Something I noticed about health insurance

Ok, a comment by Snarf in another thread prompted me to make this one.

My husband has a lot of health issues, and we were off to the emergency room a few months ago.

I got a bill from the Hospital the other day, for a balance that is still owed. The entire bill came to, $2179.60. The insurance company paid $644.70, and my husband has both medicare and Cigna. We owe a balance of $173.99.

Here is the interesting bit, the insurance companies received what they said was an INSURANCE CONTRACTUAL ADJUSTMENT of $1360.91!!!!!!!!!!!WTF?

How is it that the insurance company can wrangle this kind of discount while Joe Q. Public with no insurance at all, would be responsible for the whole bill of $2179.60?

If people were allowed such deep discounts as insurers, people that need it, there would be no need for a national health insurance program, no?

I think Obama went about this the wrong way, because not only are people now going to be forced to carry insurance at a cost, the carriers will still get discounts!

How is this going to help? Or, can somebody explain it to me?

[edit on 20-4-2010 by Blanca Rose]

Its probably because that insurers guarantees that hospital and many ohter hospitals plenty of business & getting a discount for bulk purchases. Kind of like going to Sam's Club or Costco and paying prices different than that of regular grocers.

[edit on 20-4-2010 by prionace glauca]

reply to post by prionace glauca


Yes, but there are also one heck of a lot of people that have no insurance at all.

How could they decide on what sort of discount to give, if they don't know how many customers will be there?

And still, why should they get a preferred discount over everyone else?

I work for an insurance carrier. When a provider signs with the carrier they sign contracts and agree on "contracted amounts" for services rendered. So someone without health insurance who pay the actual billable amount because they dont have a contract with that provider. Lets say i was a primary care phyisican and my charge was 50.00 a visit. I can sign to be in an insurance carriers network and agree the price will only 35.00 to those members. I would do that because I will gain more clients since I am under that insurance companies umbrella (network).. Hope that clarifies some things for you

[edit on 20-4-2010 by MandBB]

reply to post by MandBB


Yes, thanks, but I'd also like to point out that my husband has 2 carriers, yet we still owe a balance. I guess I am surprised that 2 coverages did not cover the entire cost. If anything, I consider us over insured.

reply to post by Blanca Rose

Here is the interesting bit, the insurance companies received what they said was an INSURANCE CONTRACTUAL ADJUSTMENT of $1360.91!!!!!!!!!!!WTF? How is it that the insurance company can wrangle this kind of discount while Joe Q. Public with no insurance at all, would be responsible for the whole bill of $2179.60

Let me answer your question with two facts:

1.) Many people are not aware of the fact that individuals should ALWAYS NEGOTIATE with hospitals on the balance due. Hospitals EXPECT you to, and if you don't, you become the loser..

2.) The second part of the answer to your question lies in the fact that for-profit hospitals purposely over-inflate their bills, and when the remainder does not get paid, they have a built-in LOSS to reduce their "profit" and avoid taxes.

Hopefully, you now understand why an aspirin can "cost" $100 on a hospital bill.

Of course, this is nothing new. Our government is adept at producing screwdrivers that "cost" $900 to manufacture!

reply to post by ProfEmeritus


That is great information to know, not just for me, but everyone. Had this not been a situation where my husband thought he was having a heart attack, we wouldn't have gone to this particular hospital anyway.

For some of his other proceedures, I am going to call around and check on prices.

I love to haggle, so, I going to give the hospital a call about the remaining balance.

reply to post by Blanca Rose


Yes sometimes having more than one carrier creates COB (coordination of benefits) issues

The reason for all this is "cost-shifting."

Hospitals charge excessive amounts because they know that the contracted carriers, such as medicare, medcaid, Blue Cross, Cigna, etc., are going to pay a discounted amount anyway. They want to make sure that those "covered" costs make up for the money they are losing in areas like the E.R., where many patients receive virtually all of their health care, without the hospital able to recover those costs. Whatever they lose in one place, they make up for in the others.

For the uninsured, the E.R. is guaranteed care, because Federal law requires any hospital that receives Medicare payments to have an "Open Door" policy in the E.R., so that no one is turned away because of poor or no insurance coverage. So even when a patient has been seen thirty times, and paid nothing for their previous care, the E.R. cannot refuse to see them. These costs, then, are "shifted" to those with insurance or those with the actual ability to pay their bills.

As has been mentioned before quite well, the doctors and hospitals agree to capitated payments because even those capitated payments assure that they are going to get paid something. Ask any doctor in private practice, those few who remain, how much money their patients owe them that they can't collect, and it will stagger the mind of most people.

The health care system has been broken for a long time, but still able to limp by. This is but one more example of how messed up the entire system really is.

reply to post by Truth1000


It's interesting you mentioned this. One of my sons broke his arm while skateboarding and I took him to the emergency room. I also had Cigna at the time, and while we were waiting to see a Dr., the billing department came in the room and asked that I pay my deductible on the spot.

