Friday, October 03, 2003

From the CBS Marketwatch a story about the author's open heart surgery and the workings of the fee structure in medical care. Or, the difference between the "usual and customary fee" and what insurance will pay:

The surgeon in charge of fixing my heart billed $6,000, but insurance paid an agreed rate of $2,875. The hospital billed $42,000 for the surgery and my first three-day stay, but accepted $7,000 less. One specialist billed $699 for a weekend emergency consultation but was paid an agreed insurance rate of $80.

Here at the Acme Surgical Corp. is how it breaks down:
For a lap gallbladder (CPT 47562) our fee is $2,550. A managed care plan in our area pays about $2,000 while Medicare pays $600.
For construction of an A-V graft (36830), we charge about $2,600, Uncle Sam coughs up $671
Why the difference?
It goes back to the time when private insurance rates were not tied so closely with Medicare. Often private insurance would pay your usual fee, or just a little less. This was back in the days of "balance billing" where the fees from insured patients would subsidize the uninsured. Now managed care plans set fees just above or even below Medicare, depending on procedure and geography. So reimbursement is tighter and physicians start thinking about admin fees to try to improve things.
Why continue to set fees that you know will never be met in full? There is this fear that if we reduce our fees to bring them closer to Medicare, they (meaning Medicare and managed care plans) will reduce our reimbursement even lower because we have cut our fees.
Silly, isn't it?
via The Health Care Blog
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