Part 2 Overview: How Claims are Priced and Paid
Updated: Jan 31
The Chronic Cost
Medicare's Impact on Pricing
Medicare plays a critical role in how much insurance carriers charge for premiums. Did you know, Medicare pays claims for medical services significantly cheaper than PPO plans?
"Think about it- if Medicare is paying 100% for services, then private insurers are charging us 350% more. These are essential health services, such as surgery, childbirth, and care for chronic illnesses like diabetes and heart disease." - Part 2 of The Chronic Cost by Clayton Wood.
Does that sound crazy? It should. Why should patients pay 350% more than someone on Medicare when they're receiving the same medical services and same level of medical attention? The only real reason for the price difference between Medicare and private insurers is to increase profits.
How Insurance Reimbursement Works
"Insurance carriers have been notorious for gag clauses with hospitals regarding how much they will pay them for medical services. Even though you may know that you are going to get billed at a much higher rate than Medicare, you still don’t know exactly what that rate will be." - Part 2 of The Chronic Cost by Clayton Wood.
In hopes that market competition will regulate pricing, Centers for Medicare and Medicaid Services recently put in regulations requiring hospitals to share their pricing for services and procedures.
"We know that hospitals, physicians, and other medical service providers can deliver the same quality of care to Medicare patients for a significantly lower cost. They have already agreed to Medicare’s pricing." - Part 2 of The Chronic Cost by Clayton Wood.
The good news is, there's always opportunity to negotiate lower prices that are closer, or the same as, Medicare pricing.
An Alternative to the Claims Process: Paying the Cash Price
Did you know, the cash price of medical procedures is typically significantly lower than the cost you would have paid with insurance in a PPO Network?
"A study published in JAMA found that cash prices are frequently lower than commercial insurance prices for many standard procedures. Researchers compared commercial insurance negotiated prices with cash prices for 70 services across 922 hospitals that were willing to share pricing information.
Of those who have shared information about the cash price of their services, the study’s researchers found that “cash prices determined unilaterally by hospitals are often lower than commercial prices negotiated between hospitals and insurers.” - Part 2 of The Chronic Cost by Clayton Wood.
It could save you hundred of dollars to pay for the cash price of a medical service instead of going through your health insurance company. There's so much wrong with the current health insurance system. If you have been stuck in getting better rates for your employees without giving up the quality of care, you are not alone.
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