Got another Lab Test Bill - are they insane?

[schildi]

We are on an HSA, so we pay the full amount - after the contract adjustment - and that part is very important.
So I got this bill from a lab today - for a strep throat test. They tried to charge $143.10, then it says: "contractual insurance adjustment ($113.23)" and leaves me with an amount of $29.87 to pay. Ok, that's > 79% off. So why in this world are they trying to charge this ridiculous amount in the first place? Can somebody explain this?
And this is not the first time, btw. Any lab test seems to be similar ....

[zibazinski]

Because if you don't have insurance this is exactly what they try to charge you!!! I left my dentist because he got paid $43 from my insurance for a cleaning, x-rays, and checkup. I wanted to pay the same amount after I left my job and he wanted a whole lot more. My theory was he should actually charge me less because I was paying him in cash right now so no billing and waiting hassle.

[Deleted]

They are reminding you what the uninsured pay. It is one of the ironies of our current health system that the uninsured pay more than the insured. Never mind that the insured usually have some help in paying and the uninsured don't.

If it costs $29.87 for an insurance company to cover your strep throat, it costs $29.87 to cover anyone else's as well. People talk about people taking responsibility for their own health care costs and having high-deductible plans with HSAs (like you seem to do). That only works if you pay what the insured pay.

How would you feel if you had had to pay the full amount knowing that a large number of people pay substantially less . . . not because they are poor but because they don't have any insurance so no one is negotiating for them.

[haapai]

I can't tell you how they calculated the $143.10. Cost accounting is a black art. The number is pretty much made up. There's almost no reward for calculating a low list price and lots of rewards for bloating it.

My father rants about fraud for days after opening one of those letters. He gets the discount, so it isn't hitting him in the pocketbook. It's the abuse of math that sets him off. He's an accountant and he doesn't like seeing numbers being used like that.

[hoops902]

What's insane about it? This is no different than manufacturing companies who offer bulk discounts to big buyers. That doesn't mean you can just wander in off the street and demand the same discount. This happens everywhere all the time, not just in healthcare.

Example: I'm getting married in a few months. We negotiated a bulk discount deal at a hotel to block off rooms for our guests. They did this without knowing if we'd have 5 reservations or 50. Is it some amazing deal? Probably not. Someone else could probably negotiate the same deal on an individual room if they wanted to, but if you walk in off the street they're going to charge you full price if you don't try to negotiate.

"How would you feel if you had had to pay the full amount knowing that a large number of people pay substantially less . . . not because they are poor but because they don't have any insurance so no one is negotiating for them. "

Everyone faces this situation every day though. If you don't negotiate, and someone else does, they're probably going to get a better deal. This has nothing to do with healthcare and everything to do with whether you negotiate deals or simply pay asking price. Do you feel similarly sorry for people who walk onto car lots and plop down full asking price simply because they're too lazy to negotiate?

If you're not willing to negotiate you're almost always going to pay substantially more than someone who is and who also has bulk orders to place. I guess I don't get this idea that it's ok for every other business on the planet to operate that way, but it's not ok in this one instance just because people want to play the "life isn't fair" sympathy card.

[Deleted]

Health care is different from buying a new car. Generally speaking, you need health care when you need it. You can't go bleeding into the doctor's office and say, "Doc, I'm interested in having this bullet taken out. What's your best rate?" Then if you don't like his rate, you move on to another doctor/dealership.

I'm not negotiating this lower cost, by the way. It is being done for me. So no kudos for me. I've personally done nothing to deserve it just as someone whose insurance company doesn't have the clout to lower the cost has done nothing to deserve the higher price.

This isn't the "life isn't fair" sympathy card. This is medical care, which I do believe everyone is entitled to. And there something inherently ironic that the poor are charged the most. Then we wonder why they wait to go to the ER.

[hoops902]

We're talking about getting tested for strep throat here. Why does everyone want to jump immediately to the most severe scenario when the actual scenario is not that serious.

"I'm not negotiating this lower cost, by the way. It is being done for me."

Because you're essentially hiring the job done.

"And there something inherently ironic that the poor are charged the most."

Does it matter if I charge you $500 or $50,000 if you're not going to pay anyways?

"You can't go bleeding into the doctor's office and say, "Doc, I'm interested in having this bullet taken out. What's your best rate?" Then if you don't like his rate, you move on to another doctor/dealership."

