When Bill Lorimer鈥檚 doctor diagnosed him with a kidney stone in May, the Minnesota retiree and part-time resident of Marathon in the Florida Keys went to his local hospital for diagnostic scans of his pelvis and abdomen.
A few weeks later, Lorimer received a bill in the mail from Fishermen鈥檚 Community Hospital, showing the charge for the CT scan: $9,165.21.
鈥淚 was kind of blindsided by this,鈥欌 said Lorimer, 67. 鈥淚 thought the charge was a mistake.鈥欌
Lorimer didn鈥檛 have to pay Fishermen鈥檚 full charge, though. Because he鈥檚 on Medicare, Lorimer was responsible for only a portion of the bill, and his share came to $1,456.36, which the hospital recently recalculated to $1,817.55 after adding a physician鈥檚 fee.
鈥淗ad I been a better health care buyer,鈥欌 Lorimer said from his other home in St. Paul, Minn., 鈥淚 would have probably checked around. But I was in a lot of pain. So I went over to the hospital.鈥欌
Lorimer, like many health care consumers, didn鈥檛 give much thought to the cost of his medical service before receiving it, nor was he inclined to research it while in pain.
But that may have to change. Increasingly, individual consumers with health insurance are feeling financial pressure to be more careful shoppers as employers and insurers pass along a greater burden of costs through higher deductibles, co-payments and co-insurance rates.
Placing more financial responsibility on patients for their health care also may change costly behaviors left over from the days when generous health insurance plans shielded consumers from the true cost of medical care, health care experts say.
鈥淭here鈥檚 more interest in what folks are paying,鈥欌 said Bruce Rueben, president of the Florida Hospital Association, which has launched a committee to study healthcare price transparency and the ways hospitals can communicate costs to consumers.
鈥淭he very fact that people were insulated from the cost of care because it was the insurance company paying for it 鈥 gave people less incentive to be asking those questions,鈥欌 Rueben said. 鈥淣ow that they are, we鈥檙e certainly trying to respond.鈥欌
Health care prices can be , though, and the contracted rates between insurers and hospitals or physicians are considered proprietary.
Yet the price a consumer pays for a medical procedure can vary significantly from one hospital or doctor to the next 鈥 often with little difference in quality. And those price differences can add up, especially for so-called 鈥渃onsumer-directed鈥 plans with co-insurance, which requires consumers to pay a percentage of medical costs.
If a CT scan costs $9,000 at one medical facility but much less at another, a consumer could save on out-of-pocket costs by knowing which provider has the lower price.
Consumers trying to lower their healthcare costs do have some help in the marketplace 鈥 but most aren鈥檛 using the tools available.
Cigna, the health insurance company, offers an Internet-based transparency tool that shows plan members price information on the 200 most common procedures, which make up about 70 percent of the company鈥檚 medical claims, said Mark Slitt, a spokesman.
鈥淧eople really like cost transparency,鈥欌 Slitt said, 鈥渁nd having quality information as part of their choice.鈥欌
But some studies show that only a very small percentage of consumers use these tools, which are offered by a number of insurance companies, when planning a medical service, said Joe Smith, a physician and engineer who chairs the board of West Health Policy Center, a Washington, D.C.-based nonprofit that studies healthcare reform.
鈥淢aybe 98 percent of those who are covered have access to some sort of price transparency tool, which appear to be used about 2 percent of the time,鈥欌 Smith said.
Power of Price: A glossary of healthcare terms
As if health care pricing wasn鈥檛 complex enough, try talking about it without running into some conversation-stopping jargon. Words that mean one thing to the rest of the English-speaking world can mean something completely different in health care 鈥 like a 鈥渃harge鈥 that isn鈥檛 the same as the price.
To help clarify, here鈥檚 a glossary of common terms in the world of health care finance:
- All-payer claims database: A state-run database that tracks what insurers and other payers actually shell out for health care services from different hospitals and providers. Florida鈥檚 Agency for Health Care Administration was denied a budget request of $5 million to develop a database last spring.
- Charge: The price a health care provider says it is owed for a service; not necessarily what it expects to receive. Insurance companies negotiate with providers for cheaper rates than the listed charge. People who are uninsured may be billed for the whole charge 鈥 but even then, the amount is frequently negotiable. Appears as the amount billed column on an explanation of benefits.
