The story of Dr. Highcost, patient Blamethem and insurance company Badguy, why health care reform … isn’t

This is a true story; the names are changed to protect the guilty and the misguided.

A very sick person we call patient Blamethem goes to a doctor who is not in the network of his health plan. Generally that means the provider charges high fees, which is why he is not a participating network provider. Hence, the patient used Dr. Highcost.

Dr. Highcost performed surgery on Mr. Blamethem on two occasions, once in January and again in February.  The charge in January was $15,000 and insurance company Badguy allowed a reasonable and customary fee of $14,504 taken from the Prevailing Healthcare Charges System reasonable and customary fee schedule as stipulated in the employer’s plan. The net benefit payment was $12,858.50 because of the co-insurance.

In February, Dr. Highcost performed three procedures on the same day.  For one he charged, $15,000, for the second $5,000 and for the third $2,250 or a total of $22,250.  Badguy insurance company allowed a total of $8,203.50 under the reasonable and customary schedule and because there is a fee adjustment when multiple procedures are performed at the same time, in other words, one anesthesia, one use of the operating room, one trip to the hospital, etc.  Since there was no longer coinsurance to apply, Badguy insurance company paid  80% ($8,203.50) of the allowable charge leaving Mr. Blamethem with bill of $14,046.50.

In his appeal of the payment, Mr. Blamethem says in part. 

“I do not understand how Badguy can deny payment for the second surgery.” “Am I to understand the Badguy regulations state that I should not have had the second surgery and increase my risk of my disease spreading?” “How can Badguy deny payment for a surgery that may have saved my life?”  “Dr. Highcost should be reimbursed for at least the 80% allowed for surgical services out of network.”

Do you recall any part of the story where Badguy insurance denied payment for any of the services? It did not.  No one, least of all Mr. Blamethem, except Badguy questioned the fees charged by Dr. Highcost. Rather, Mr. Blamthem quite understandably focused on his life threatening illness and like most of us could care less what Dr. Highcost charged (as long as Badguy paid the bill – in this case, because it is a self-insured plan it is actually the employer paying the bill). 

What to do, what to do? 

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I thought you said this would control health care costs?

Dr. Highcost believes his fees are justified even though he charges above what his peers charge for the same service in the same area.  Mr. Blamethem blames Badguy for not paying what the doctor charged even though he knowingly used a doctor out of network and should have known he was at risk for fees above reasonable and customary levels.  Badguy is administering the plan as written by the employer and union.

This scenario happens every day and yet, there is nothing in PPACA to address such situations except to limit the ability to recoup the cost of such oversight by insurance companies. In fact, there is very little in PPACA that addresses the cost of health care at all. 

Should Dr. Highcost and the physicians like him simply go on charging what they want?  Should insurance companies and employers pay whatever is charged? Should patients have any responsibility for the choices they make and the charges they incur? 

Congress did not try to figure it out, so I guess we just go on blaming insurance companies for charging high premiums.

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