I agree it's not like buying a car, it's BETTER! You can go in, get everything done for you without handing over one penny, and then if you refuse to pay for what you received it's not even theft. You can then go into the billing office and negotiate a lower price based simply on the fact that you "want a lower price". You can't go buy a car, leave without paying, drive it around for the next 15 years, then come back to the dealership to discuss what you think a fair price would be to pay for what you received.

"And there something inherently ironic that the poor are charged the most."

The poor are ALWAYS going to be charged the most compared to a rich entity buying in bulk. How much can a poor person buy a Snickers bar for? How much can a supermarket buy a Snickers bar for when they place their orders? How much could Bill Gates buy a Snickers bar for if he ordered a billion of them? It's not unique to healthcare. The only part of it unique to healthcare is that we go ahead and give people the service/goods and let them use it up prior to getting any kind of payment, and then allow them to negotiate the payment after the fact.

[schildi]

Mar 3, 2011 8:08:56 GMT -5 haapai said:

I can't tell you how they calculated the $143.10. Cost accounting is a black art. The number is pretty much made up. There's almost no reward for calculating a low list price and lots of rewards for bloating it.

My father rants about fraud for days after opening one of those letters. He gets the discount, so it isn't hitting him in the pocketbook. It's the abuse of math that sets him off. He's an accountant and he doesn't like seeing numbers being used like that.

Yea, this is exactly what I don't like.

[Deleted]

We aren't talking the difference between wholesale and retail here.

When Bill and I both go to the local Walmart to buy that candy bar, I think we should both pay the same price. That's what Walmart is offering to sell them for.

[schildi]

Mar 3, 2011 8:12:06 GMT -5 hoops902 said:

What's insane about it? This is no different than manufacturing companies who offer bulk discounts to big buyers. That doesn't mean you can just wander in off the street and demand the same discount. This happens everywhere all the time, not just in healthcare.

Example: I'm getting married in a few months. We negotiated a bulk discount deal at a hotel to block off rooms for our guests. They did this without knowing if we'd have 5 reservations or 50. Is it some amazing deal? Probably not. Someone else could probably negotiate the same deal on an individual room if they wanted to, but if you walk in off the street they're going to charge you full price if you don't try to negotiate.

"How would you feel if you had had to pay the full amount knowing that a large number of people pay substantially less . . . not because they are poor but because they don't have any insurance so no one is negotiating for them. "

Everyone faces this situation every day though. If you don't negotiate, and someone else does, they're probably going to get a better deal. This has nothing to do with healthcare and everything to do with whether you negotiate deals or simply pay asking price. Do you feel similarly sorry for people who walk onto car lots and plop down full asking price simply because they're too lazy to negotiate?

If you're not willing to negotiate you're almost always going to pay substantially more than someone who is and who also has bulk orders to place. I guess I don't get this idea that it's ok for every other business on the planet to operate that way, but it's not ok in this one instance just because people want to play the "life isn't fair" sympathy card.

As susana said, your comparison stinks.
Besides that, with a car purchase, we are talking about a 10%, maybe 15% additional discount. This here is 80%!!! What's insane is that the number seems complete made up. 5x the amount? Come on. This is out of control.

[hoops902]

Mar 3, 2011 11:06:26 GMT -5 @southernsusana said:

We aren't talking the difference between wholesale and retail here.

When Bill and I both go to the local Walmart to buy that candy bar, I think we should both pay the same price. That's what Walmart is offering to sell them for.

You're buying one. Bill is going in with Microsoft behind him and asking what kind of deal they can cut him if Microsoft agrees to use this particular Wal-Mart to serve all of their candy needs across the country. His price per candy bar is going to be significantly lower than your price purchasing one.

In healthcare terms you're walking into Wal-Mart, eating the candy bar as you shop, waiting until you get to the checkout to see what the price is, then still having the option to haggle even though you're already consumed the item.

"Besides that, with a car purchase, we are talking about a 10%, maybe 15% additional discount. This here is 80%!!! What's insane is that the number seems complete made up. 5x the amount? Come on. This is out of control."

So then which do you have a problem with? Businesses giving discounts for bulk buying? Or simply the size of the discount in this one very specific instance of a strep test? The discount for a service is generally going to be higher across the board than a discount for a good given the cost of manufacturing and the profit margin. My plumber charges $75/hour for small jobs, when I gave him guaranteed work on my house for 30 hours that charge dropped to $25/hour. No different between doctors and insurers. If you can give me a more steady flow of income through naming me as a provider for your insurance, I'll give you a discount compared to hoping random people show up enough and pay in cash to keep my business afloat.

