physician services.
This is something I know a little bit about. I'm not a fan of this bait n switch practice either. As others have said one reason it's done is to increase access and/or reduce costs.
> They will charge your insurance for a doctors visit but only have Nurses and P.A's available to see.
I can't comment on how One Medical bills for this sort of thing. But almost always, at any other "standard" clinic/hospital/etc, they will get reimbursed by the payor for 80% of what a physician would get paid for an equivalent visit.
As a general rule of thumb, payors reimburse mid-level providers (nurse practitioners/physician assistant/etc) at 80% of the physician equivalent reimbursement. If you do a little napkin math you can see why there is a financial incentive to use mid-level providers. Say a family physician makes $250k and a nurse practitioner makes $125k each year, and if they bill for a similar amount of visits in dollars each year, say $500k worth. For the physician the clinic has a $250k profit, for the nurse practitioner they have a $500k * 80% = $400k, minus the $125k salary, so $275k profit.
I have no idea about other tradeoffs (quality, access, etc) regarding the use of mid-level providers in replacement of traditionally physician services.
I appreciate the response, it sounds like we have some overlapping industry experiences where we've seen different things, which is interesting.
>>>>>>>>>> This is a common excuse given by industry. Its also BS.
Just to reiterate I'm not saying the reasons I gave are "good" reasons, it's more a statement of what's currently going on. I think the analogies are a little unfair but I agree with your overall point as it applies to elective procedures in certain settings. I think for emergent cases or complications the discussion gets more nuanced. The other point I'd make is that providers can't just decide to "simplify" the claim, the claim has to accurately reflect what occurred during the visit, so if things went sideways and other stuff was done then they need to document/bill for that because they are required to do so. There's also downstream reasons for this like reporting on quality/cost metrics and obviously if they bill for things that didn't occur that's fraud. Besides my anesthesia example, another clear example is an inpatient stay where you're billing an MS-DRG, you have to code in the severity of the case which is going to vary. And to reiterate, I think there are tons of clinicians that would love to move away from itemizing everything and doing something like surgerycenterok, but they are at the whim of the government (medicare/medicaid) and private insurance companies documentation requirements.
I'm aware of surgerycenterok, I'm a fan. Worth mentioning is they can't give pricing on anything done outside their purview (so imaging, labs, physical therapy, complications that send you elsewhere, etc). Definitely a step in the right direction. Side note there's quite a few places like this they just don't advertise it as openly.
>>>>>>>>>> This is true. They don't know because no one has bothered to translate a scheduled case into specific CPTs and/or looked up rates rates with insurer. So someone dropped the ball.
In my experience, payors are typically very uncooperative when making a request such as this. If you ask them any questions related to the contract/pricing they just tell you no.
>>>>>>>>>> Actually, you are misinformed here. The vast majority of contracts for independent providers are simple affairs that are % of medicare rates.
This is a tough one to swallow :) I'm going on ~5 years reading god knows how many of these contracts and writing software/doing analyses to enable practices to provide accurate pricing information. And if I didn't read the contract myself, I maintained/saw how it was implemented on the backend. This spanned small provider groups to the largest in the country, contracts from small payors to the largest in the country, and private/government contracts so I feel like my exposure is pretty well rounded to have a feel for things. But I could very well have a blindspot and we may also be talking about different things. Maybe you've mostly dealt with elective procedures at private practices where you mostly worry about professional fees? Or maybe you're alluding to the industry standard of comparing your contract to % of medicare to see if it's good or not? It's pretty common they'll say "oh we get paid 165% of medicare", but this is just in aggregate their contract may not even mention medicare.
