One of the key components of health care reform is the move toward a marketplace experience where consumers may expect to shop prices for health care services just as they do for cars, furniture or homes. Unfortunately, estimating the cost of a medical service is complicated by a many factors, ranging from insurance coverage and whether patients have met deductibles to the patient’s health and ability to heal.
The federal Health Care Transparency Act would require hospitals and insurance companies to provide estimated out-of-pocket costs for health services. The goal of the Act is to create a more competitive market place for consumers and potential cost savings for federal and state governments. Making this information available would eliminate surprises, help consumers plan their budgets better, curb inflated prices for services and hold the government and commercial payers accountable.
Unfortunately, shopping for health care services is not like shopping for a car or new furniture. In health care, price and costs are two different numbers. The list of prices or charges for services that a hospital provides is not helpful to patients because of the personal variables that affect each individual:
- Insurance coverage
- Government medical coverage
- Insurance deductible
- Out-of-pocket maximums
- Number of services required for patient
Accurately estimating the cost of a medical service is further complicated by other factors as well:
- Hospital charges
- Discounts from list price that the patient’s insurance company agrees to
- Whether the patient needs to pay his or her bill in installments
As consumers begin to ask for pricing, they will discover that prices will vary by provider. These variances will depend on everything from geography to the number of services the hospital provides that are not profitable or expensive to provide, such as care for the indigent, trauma care and neonatal intensive care. Prices may be higher, for instance, to make up for losses in areas that are not profitable.
Freestanding providers may be able to charge less for specific services because they have more focused operations. They often concentrate on only a few clinical services, saving them the expensive overhead of funding numerous specialties, staying open after hours or purchasing other expensive medical equipment.
With this many variables, hospitals have begun using tools to help provide estimated costs for patients, based on averages over a specific period of time. While these estimates can be helpful, the most accurate estimate is more likely to come from patients’ health insurers.
Relevance to Floyd
Floyd provides many services as a community benefit that the organization loses money on. For example, because Floyd is a Level II Trauma Center and Level III NICU provider, Floyd Medical Center is required to be ready to provide a high level of care 24-hours a day, seven days a week. This means the hospital has the added expense of paying shift differentials for employees and paying for full-time access to pharmacists, specialty physicians and technicians–even if no patients are present.
And, federal law requires Floyd to care for all patients who come to our emergency room, even if those patients cannot pay for their care. Last year, Floyd Medical Center provided over $60.34 million in uncompensated care to patients. Also, northwest Georgia has a higher number of patients who don’t have adequate insurance than other regions. As a result, Floyd Medical Center is paid less than it costs to provide care.
In the end, every patient bill is unique to that patient. The amount of those bills is dependent on the number of services a patient receives, the number of days the patient was hospitalized, the level of care required for that patient as well as personal financial considerations. Floyd’s master charge list contains over 16,000 separate services and items for which a patient may be billed. This master list serves as a starting point for negotiations with insurance companies to determine the actual charge they and their covered clients pay:
- Insurance companies negotiate volume-based discounts from list prices. Each insurer has a separate contract with Floyd, therefore the discounts to their patients vary.
- People with limited financial means receive discounts on the charge for the services they receive, based on a sliding scale to make quality care more accessible and more affordable.
- Floyd also offers prompt-pay discounts for patients who can afford to pay their portion of their medical bill within a specific amount of time.
Financial considerations should never be an obstacle for necessary medical care. Patients without health care insurance should always check with a Floyd financial counselor by calling 706.509.6940.