Everyone seems to want to conveniently ignore the fact that people who receive the full bill can still negotiate it down. For those with insurance it's simply been pre-negotiated for you by the person you paid to perform that service. It's also completely ignoring we're talking about a strep test which is not life threatening and could easily be shopped around prior to purchase.

[The Walk of the Penguin Mich]

The difference is that your insurance payment is guaranteed for the test. They'd rather have a guaranteed 30% than a less likely $143 - however, many times they'll receive 0. When it averages out, chances are there will be one person who pays $143, many who pay $30 and several who pay 0.

I went to a walkin clinic a couple weeks ago. For a PA to see a rash, tell me what it was and to prescribe a cream (all in <5 min), it cost me $108 since my insurance was not accepted. There was no way I got >$100 in treatment in that time. However, I know that the money I paid supplements the salaries in the clinic for those who pay 0. It was worth it to me. Maybe I'll get something back when I submit it to my insurance company, but I'm not holding my breath.

[schildi]

Mar 3, 2011 11:23:36 GMT -5 hoops902 said:

Or simply the size of the discount in this one very specific instance of a strep test?

hoops, as I quoted in my OP, this is not an isolated case, it happens all the time with lab work. (not with regular doctors visits though)

Mar 3, 2011 11:23:36 GMT -5 hoops902 said:

It's also completely ignoring we're talking about a strep test which is not life threatening and could easily be shopped around prior to purchase.

This is not as easily done as it sounds. Many times, even doctors offices can't give you a quote before they send it to their billing office. And try to ask a doctor who orders a test what this test will cost. You'd be very lucky to get an answer. I agree with you, though, they should know for a set of standard tests at least, but they don't. I've tried it. :-)

[The Walk of the Penguin Mich]

They tried to charge $143.10, then it says: "contractual insurance adjustment ($113.23)" and leaves me with an amount of $29.87 to pay. Ok, that's > 79% off. So why in this world are they trying to charge this ridiculous amount in the first place? Can somebody explain this?
And this is not the first time, btw. Any lab test seems to be similar ....

Do you think that healthcare is the only place this happens? My employer has a contract with Dell, so my computer at work would cost me >50% more if I tried to do this personally.

I purchased a piece of lab equipment and negotiated the software as well. Had I not negotiated the software into the package, the software would have cost us $7000 (I tried to buy it without the equipment about 6 months previously), we paid $500 for it.

Many many employers receive discounts for things as they negotiate a bulk discount. The negotiated company realizes that this is a guaranteed revenue stream.

[schildi]

Mar 3, 2011 11:39:07 GMT -5 The Walk of the Penguin Mich said:

The difference is that your insurance payment is guaranteed for the test. They'd rather have a guaranteed 30% than a less likely $143 - however, many times they'll receive 0. When it averages out, chances are there will be one person who pays $143, many who pay $30 and several who pay 0.

Yes, I agree, and that's most likely the underlying problem that makes them come up with these seemingly arbitrary numbers. And it's a problem that is difficult to fix. :-(

[whoisjohngalt]

The argument that bulk is cheaper than individual rate holds no logic in the case of healthcare.

When someone buying something in bulk, there is a known starting price, there is a known quantity and a known day of "purchase". None of that exists with healthcare. A medical bill can be understood by the brilliant few as all those codes are more complicated than a space ship manual and not only prices vary, you usually can't get a price for anything more complicated than a regualar check up due to "Oh, well, we don't know what tests you will need or what procedures you will need or how many more surgeries you will need
No dr or hospital or lab really knows how many patients they will be getting from Business A who uses insurance ABC and there is zero knowledge as to when a "purchase" will happen. So, really what "bulk" are we talking about here? That's absurd.

Lena

[shanendoah]

1) Lab tests CAN'T be easily shopped around before purchase. Let's start with that. You are dealing with your doctor's office, who ships the test to a lab. You almost never have a choice as to what lab they ship it to. (Its either who your insurance has a contract with, or who the MD's office has a contract with for those whose insurance doesn't care or don't have insurance.) Your doctor's office can not tell you what the cost of the lab test will be because they aren't the ones billing, nor do they see the bill because that comes to you or your insurance company. Even for labs that you go to to have the test (vs ones administered in your MD's office, like strep tests), you can't just call around and find the cheapest one. Most labs do not accept patient self-referral - they have to have an MD's order before they'll even talk to you.
In addition, for some people, strep is life or death. Growing up, my BFF had kidney disease. If she got strep, her life was in danger. That meant that for our entire neighborhood (due to carpooling, babysitting, etc), strep was considered a dangerous condition that was tested for at the drop of a hat.