This is interesting though because most contracts being % of medicare is the opposite of my experience. The vast majority have not been % of medicare (it may be a single component of their contract but there's much more to the terms). The handful of contracts that I saw that were truly just % of medicare were usually at smaller private practices in less competitive markets (eg some places in the Midwest). For what it's worth it's still not just % of medicare. There's an entire pricing methodology that underpins the "% of medicare" that is defined by medicare (eg depending on what else is on the claim there may be subsequent adjustments that trigger, then there's totally different rules/methods for different types of stays, etc). For example a really simple adjustment is a multiple procedure adjustment. Medicare publishes a list of procedures that qualify under this adjustment. If I get both my knees replaced and I bill for the procedure code twice I will not get paid the medicare rate times two. The second knee replacement will be adjusted 50% off. This is an extremely simple example but there's a whole slew of adjustments/nuance to the pricing methodologies, and then you add the fact that there's nothing preventing adjustments from stacking (unless the contract says they don't stack in certain situations). And I'm also just talking about the professional fee above.
All of the following were things I commonly encountered in contracts, all of which impacted the price estimates we generated: bill types like inpatient and outpatient were often very messy, handling different sites of service (clinic, asc, hospital, etc), various DRG standards, APCs, EAPGs, diagnosis codes, revenue codes, bundling agreements, modifiers, adjustments (multiple procedure, multiple radiology, multiple endoscopy, mid level provider, etc), carve outs, GPCI adjusted rates, different rules/schedules based on specialty, individual providers, location, 3rd party schedules, proprietary (meaning no one gets access / knows how it works) schedules and entire pricing methodologies that are a weird flavor of medicare pricing methodologies like 3M and optum, what quarter/year schedule is being referenced, what happens if a procedure isn't on the schedule do you grab the first time it appears in the future or the current year rates, is there a hierarchy of schedules to follow, fallback schedules, etc. To top it all off, frequently the contracts didn't outline many of the above nuances. They were assumptions made by the payor (not defined in the contract) that were only revealed until we asked them why our estimates were out of alignment.
This also doesn't even talk about the industry shift that is happening behind the scenes from fee for service to value based care. The value based care contracts I've seen only add an additional layer of complexity. How providers get reimbursed has been on a steep upward complexity curve since the 70s/80s (back when payment was based on Usual, Customary, and Reasonable charges). I would absolutely love to simplify things.
>>>>>>>>>> In my experience, some of the data fields are reliably accurate. For the rest, we are actually working on a solution. But let's not make perfect the enemy of the good.
Yeah, I would say it tended to be accurate, but when it was inaccurate and you then had a weird estimate and then an upset patient it was pretty frustrating for everyone involved. But I totally agree, that we shouldn't make perfect the enemy of the good. The other thing that was frustrating with the clearinghouses/payors was how frequently they'd have outages or the latency with someone's eligibility status if their plan changed.
There's a child comment that is in disagreement with the margins you mentioned. I've seen the financials of a lot of practices and hundreds of contracts between payors and providers. The child comment by kstrauser is much more in alignment with my experience, and they also did a good job of noting all the various expenses that are overlooked.
Sometimes there are services that do have 90% margin like you mention, but there are also sometimes services that have a negative (-90%) margin. I want to emphasize I'm talking about specific services/procedures, not the overall margin for the whole practice. A profit margin of 90% is unheard of. Perhaps you're thinking of hospital systems for example which will have certain departments that are operating at a loss and then other departments that are profitable. Then they offset each other.
I've worked in the healthcare tech world (for both providers and payors) so I can comment a little here. There's a difference between "billing to put as many relevant codes as possible" and "billing procedure that were not performed". The former is perfectly acceptable, the latter is not and would be fraud. It's possible it was in error, billing is super complicated so I'd recommend just trying to get ahold of the clinic and talk to them first.
There has to be supporting clinical notes for anything that gets billed. There are companies/researchers that try to find large scale fraud and then pursue legal action under the False Claims Act (if they win they get up to 30% of what is recoverable) https://en.wikipedia.org/wiki/Medicare_fraud#Medicare_fraud_...
There are also companies that try to help maximize billing. Really they're just trying to bill for everything that occurred, they aren't doing anything exploitive necessarily.