A few months after the visit, I got a bill in the mail for the entire amount of the ER visit. I called the hospital and they told me that they no longer accepted Cigna at the time of the visit. Of course I protested, explaining I paid the deductible, and was not told at the time they did not accept Cigna patients. The hospital said it was because of the turn around time that Cigna took to pay claims. I refused to pay that bill, because considering it was not a life threatening situation, I could have easily driven my son to another hospital that did accept that carrier. I had almost forgotten about this, until your post. Long story short, I did not end up having to pay that hospital anything because they accepted the deductible.

reply to post by Truth1000

For the uninsured, the E.R. is guaranteed care, because Federal law requires any hospital that receives Medicare payments to have an "Open Door" policy in the E.R., so that no one is turned away because of poor or no insurance coverage.

That is true. However, more and more hospitals are now REJECTING Medicare, forcing longer lines, and less care at those hospitals that still accept Medicare patients. The ultimate result of ObamaCare is that the cost of these rejections will ultimately fall on the taxpayer, resulting in much higher taxes to pay for those patients. Ultimately, as I have said on other threads, the result will be a complete tak-over of health care by the government, an extremely high tax bill for the average worker, and a complete collapse of the economy. This is not supposition, this is fact. Ask any honest economist (if you can find one anymore). The system is not sustainable. The entire US economy is a Ponzi scheme. Once our creditors accept that, the entire system crashes. It truly is ironic that Congress now recognizes what Goldman Sachs and other firms did, but FAILS to RECOGNIZE that our entire economy is in the same position. The economy WILL fail. Of that, there is no doubt.
I would strongly suggest that you convert your worthless dollars to items that will help get you through the next decade, when your dollar becomes worthless, except as kindling for the fire in your fireplace, should you be fortunate enough to have one.
Let's top making believe that everything is alright. It is not.

[edit on 20-4-2010 by ProfEmeritus]

When two insurances are involved, there is still a primary and secondary. The primary insurance sets the total amount that the contracted provider will receive. Then they figure their payment percentage of that total. The secondary will then pay their percentage of that cost total. Any remaining costs are bourne by the patient.

As an example: Mr A goes to have a procedure that is billed for $1,000. The primary decides the acceptable fee is $630. They pay sixty percent of the acceptable fee, which comes to $378. This leaves the bill at $262. Now the secondary isnurance agrees to pay twenty percent of the remaining balance, which comes to $52.40. That still leaves $209.60. That will be the patient's portion, under those rules.

There are many variations on these rules, but this is one example.

reply to post by Truth1000


Interesting....so the secondary insurance only has to pay a percentage? They are already only responsible for a portion of the contractural amount of which is already reduced.

What a freakin scam!

reply to post by Blanca Rose

To make matters worse, if the coordination of benefits is between two private insurers, you can be sure that there are fine print clauses, designed to deny coverage for many "coordination" of benefits situations. For instance, in many cases, if the primary denies coverage, there are instances when the secondary will then refuse to pay. At a minimum, you can be assured of a run-around for many months, even if they eventually do pay something.

CMS has attempted to lay out specific details when Medicare is coordinating benefits, and I applaud them for that. However, if Medicare is not involved, then you can assured that you will have months and months of battling both insurance companies to get either to pay. Each will point at the other.

reply to post by ProfEmeritus


Yes, and in the mean time, who gets the collection calls?

Thankfully, owing the balance that we do, is not a real problem, considering the situation could have been a lot worse.

Honestly, I don't know how people who have catastrophic illnesses or members of their families can endure such rigamarole!

My husband has an incurable disease, and so far is doing pretty well considering it all, but having to mess around with this kind of nonsense could push a person over the edge!

Originally posted by Blanca Rose


Here is the interesting bit, the insurance companies received what they said was an INSURANCE CONTRACTUAL ADJUSTMENT of $1360.91!!!!!!!!!!!WTF?

How is it that the insurance company can wrangle this kind of discount while Joe Q. Public with no insurance at all, would be responsible for the whole bill of $2179.60?

You unknowingly answered your own question. It's contractual. The hospital accepts a discounted rate for the volume of patients that the insurance plan will bring in.

If you have no insurance, they will bill you for the full amount; however, that bill IS negotiable. I once negotiated a $5K bill down to around $1,100 and some change. The key here is that you have to call and negotiate...negotiate hard...most people won't do that; thus, the hospital gets the full payment.

Sorry to hear about your husband, Rose.

My prayers are with you.

reply to post by Blanca Rose

My husband has an incurable disease, and so far is doing pretty well considering it all, but having to mess around with this kind of nonsense could push a person over the edge!

Believe me. I fully understand your anger. Since I retired several years ago, I spend more time battling health insurance companies than any other chore that I have.

In my post above, I forgot to mention something important....conspiracy wise...

Because hospitals accept these lowered rates, it has led to up-billing and diagnostics/lab work/imaging that are not medically necessary, but the insurance allows it (again at a discounted rate). They (hospitals, family practitioners, etc.) do this to recoup on the discounts given. This is a major issue in health care costs...something that should have been directly targeted in the health care bill...but that's another thread.

[edit on 20-4-2010 by Aggie Man]

reply to post by Aggie Man

it has led to up-billing and diagnostics/lab work/imaging that are not medically necessary

Star for you. Excellent point. The AMA has estimated that approximately 30% of all tests and procedures are due to defensive medicine, as a result of fear of lawsuits.