2) How prices are exactly set, I can't tell you. However, like manufacturing, they do have to take in to account labor, hours, machines, etc. In addition, many prices for services are adjusted each year based on inflation or changes in technology. Many MD's offices use the updated Medicare fee schedules as their base. For things Medicare covers, they have a Medicare allowable amount. Most offices set their "standard" prices some small percentage over that, with room for rounding to nice even dollar amounts. (Medicare allowable amounts are often in the realm of $54.81 - your MD's office would probably set their "standard" price for that service to $65.)
Insurance rates are then negotiated - sometimes based on the MD's standard rates, sometimes based on the Medicare rate. Most private insurance companies pay less than Medicare in communities where they have a strong presence. Also, your negotiated rate is going to be different based on your insurance company - their buying power and the skill of their negotiators.

3) We value life above transportation. So yes, people can walk in to an ER and get treated without paying a dime. We make doctors take an oath to help people, and in cases where hospitals receive any federal funds (and often state funds) the administrators aren't allowed to turn people away, either.
However, the ability to negotiate after the fact is more limited than it might seem. In a private MDs office - either sole practitioner or partnership of some kind, you have the most ability to negotiate, as you deal with the MD directly.
In hospitals, especially ERs, you lose the ability to negotiate directly with your MD. In most cases, in order to qualify to pay less than the "standard" rate, you have to meet strict financial requirements. If you don't meet those requirements, the negotiating you do is for a payment plan, not for being charged less. Luckily, medical care facilities almost never charge interest.
And if you don't/can't pay, don't think you're off the hook. Hospitals and other medical care providers generally think nothing of sending you to collections. There is a reason medical bankruptcy exists as its own special class.

4) Medical care isn't the only place we penalize those least able to pay in this manner. It is the place where its most visible because of the total expense, but this exists even in your grocery store. I think a lot of us take for granted our ability to buy in bulk and therefore get higher quality items for less money, and we can't believe anyone would ever pay more per pound for lower quality meet. But the truth is, if I only have $5, I have to buy the 2lbs of low quality meat at $2.25/lb, because I can't afford the 6lbs of high quality meat at $1.50/lb.
I work in healthcare, and trust me, I wish it were different. I do believe that access to quality health care is a right and not a privelege, but for now, health care costs are only lightly regulated, and it is still, for the most part, a capitalistic and for profit enterprise. It is therefore the fiduciary duty of the hospitals to make as much profit for their shareholders as possible, and that means charging "full" price to those who don't have the buying power to negotiate based on bulk.

[The Walk of the Penguin Mich]

When someone buying something in bulk, there is a known starting price, there is a known quantity and a known day of "purchase". None of that exists with healthcare.

This is not so. When you buy supplies for healthcare, you do not buy one strep kit, you buy a case of 100 strep kits (or however quantity they're sold). The strep kit (which happens to be only one of the dozens and dozens of kits and supplies that labs buy) requires that they outlay - IME, probably around $20/test, so you've got a $2000 outlay for a SINGLE test. Multiply that by all tests in stocks for various problems (look at your the slip for your next blood test and see the HUNDREDS of tests they have) and you can see how much $$ there is in an outlay of stock.

Otherwise, you'd be waiting > a week for test results, rather than getting them within a couple hours - or even immediately.

When the expiration date on that case of kits is gone, they MUST be tossed. So if you've only used 30 of those kits, that takes the price of each one of those kits up to $66 each. EVERYTHING in the medical field (including things like needles and syringes) have expiration dates on them and you cannot use any expired items on patients. If they've used all 100 of those kits, but only half were insured patients, there's a $1500 cost so they're short $500. Hopefully, you'll get another 4/50 patients to pay $143 to make up that $2000 that was the intial outlay.

[hoops902]

When someone buying something in bulk, there is a known starting price, there is a known quantity and a known day of "purchase".

True, but there are simple examples of the same type of use. For example: "Joe Schmoe rent-a-car, I am willing to send all of my employees to you for our rental needs. What kind of discount can I get for that?" It's not "buying" in bulk, but it's licensing someone to do your work on some basis of exclusivity in exchange for a discount. Same as my Bill Gates offers to use a Wal-Mart for all the candy needs. He need not place an order at that point, simply using them as the future supplier for some unknown quantity can gain a discount when the negotiator is a known entity large enough that their business is valuable.