This sounds about right. I've worked in the healthcare tech world for about 5 years on both sides (for providers and payors). I totally empathize with how annoying it is that essentially no one processes estimates for patients with insurance. There are some places though that do, and it tends to be small/medium size specialty practices (think orthopedics, ophthalmology, radiology) in forward thinking places (Seattle, Minneapolis, etc). I can give some technical reasons as to "why" they can't/won't give you an estimate. I'm not saying these are legitimate reasons, just stating what I've seen.
One reason they may not want to give you an estimate is because depending on what happens during your visit/procedure, the codes that get billed could change quite a bit. Because of this their initial estimate could be wildly different. In addition to the procedure codes changing, there are modifiers/adjustments that can get applied to a procedure code depending on what happens during the procedure (which adds another level of uncertainty). For example, anesthesia often bills based on time and complexity. If the procedure runs long then it will cost more, if something goes wrong and the complexity increases then it will cost more, if a nurse anesthetist (CRNA) does your anesthesia rather than an MD it will cost less, etc.
Another reason they may not want to give you an estimate is because they have no idea. This is in my experience the case most of the time. A given clinic/hospital is going to have many many contracts with many payors. There's a ton of nuance in these contracts and they are sometimes extremely complicated. I've read hundreds of these contracts and written software to try to scale price estimate tools for patients. It's really hard, happy to dive into it more if there's interest.
I often see comments on hackernews along the lines of "it's just a fee schedule, how hard is it to put it in a database and select amount from feeschedule where procedure = 99215". The big wrinkle here is the contracts. The contracts are often times super complicated, dependent on many many different fee schedules and pricing methodologies. The fee schedules/pricing methodologies may be from the payor, they may be from 3rd party vendors, they may be proprietary, they may be based on medicare, etc. Then there's a whole slew of adjustments/modifiers that can trigger depending on tons of different events and combinations of procedures codes that may appear on a claim.
Another reason they may not want to give you an estimate is because it's not straightforward to verify your insurance. There are clearinghouses that aggregate benefits data from major payors, but the data is kind of shoddy. It may return your insurance is active when it really is inactive. It may have bad data on what is covered vs not covered, what your deductible, coinsurance, etc are so given all this data is kind of unreliable then giving an estimate becomes pretty unreliable.
Anyway, these were a few reasons off the top of my head. Again, I want to emphasize I'm 100% with you on how annoying it is that we can't get estimates. I spent 3 years literally trying to solve this problem, and we actually made really good progress if it gives you any hope that things will maybe (fingers crossed) get better overtime. I just wanted to give some context / spark some conversation around these contracts and why they are challenging from a technical perspective to automate price estimates.
I just wanted to clarify what OP meant by $Maximum. I'm not sure if that was intentional use of maximum or not, but it's pretty accurate and I'll explain why.
A couple of terms I need to define up front:
Provider = Anyone or anything rendering healthcare services.
Payor = We'll just define this as a health insurance company.
Charge Amount = This is the "sticker" price, many of you have heard of it. This is something defined by the provider, essentially all providers maintain a chargemaster which is a list of all services (procedure codes) and their respective charge amount (more on this later). Almost always they just have one chargemaster.
Allowed Amount = This is the negotiated price for a service between a provider and a payor.
So, say I'm getting a knee replacement at Man's 4th Best Hospital. The knee replacement is procedure code 27445. The hospital looks at their chargemaster and the charge amount is $10,000. If you want to self pay, they will often offer you a discount based on the charge amount. Often times around 80%, but it's very variable. Many people ask "well what would it be if I used my insurance so I can compare price". To which you get response of "we don't know, or we don't share that info, etc". Almost always they honestly don't know and it's actually really really hard for them to find out. I can talk about why this is so hard if there's interest.
Anyway, back to the example. A common myth is that the charge amount is just a made up number. This isn't really true, it is based on something. In virtually every contract there is a clause the insurance company puts in that says "we (the insurer) will pay the lessor of the charge amount and allowed amount". In other words if the allowed amount is less than the charge amount then the insurer pays the allowed amount, if the charge amount is less than the allowed amount then the insurer pays the charge amount.
