Health care’s new math

When does 20% of $753.95 equal $641.60? When $753.95 equals $2,808.

Health systems have contracts with insurers about what the insurer will pay for a given procedure. While the specifics are confidential, Cigna’s contract with Sentara allowed for a “case rate” to be applied. In Dockter’s case, that meant the epidural injection she received was part of a group of outpatient surgeries that were all covered at the case rate of $2,808.

Presumably, while the $753 charge for Dockter’s epidural was only a fraction of the case rate, there are other, more involved procedures that Sentara would bill significantly more for. Regardless, Cigna would pay $2,808 and, in theory, it all comes out in the wash in the long run.

And we wonder why health care costs are so high.


6 thoughts on “Health care’s new math

  1. I guess my problem with that is that Sentara has a contract with Cigna, which sets a specific rate, but not with the patient. What contractual provision with the patient allows Sentara to raise the rate to the patient after the fact, based on a contract with a third party health insurer?

    We have had Sentara use the opposite argument against us — that their contract for a specific, lower rate is with the health insurer, not with us — to charge us the “remaining” $1000 on what turned out to be a $3000 routine test, far above their normal rate of about ….. $1000.

    This is one more reason that the monopoly of the Sentara “non-profit” system must be broken. The state recently took a big step backward in that regard by allowing Sentara new hospital beds in our area, but denying Bon Secours new hospital beds in the very same area.

  2. When you think about it, the patient is paying the insurer so one would think that the first obligation would be to the patient. It is the patients’ premiums that allow the provider to get paid. Shouldn’t the insurance company be looking out for the patients first?

  3. It seems like they’d argue they should be looking at their profit margins first, since the reason they’re in business is to make money. Patients and hospitals are second and third on that list, although it’s not necessarily in that order, and it’s not necessarily a close second, either….

  4. In general, Vivian, the insurers are mostly paid by the patients’ employers. The employers want to keep costs down. So those paying the bulk of the premiums are not those receiving the services. This has two consequences. First, the insurers have double motivation to keep costs down — their own profits and to keep their true customers, the employers, happy. Second, the patients go to doctors for trivial ailments because they don’t have to pay the full cost of it, driving up insurance premiums.

  5. AEM – while many employers participate in the cost of the premiums, outside of the government, I think you’d be hard pressed to say today that employers are paying the bulk of the premiums.

    In any event, the agreement isn’t with the employers, either.

  6. Review the actual costs of the premiums, versus what the employees have to pay. Employers are paying the bulk.

    In any event, it is the employers who decide which insurance companies to use and what the policies will cover, not the employees. Since the employees cannot decline coverage without having some other coverage (which is expensive and difficult to get), they are stuck with whatever the employer decides.

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