You are essentially buying in bulk, you're buying an unknown quantity and the purchaser is usually known to be large enough to make it worth your while. Essentially though you are correct in that it's not really "buying in bulk", it's more of an exclusivity agreement. THere is value to that exclusivity (even though it's likely not completely exclusive, but as a licensed or approved provider).

In my plumber example, i didn't say "I'll pay you for 30 hours", i "guaranteed" him 30 hours because he has an idea what the work will take. I basically said to him "For this job, I will only use you, what kind of rate can I get as opposed to someone who calls you in to work a small job". I wasn't buying in bulk per se as there was no fixed quantity, I was granting him status as a licensed provider to my home's plumbing. Healthcare is the same kind of thing on a much larger scale. Having that status as a licensed provider has value, a value which they are willing to give a trade-off for.

[Clever Username]

For fun, read the notice on the door for your hotel room sometimes.
They've got a crazy "regular" rate on those too.

[gooddecisions]

I got a new doctor this year and he uses a different lab than my last doc. I also have an HDHP and the Labcorp bill was always around $500, which I thought was outrageous. My new doctor uses Quest and the same lab test was only $125. It does make you wonder. It's really unfortunate that you can't choose where the doc sends your samples for testing.

[Gardening Grandma]

DH is also on a high deductible policy. He had his annual checkup (which they covered as preventive care). I'm looking at the lab bill. The total amount charged is $235. The discount is $174.12 leaving us with a bill of $60.88.

I'm not complaining. Far from it. But, sheesh - that's like a 75% discount!!!

[oreo]

I also have an HSA but I haven't used it yet (only had it a few months). All of this discussion is making me appreciate it even more! I hope if I ever have to go to the doctor that I can get these kinds of discounts too. Of course these discounts also greatly benefit the insurance company (even though they aren't paying these bills) because it will be FOREVER before I meet the $5500 deductible and they have to pay a dime!

[workpublic]

$5500?

what if you break your leg and go to the ER in an ambulance ;D

[schildi]

Mar 3, 2011 18:30:16 GMT -5 workpublic said:

$5500?
what if you break your leg and go to the ER in an ambulance ;D

Then you pay the bill, up to the out of pocket max. That's the idea, I think. $5,500 is not all that bad if it is for a family, and if the monthly premiums are low.
We are on a plan with $2,800 deductibe annually, and an out of pocket max. of $4,600 (insurance pays 90% in between the two numbers, and 100% once the oop max is reached). But our monthly premium is $0. So our best case scenario is that health care costs nothing, and worst case is $5,000 per year for a family of four. That's a good price IMO.


I have another weird example. We needed a prescription creme for the wife. The price was $600. The skin doctor gave her a discount coupon (from the manufacturer) which took off $300 at the pharmacy counter. What is weird imo is that the coupon was only valid for a person with insurance that covers prescription drugs. So again, that person without insurance would have been out of luck. The coupon stated that with the use of it, the copay for most patients was going to be $0.

[blackcard]

No insurance is a bad option. The prices do seem outrageous at times though.

[Deleted]

You know, Blackcard, insurance isn't AlWAYS an option. I worked in a private school that just assumed your spouse had insurance. I have no idea what single teachers did, but most of the teachers had kids there so I guess it all worked out.

When I got divorced, still working there, I had to pay for COBRA.

[wvugurl26]

Every time I see my primary care doctor they bill my insurance company $227. I pay them a $20 copay, insurance gives them $91 and knocks $106 off the bill. Then they send me a bill for $10 more every time. I'm tired of this song and dance and want to just give them $10 more at the time of the appointment and call it a day.
By the time it goes through insurance adjustments, its two months after the appointment when I get the bill. I went twice in January. I'm sure the bills will be coming in shortly. My gyno on the other hand has never sent me another bill. I just started seeing the allergy/asthma doctor so I have no idea what they will do.

[gooddecisions]

Why all the posts about only qualifying for insurance if you have an employer sponsored plan? My employer policy has gone up pretty dramatically. I've searched insurance.com to compare rates and it turns out I can get an independent plan for cheaper than my employer sponsored plan. If you're young, a non-smoker and healthy, this might work for you too. The first thing I would do if I lost my job is pull the rates and find the cheapest HDHP- right now it's $85/month, not too bad.

[gooddecisions]

Plus, even with a high deductible health plan- you still get the negotiated rates.