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Why Health Care Costs So Much, Reason #581


Sometimes when you’re a health care consultant and policy wonk, you need a little bit of education in what’s happening on the ground to understand why the health care system is so screwed up! And you’ll find that if you play your cards wrong, your own experience can be very informative. Just not in a good way.

Last fall, I went to see my knee surgeon at California Pacific Hospital for a 18 month post surgery check-up. For some strange reason there was no receptionist on duty – the office was closing early that day, and I was whisked straight to the exam room and shuffled out a side-door after the exam. My surgeon said my knee was fine to go snowboarding so I didn’t think too much about the appointment again.

Until last week when I got a call from a pushy collection agency asking me for $85. So I called the surgeon’s office and talked to billing. They said, we submitted this to your insurance, the insurer said you were no longer covered, so we sent you the bill three times. You never responded, so we sent it to collections.

I said, which insurer did you send it to? They said “ABC insurer.” I said but I’m not with them any more. We didn’t know, they said. Then I said, which address did you send my bill to? They said “123 A Street.” I said, but I moved from there two years ago, and now live at 987 Y Street. We didn’t know, they said.

Then I said, what phone number do you have for me? I always put down my cell phone number on those forms, which I have never changed and never will. They had the correct cell phone number. Of course, they did – that was the one the collections agent called! So, I said: “You had a phone number for me, and you knew that I had paid all the bills for an extensive surgery the year before on time. Now I went quiet over an $85 bill. Why didn’t you call me and ask what was up?”

Their response was simply: “It may sound like a good idea to you, but we have at least 50 past-due bills in the office at anyone time, and taking the time to call people up is just not going to happen.”

I then said, OK but because the address and insurance info was wrong, even though I have an high-deductible health insurance plan, I will now lose the discount that my former insurer, XYZ insurance, has negotiated for me. Meanwhile you (the doctor’s office) will hand over a big chunk (perhaps $40) of that $85 to a collections agency. You’ll now get some $45, nearly a year late, most of which has been eaten up by the administrative work you took to chase me down, and of course your billing company had to send out reams of paper 3 times. All because you wouldn’t make a 30 second phone call.

It gets worse. I then said, what if I pay the the $85 from my health savings account (HSA) and claim it as a legitimate medical expenditure on my taxes? If the account statement from my HSA just says that a collections agency got paid, and the IRS audits it, how will I prove that it was a legitimate medical expenditure if no claim was lodged with my health plan? (If I can’t do that, the IRS can claim that’s an “unqualified” distribution from my HSA, as that’s only meant for health care purposes, and tax me for it).

Oh, that’s OK, the billing rep said, if you fax me the ID card from the insurer you had back then, we can submit it to them and they’ll process the claim. Of course I was nowhere near my deductible for the year, and I’ve now left that insurer! So all that would happen would be that the insurer would move some more paper, send out an an benefits statement and tell me what I should have paid the doctor, with the PPO discount in effect. Of course the account itself is not with the doctor, but instead with a collection agency who want $85, not whatever the discounted amount was. So I’ll have to pay that, and I’ll never see the discount anyway (not that the $20 or whatever it is matters much).

But both the doctor’s office and the insurance company would have to go to the trouble of yet more claims and paper flying around. And the whole thing would only matter on the off chance that the IRS audits me about the $85 that I will claim as a legitimate medical expense, and wants to see the insurer approve it. That’s a pretty small chance, but other than the cost of a fax, it wouldn’t cost me anything to set that train in motion.

As luck would have it, I threw away my XZY company insurance card when they dumped me last year, so I can’t send it in anyway. When the IRS calls perhaps I can get my surgeon to act as a character witness. What are the changes?

I’m not alone, either. That’s the real pity here. Last year a study showed that billing and insurance related functions account for nearly 22% of privately insured spending in California acute care settings. And that’s made up of plenty of people and paper chasing down my $85!

Share  Posted by Matt Holt at 9:16 AM | Permalink

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