A guide to understanding the cost of health care

April 07 01:00 2016 by ushadmin

Patients utilizing healthcare today are being asked to take on a new role with a whole new set of responsibilities: Informed Health Care Consumer.

This poses a challenge to patients accustomed to a health care market where price information often isn’t known until after the service is rendered, and the patient simply receives a bill a month later.

Price is one of the predominant factors in an informed consumer’s purchasing decision, and to be an informed health care consumer means you now have to do your homework before purchasing health care services.

With the dramatic increase in patient cost-sharing over the last three to four years, it’s more important now than ever to understand price transparency and how to get the most out of your plan coverage.

What is price transparency?

Price transparency on a practical level means knowing up-front what costs you can expect to pay for that service, and how much you will be expected to pay out-of-pocket.

As high deductible health plans become the most common health plan design, you need to know what you will be expected to pay before your health benefits even kick in.

It’s important to think of price transparency from two angles: the actual cost of a procedure and what your health plan will cover.

Why is it so hard to find cost information?

The actual price of any health care service is usually much more complicated than just the fee for the service, as anyone who has ever received a bill from a consulting doctor they never saw can attest.

The total cost of any procedure can include consulting fees, facility fees, lab fees, anesthesia fees, and more. On a complex surgery, you might have six or seven providers. That insurance claim might contain 300 to 400 lines of billing codes. These services typically aren’t bundled, which can make the cost estimate very cumbersome.

In addition, every provider has a different contracted rate with different insurers and payers. That rate will also vary depending on the member’s selected plan.

Where can informed health care consumers find good data?

One way to know what a service will cost before you utilize it is simply to call your provider and ask. If you are responsible for paying out-of-pocket, be sure to ask about the price through your insurance and the cost for cash-pay, which will usually be different.

Castlight Health is a useful tool for employers to estimate cost for their employee services. Healthsparq is offered by some employers, and it offers cost estimations tied to benefits.

Other transparency tools like Healthcare Bluebook offer guideline prices for comparison, and online health care marketplaces like MDsave close the transactional loop by allowing consumer to shop, compare prices and purchase procedures online.

How much will my plan cover?

The most important thing is to understand your plan design. The four main components are the deductible (the amount you pay out-of-pocket before your benefits start covering costs), your premium (the amount you pay each month to have the plan), your co–insurance (a percentage of the cost of service you will be responsible for even after the deductible is satisfied), or co-pay (a flat fee you will be charged with every service even after the deductible is met), and your out-of-pocket maximum.

Once you satisfy your deductible, your plan will cover your health care services but will still require you to pay either co-pay or co-insurance, up to your out-of-pocket maximum. Most plans have a different out-of-pocket maximum for in-network and out-of-network providers.

Your prescription drug benefits can also apply towards your deductible. You may have a list of prescription copays printed right on your insurance card, which you can check before you visit the pharmacy so you know what to expect.

Being a smart health care consumer

Americans are paying more and more out-of-pocket for their health care. While the market learns to adapt to the need for price transparency, you can make sure you’re getting the best value for your hard-earned money by doing your research before you purchase your procedure.

Understand what your insurance expects you to pay and research what your procedure will cost beforehand, and you can spare yourself unpleasant surprise bills in the mail after your visit.