Fuzzy Math

fuzzy math

The following email was received this morning from a source with impeccable credentials:

Recently I had a CAT Scan done at a clinic which is down the block from Valley Baptist Medical Center (VMBC) and is owned by VMBC. My insurance is through Blue Cross with a $10,000 front-end deductible. Prior to receiving the CAT Scan, I asked the lady in charge what the normal fee would be for the procedure to be done (lower abdomen with dye injection). She entered the data in her computer to find the charge. It took her only a few minutes, at which time she wrote down the following and handed it to me:
CT Abd.Pelv. w/o – $1,815.00
I asked her what the price would be if I paid cash. I returned the note to her and she wrote:  $1,815 X 50% Disc – $907.50.
A cash payment would have earned me a 50% discount off billed charges.
So, I said “let’s see what Blue Cross has negotiated with you. Please file the claim, and I will pay you the balance.”
I just received my Blue Cross EOB which showed:
     Billed Charges              $ 2,886.00
     Non-Allowed               $ 1,856.32
     Covered                       $ 1,029.68
It looks like Blue Cross came through for me with a whopping 64% discount off billed charges, much better than the measly 50% discount I was able to achieve simply by asking.
Bottom line: With my Blue Cross insurance plan, I am going to have to pay 13% more for this service than if I had no insurance and paid cash. Yet if I were a Blue Cross salesman, I would tout my 64% discount as a wondrous thing.
Since the EOB does not show the CPT code, I dont know what Medicare would have allowed, but I can guess.
If VMBC had given me the same deal as Blue Cross, a 64% discount would put my bill down to $654.
BTW – the charges described above are only for the CAT Scan. The dye injection was billed at $1,100, of which $707.52 was non-allowed, leaving me a balance to pay of $392.48. Again, BCBS achieved a whopping 64% discount for me. The radiologist bill was $544.00, of which $385.61 was non-allowed, leaving me a balance to pay of $ 158.39. This is a 70% discount off billed charges – one hell of a deal. Thank you Blue Cross!
So, what is the deal here? Billed charges for me was quoted at $1,815 but were quoted to Blue Cross at $2,886, +60% more. With cash, I could have achieved a better deal than BCBS, a huge insurance company, negotiated for me. This is upside down.
Of course, you have heard many similar stories from others. I think this illustrates a systemic problem within our industry (insurance). The solutions are readily apparent. As individuals we all can beat the PPO discounts foisted upon us by middlemen. Providers and employers can work together to achieve a mutually acceptable financial relationship that makes sense and is totally transparent.
Editor’s Note: This story is not uncommon. We have all heard similar stores in the past. The patient in this case happens to be a knowledgeable health insurance consultant who saw how the system works up close and first hand.

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