So, we get our knee replacement at Man's 4th Best Hospital, the billing department submits a claim for procedure code 27445 and includes the charge amount of $10,000 on the claim. They send it off to Man's 4th Best Insurance Company. Side note, the claim would be much more complicated than this. Also happy to explain more about why that is if there is interest.
Now say the Hospital and the Insurance Company had negotiated an allowed amount of $5,000 for this procedure code. This means that Insurance Company will pay the Hospital $5,000. What if the billing department submitted the same claim with a charge amount of $4,000. Well then the Insurance Company would only pay them $4,000, it doesn't matter that they had in fact negotiated a higher rate of $5,000. So you can see how the burden is on the provider to ensure they submit the claim with a charge amount that is greater than the negotiated allowed amount otherwise they will get underpaid.
Alright, now back to OPs use of the word "$Maximum" for self pay. Remember how I said providers maintain one chargemaster. Because providers have many many contracts with many different payors, and across all these contracts the allowed amount can vary quite a bit, they need to set their charge amount as the highest allowed amount across all their negotiated contracts. If not they will sometimes get underpaid when submitting a claim. This is in large part what the charge amount is based on. It is the highest allowed amount across all their contracts with payors.
You may be thinking, hold up I thought you said they don't know what their negotiated allowed amounts are so how do they know how to set their charge amount at the highest allowed amount across all contracts. One way they can figure out the charge amount is by looking at how historical claims were paid out.
Okay okay sure, makes sense I guess, but why don't they just set the charge amount as $1,000,000 for everything. They could maybe, perhaps there's some rule against this, but regardless it wouldn't be very helpful. The chargemaster is a useful negotiating tool as it tells you your highest negotiated rate for a given procedure code. It's also useful for forecasting your financials. For example, you can look at last years claims for a given payor mix, and determine what percent of your chargemaster they paid out. Then you can use that to forecast revenue for next year. This is a really dumbed down example but I hope you get the idea.
So long story short you now understand the "why" behind the self pay cash price being a discount on their highest negotiated allowed amount, aka $Maximum as OP put it. That doesn't mean you're getting price gouged necessarily. Their chargemaster charge amount may be less than medicare rates if they have bad contracts (little negotiating power), or it could be super high if they have good contracts (lots of negotiating power).
My background is in the healthcare tech world on "both sides" (for providers and payors) for about 5 years doing analytics/data science/engineering stuff. I just mention this because as a long time lurker of hackernews anytime I see big healthcare threads like this I see a lot of questionable information that at least in my experience isn't accurate. There are some high ranked threads in this post that are not accurate in my opinion.
So all this to say, I empathize with OP's "/been there //tried that", it's a very frustrating experience. If there's one thing I've learned in my short time in the weeds of the US healthcare system, it's that the overwhelming majority of clinicians are honestly trying their best and are just as frustrated as patients (sometimes for different reasons but a lot of times the same reasons). The most exploitive behaviors are taking place multiple levels beyond the clinician you see at the clinic and are acting like puppeteers, where the puppets are clinicians and patients. The puppet strings are so long and so tangled that we can't even really tell what's causing all our anguish, so we just get upset at the only thing we can see.
In your example, the hospital very likely billed the same services and charge amounts. This is standard practice. Also, captured on the claim form they submit to the payor is who rendered the services and also other modifiers/adjustments that indicate you were seen by a mid-level provider that was overseen by a physician. Regardless, what ultimately matters is the negotiated rate. As a general rule of thumb, payors reimburse mid-level providers (nurse practitioners/physician assistant/etc) at 80% of the physician equivalent reimbursement. So if a doctor gets paid $100 for a wellness check, then a PA would get $80 for a wellness check assuming everything was the same.
This all can get a little hairy / confusing as each state has different laws around what nurse practitioners and physician assistants can or can not do (which then impacts billing). Some states allow little to no oversight by a physician, where as other states it is more strict.
I have no idea about other tradeoffs (quality, access, etc) regarding the use of mid-level providers in replacement of traditionally physician services.