- Chargemaster: A hospital鈥檚 list of charges for common procedures. These lists are different from the list of rates negotiated by each insurer. Starting in October, the Affordable Care Act requires hospitals make charges available to the public. Many hospitals plan to satisfy this requirement with the chargemaster.
- Contracted rate: The price an insurer and provider have agreed upon for a particular service 鈥 usually lower than the charge. This is also known as the reimbursement or negotiated rate. On an explanation of benefits, it appears as the amount paid by the insurer.
- Copay: The standard price paid by an insured patient for a covered service or medication. This is in addition to what the insurance company will pay on behalf of the patient.
- Cost adjustment: The difference between the charge and the contracted rate. It鈥檚 sometimes presented to health insurance customers as savings.
- Deductible: The amount a patient must pay for covered health care before the insurance company picks up the rest of the tab.
- Explanation of benefits (EOB): A statement from an insurance provider detailing how it covered a patient鈥檚 health care. EOBs typically include details like a description of the service and its billing code, the amount the provider charged, the amount the insurer paid (the contracted rate), and what the patient owes. It looks so much like a bill that some insurance companies write, 鈥渢his is not a bill,鈥 on the statement.
- Premium: The monthly price you pay for health insurance. It is separate from the deductible and copay.
- Medicaid: Health insurance for people with disabilities and low-income individuals and families. It鈥檚 managed at a state level with federal oversight and it鈥檚 funded with federal and state money.
- Medicare: Federally run health insurance, mostly for people over 65.
- Self-Insured: When an employer takes on the risk of insuring its employees and pays their health care claims. Self-insured employers, like Miami-Dade County, frequently hire an insurance company to manage the claims process and negotiate rates with providers on the employer鈥檚 behalf.
Compiled by Sammy Mack
Cigna鈥檚 transparency tool allows plan members to search by medical service and provides them with a range of providers and an estimate of their prices. But Cigna does not reveal the underlying rates that the insurance company has negotiated with those providers, nor does the insurer鈥檚 tool show the rates that other insurers have negotiated with the same providers 鈥 the sort of insight that would empower consumers to comparison shop.
鈥淭hey all want you to be informed,鈥欌 Linda Quick, president of the South Florida Hospital and Healthcare Association, said about insurer transparency tools. 鈥淭hey just only want you to have their information.鈥欌
Lorimer, the part-time resident of the Florida Keys, would not have had to look far for information that may have saved him more than $1,000 on his share of the CT scan from Fishermen鈥檚.
He intends to pay the bill, 鈥渂ut I will pay it under protest,鈥 Lorimer said. 鈥淭he whole system is very opaque. There鈥檚 no question about that. But there are prices available.鈥
About a mile away from the hospital, an independent imaging center named Homestead Diagnostic Center advertises a CT scan starting at $275 and topping out at about $350 when a contrasting dye is included.
Tomas Gonzalez, the owner of Homestead Diagnostic, said he makes 鈥渁 nice profit鈥 with his rates. And he鈥檚 well aware that hospitals charge higher prices for the same services.
鈥淩unning a hospital is a lot more expensive than me running a diagnostic center,鈥欌 he said.
But Gonzalez was taken aback by the charge from Fishermen鈥檚 鈥 even after acknowledging that the hospital has the only CT scanner in Marathon. At his facility, patients who need x-rays, ultrasounds and digital mammograms are seen on site. Those who need CT scans and MRIs are bused for free to the company鈥檚 main facility in Homestead, an 80-mile trip that might not be worth it for someone in pain.
Still, Gonzalez said, 鈥$9,000 for a CT scan? Come on. It鈥檚 outrageous. It really is. I鈥檓 in business to make money, but not like that.鈥欌
Hal Leftwich, chief executive of Fishermen鈥檚, said part of the reason for the hospital鈥檚 high charge is that the facility is certified by Medicare as a so-called 鈥渃ritical access hospital,鈥欌 a designation typically assigned to rural hospitals that are far from other medical facilities.
The designation requires around-the-clock emergency care capability, and care for the uninsured, adding considerable costs for Fishermen鈥檚, Leftwich said.
