When I go buy gas, the station has a big sign out front, announcing the current price per gallon. And when I need to purchase shaving cream, the can has a little sticker, indicating its price.
But when I need a shot, or a finger stitched up, or when it’s time for my better half to have her mammogram, no such information is available.
Until, that is, I receive the EOB (Explanation of Benefits) a few weeks later. At that time, of course, it’s a bit too late to negotiate the price, or fit it into the budget. Such services, once received, are on my nickel (less any amount the insurer has paid).
If one looks closely at the EOB, one can see (among other things) two interesting items: the amount charged by the provider, and the amount “allowed” by the insurance carrier. The latter is is called the “negotiated rate,” and it indicates the amount that the provider has agreed to discount in order to be a part of a carrier’s network. This saves both the insurance company and the client money, and gives the provider a steady source of patients.
How come, then, one must wait until after the shot, or exam, or PSA screening, to know how much that service will cost? Wouldn’t it be more advantageous for one to know this going in, in order to make a more informed, rational health care purchase? This is even more critical, of course, when one is covered under a HDHP (High Deductible Plan), where those first few thousand dollars are not reimbursed by insurance.
In the biz, we call this “transparency,” and it means having this information readily available, in real time, and in advance of any health care consumption. Obviously, it’s not really practical to know ahead of time how much that emergency appendectomy is going to cost, but for less urgent matters, such information is invaluable.
Of all the criticisms of CDHC (Consumer Driven Care), this is the one which I believe has the most (indeed, only) validity. If we are to be empowered to make health care decisions, we need the tools – the information – to make these choices fully informed of their economic impact. And yet, these are the very tools which are not yet widely available to us.
Fortunately, that is changing:
Carriers like Aetna and Humana have begun to roll out programs which give us this information. Currently, such programs are in their infancy, with only certain information available, and only to folks in a few geographic areas. Other carriers are beginning to follow suit (Blue Cross, for example), but with less fanfare and even fewer opportunities. In the weeks ahead, we’ll look at what programs are available, how they work, and what the future portends.
Next week, for example, we’ll have a chat with the director of Aetna’s transparency program.
Henry Stern, LUTCF is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience in “the biz.” He blogs every day (or so it seems) at InsureBlog.