Archive for April 24th, 2012

Why Does Employee Jones Get More Than Employee Smith?

Tuesday, April 24th, 2012

Why would an employer who sponsors an employee welfare plan want to pay more for Employee Jones and less for Employee Smith? Yet, that is exactly what is happening in this convoluted health care system we have these days.

Employer sponsored group health insurance plans  today covers every doctor and every facility that employees have ready access to through extensive PPO networks, even though costs vary radically. For example, a  plan may  pay seven times as much for an MRI scan for one employee as they pay for another.

We can attest to the scan pricing differential on a personal basis. Last year we had a scan in Harlingen, Texas at a free standing MRI center – our PPO allowed amount was about $1,800. This year we had the same procedure at another free standing center in San Benito, Texas (4 miles away) and the PPO allowed was $300. Same PPO network, different providers with different PPO negotiated rates.

Should not all participants in a group health plan be treated equally?

Editor’s Note: This is why many of  our clients are moving away from PPO networks and paying providers a fair and reasonable rate for services. And, these Plan Sponsors pay the lowest market driven prices. If an MRI can be done for $300, and that is the best and lowest pricing available in the locality, then that is what the plan will allow no matter where Employee Jones or Smith seek treatment. If Jones goes to Harlingen for his MRI, the plan pays $300 and Jones pays the difference, $1,500.

Proposed Health Care Reimbursement Model