How to Manage Healthcare Costs if Out of Pockets Seem Hard to Handle?

There is a sign in the copy room at my office that asks: “Do you know that color copies cost our company three to four times more than black and white copies each year?”

The numbers are easy to grasp and most of us who work in an office can relate. We also know what we need to do to help the company save money. My company simply reminds us to “think before you print.” It’s pretty clear cut.

But health care spending? It’s not so easy to get down to a simple savings plan of action. Unless we know where the issues are, we can’t really change how we use our benefits.

The average person doesn’t know how the charges of one doctor compare to those of another doctor who has the same credentials and expertise. Patients don’t know that choosing one hospital over another can mean that you can save thousands of dollars in your out-of-pocket costs. And you won’t know how doctors or hospitals compare unless you call around and ask. Few people know to do that. As patients, we assume there is a standard that providers follow.

A recent study has done some of the work for us. The Association of Health Insurance Plans (AHIP) published a report1 in 2013 on a poll that looked at the charges by doctors and health care facilities for their services. They compared what the average person is charged to what Medicare pays for the same services in the same areas.
Here are the results – in full color.

If you’ve ever asked why the health plan you pay for each month only gives you use of certain doctors, hospitals and other health professionals, there’s your answer! Health insurers have provider networks that protect the member by getting providers to agree to a set rate for their services. Without these networks, providers can set their own prices.

Over the course of a decade, patients have saved billions of dollars in premiums and out-of-pocket costs by understanding and making use of their health plan networks. For the woman going to see a doctor for her annual health exam, the cost difference may be more like the price of a color copy without insurance coverage, compared to that of a black and white copy with insurance. For the young man who is in a crash and spends weeks in the hospital and months in rehab, the savings by having insurance might be more like the total print savings for the whole company, adding in the print budget for the company in the next building over, too.

That lack of visibility into the health care buying process and the resulting soaring prices has consumers angry, says a recent Consumer Reports review. For example, 91% of Americans surveyed found it shocking that a hospital can charge $37.50 for a single acetaminophen pill.

You get the best value for your money when you use providers in your plan’s network. If you decide you want to use a provider that isn’t in your network, you do it knowing that we can’t make that provider charge you a reasonable amount. You are giving them a “blank check” to charge whatever they want. We don’t do that – we pay them what your health plan says we’ll pay them – and they can put you on the hook to pay the rest. We can’t stop them from this practice – called “balance billing” -- because your provider doesn't have a contract with them.

Think on this, while we’re on the subject. Insurance companies work hard to build provider networks that give you access to a wide choice of quality providers. But these companies can’t get all providers to agree to the rates they can pay to keep our health plans low-cost enough for people to buy.

Taking charge of your health care spending doesn’t just mean buying a plan that has a monthly premium you can afford. It also means making the right choices for yourself and your family when it comes time to use your benefits.

Here are some tips:

  • Do your homework. Find out ahead of time what your plan covers, and where. Do you need a doctor’s referral? Will a visit to a retail health clinic or urgent care center be covered? Which hospital takes your health plan and costs less?
  • Check your benefits. Do you know what you’ll have to pay if you go out of network? It varies, based on what plan you choose. You may have to pay a larger percentage of the bill. In some cases, your plan may not cover any of the costs of out-of-network care. That means you pay the full amount.
  • Use network doctors when you need care. 
  • Compare prices before you go.
  • Ask questions, like “Is that test really needed?” and “Is there a generic for that drug?”
  • Use the same method when looking at your medications. Use a network pharmacy, make sure the drug is covered by your plan benefits, and ask about generics when your doctor writes the prescription.
  • Remember—where you go matters! Knowing your options can save you time and money.

For more facts from the report on provider charges for out-of-network care, check out AHIP’s special website, timeforaffordability.org.

1 Survey of Billed Charges by Out-of-Network Providers: A Hidden Threat to Affordability. AHIP, February 2013
2 It's Time to Get Mad about the Outrageous Cost of Health Care. Consumer Reports Magazine, November 2014.

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