Medicare reimburses critical access hospitals on a cost basis, instead of a fixed rate like most urban hospitals receive. For Lorimer鈥檚 CT scan, Medicare paid $673.85, after adjusting the charge.
Leftwich declined to discuss Lorimer鈥檚 hospital visit or his bill, citing patient privacy laws. But he said he had 鈥渟ome knowledge鈥 of the charge, and that the amount represented two CT scans 鈥 one performed with a contrast dye, and one without the dye.
鈥淭here鈥檚 basically two CTs being done there,鈥欌 Leftwich said.
He explained that Fishermen鈥檚 compares its prices with other hospitals in South Florida for similar services, and that their prices 鈥渁re very similar,鈥 for the services involved.
鈥淲hat we鈥檝e tried to do,鈥欌 Leftwich said, 鈥渋s keep our pricing to be below the market leaders. But because we鈥檙e in such a rural-type area with low [patient] volumes, of course, we can鈥檛 be the lowest price, either.鈥欌
Maintaining a CT scanner can be expensive. Leftwich said the hospital pays for a $90,000 annual service contract, among other costs.
鈥淭hat $90,000 will get amortized over fewer studies here because there are fewer people,鈥欌 Leftwich said.
Advocates for health care pricing reform call the practice of factoring operating costs into the price of a particular service 鈥渃ross-subsidizing,鈥欌 and some say it鈥檚 disingenuous of hospital administrators and unfair to the community that has to foot the bill.
Francois de Brantes, executive director of the Health Care Incentives Improvement Institute, a Connecticut-based nonprofit, said hospitals blend their costs precisely because healthcare prices are shrouded in secrecy.
鈥淭he reality is today people can do this because there is no price transparency,鈥欌 he said. 鈥淪o you have all this cross-subsidization that goes on at hospitals that leads to high prices. They say it鈥檚 high because of all these additional expenses that we have to cover. Yes you do, but those ought to be covered in an open forum about the explicit need to subsidize them.
鈥淚t鈥檚 either done by taxpayer money so everyone pays a price,鈥欌 de Brantes said, 鈥渙r you close it down. But that鈥檚 your community鈥檚 decision. It shouldn鈥檛 be up to the hospital administrator.鈥欌
Leftwich said Fishermen鈥檚 has developed ways to reduce costs, particularly for those patients who are willing to pay their own way.
鈥淲e may not match $350,鈥欌 he said, referring to Homestead Diagnostic, 鈥渂ut we鈥檒l come pretty close if they鈥檙e willing to pull out the credit card and pay right there.鈥欌
That鈥檚 how one Hollywood resident who asked the Herald not to use his name because of privacy concerns, paid for his hernia operation at Imperial Point Hospital in Fort Lauderdale this summer.
The 52-year old, self-employed man has not carried health insurance since about 2012, saying he got fed up with the confusion and complexity of the cost for his healthcare.
鈥淚 found dealing with insurance and the bills and trying to obtain a clear itemized bill from the guy who is sending us the bill was very difficult,鈥欌 he said.
Prior to his surgery, the marine industry worker contacted friends who work as insurance claims adjusters, and they helped him to identify national averages for a hernia operation, and negotiated on his behalf with the physicians and hospital.
The negotiated prices for the outpatient surgery: $125 for the initial doctor鈥檚 visit, $1,000 for the surgeon, $1,000 for the anesthetist and $2,753 in hospital fees.
鈥淚 was expecting something in the region of $15,000 to $20,000,鈥欌 he said.
Instead, he paid around $5,000 total for his surgery 鈥 in advance, on his credit card.
That鈥檚 about the same amount as his deductible when he had health insurance, he said, minus the paperwork and confusion.
鈥淲hat鈥檚 the point of having insurance,鈥欌 he said, 鈥渋f at the end of the day I鈥檓 going to pay more? I would far prefer to accept my own risk and pay for it than to have insurance and have them turn everything around and turn it into a deductible.鈥欌
There was a small drawback: The physician prescribed a narcotic pain killer that cost $245 without health insurance. He stuck with ibuprofen to relieve the pain.
Overall, Smith said, he was satisfied with the quality of care he received and the price tag.
鈥淚t鈥檚 been much easier,鈥欌 he said, 鈥渂ecause I knew what I was going to pay.鈥欌