How does medical pricing vary, with and without insurance?
December 9, 2016 9:41 AM   Subscribe

If two people walk into a facility for an MRI, one with health insurance, one without, will they be charged the same? Assume both are paying out of pocket because insured person has a high deductible. Does insured person still get a better rate? Or does it vary? Hoping someone with knowledge of medical pricing/billing can answer this.
posted by swheatie to Health & Fitness (8 answers total) 5 users marked this as a favorite
No. No, they will not. Insurance companies negotiate the prices with the facility.
posted by Melismata at 9:45 AM on December 9, 2016

The insured person will almost always pay less, due to insurance negotiated rates. As part of the insurance company's contract with the provider, they set rates for everything. So let's say the list price for an MRI is $1000. The insurance company can say "nope, we think the cost should be $800" and that's the "negotiated rate."

That said, if you pay cash, you have a couple options. One is to set up a payment plan, where you pay $X/month (you can usually spread it over a year). The other is to offer to pay up front but ask to have the cost reduced to the insurance's negotiated rate. Often providers will do that, because they'd rather get paid *something* now than try to chase you down for it later.
posted by radioamy at 9:48 AM on December 9, 2016

I have a high deductible and I pay the negotiated rate, not the list price. My Explanation of Benefits shows both.

Cash patients don't have to pay the list price, either, but they have to negotiate on their own.
posted by muddgirl at 10:01 AM on December 9, 2016 [2 favorites]

I have been in both situations. Where I have been charged more since I did not have insurance, as well as where I was charged less than what the insurance company would have been charged had I been insured.

It pays to clarify upfront and to negotiate (although good luck getting them to 100% stick to what they tell you upfront....sigh). Get it in writing if it is a significant amount to you.
posted by cacao at 10:10 AM on December 9, 2016

So, as a starting point, every procedure that a hospital or imaging center performs will have some kind of list price, which is the same for everybody - the total of these are called the provider's "gross revenue". Almost nobody, insured or self-pay, will pay this amount without some kind of adjustment applied, though, and what adjustments get applied varies a lot based on all kinds of circumstances - the total of charges after all the adjustments are applied is the "net revenue".

How that list price gets set in the first place is sort of insane too, and has basically zero relationship to a provider's actual costs, but this answer is already going to be a novel so we won't dwell on that too much.

The way that the insurance companies negotiate rates varies a lot depending on how much leverage the provider and the insurer have - sometimes they may just negotiate to pay, say, 65% of gross revenue for all outpatient charges. Other times, they may just provide a fee schedule of their own and say "For all MRIs of the lower extremities without contrast performed on patients who aren't admitted as inpatients, we will pay you $650 dollars, no matter what you charge us." If the MRI happened during an inpatient stay, the most likely scenario is that the whole stay gets paid at a single case rate for the whole stay, based primarily on the patient's diagnoses and whether they need surgery - the MRI is totally irrelevant to the actual net payment, except in the sense that the average costs of MRIs for all similar cases gets bundled into the case rate in an oblique way.

Regardless, as everybody is saying, the insured patient with the high deductible still gets all of the payor's contractual adjustments applied before the balance drops to them. Another interesting question is if the payor denies the claim entirely - whether the provider writes the denied balance off, or still goes after the patient for it, depends a lot on the reason for the denial, the provider's policies, and sometimes just the quirks of how carefully their patient accounting system was set up.

For an uninsured patient, there are a variety of discounts that might apply too. In addition to negotiating a discount for prompt payment or a payment plan, any facility that takes Medicare will probably have some kind of charity care program for uninsured and indigent patients, though in many cases it may be a totally inadequate one for the needs of the patient population and very difficult and confusing to apply to.

This isn't done through the goodness of the hospitals' hearts at all, but because there are certain Medicare and Medicaid reimbursement incentives for having a charity care program and to, (where applicable) keep their non-profit status. Also, collections efforts cost money, and where the patient truly has no ability to pay, it's actually more cost-effective to just write the account off to charity up front, rather than to spend money on trying to collect a balance that will just age into bad debt anyway. However, most hospitals are really bad at running charity care programs effectively.

Hospitals will also try to figure out if their uninsured patients are eligible for Medicaid and help them apply if they are - again, not out of the goodness of their hearts, but so they're more likely to get paid. A freestanding imaging center is a lot less likely to have the resources to do this. Even a hospital is much more likely to put the effort in if the MRI happens as part of an expensive inpatient stay.
posted by strangely stunted trees at 10:37 AM on December 9, 2016 [7 favorites]

So, I'm assuming you're in the US and ACA applies to you. Part of the ACA was that Medicare hospitals charge uninsured individuals Medicare rates for services. In theory, this could be available to anyone that doesn't use their insurance, but TBH, my employer (large, multi-region, managed care org) goes to great lengths to find an applicable insurance to bill for hospital visits for exactly this reason.
Relevant WSJ article. (Maybe paywalled)

Strangely Stunted Tree's correct about how hospitals typically work, assuming someone isn't trying to manipulate their provider.
posted by fiercekitten at 11:25 AM on December 9, 2016 [1 favorite]

Medical pricing is also all over the map generally from facility to facility.
posted by veery at 12:08 PM on December 9, 2016

Assuming the procedure is covered, the insured patient will pay an amount which mostly comes down to their allowed amount of any given procedure vs what the provider charges (example: provider charges $400 for x procedure, insurance contract with provider says they will accept $250), the specific terms of the policy (example: insurance covers 90% of allowed amount, patient responsible for remaining 10%), and how much of the deductible for the year the patient has left. The deductible will have a huge effect on the bill because until it is met, the patient will be responsible for a majority or the maximum amount of the allowed amount. There will be a huge difference in the insured patient's bill whether they have paid their deductible for the year or not. There may also be a co-pay and possibly other factors to consider but that is the gist of it.

An uninsured patient will be charged for the entire provider bill but the provider will most likely be willing to offer that patient a no-insurance discount. It might sound odd but an uninsured patient in the case of one isolated procedure might have to pay less than the insured patient if they are given a discount by the provider.

My best guess for the MRI situation is if the deductible is already paid for the year, the insured person's bill will most definitely be lower than that of an uninsured person. If it is not met, the insured's bill might be less or more than that of an uninsured person considering the uninsured is probably eligible for a no-insurance discount from the provider.

It's also worth mentioning that the total, initial bill is the same for both patients. If an MRI costs $1000 total, they will both be charged that amount. The difference is the charge for the insured first gets sent to insurance, and then once processed gets sent to the patient. So while the insured patient might get a bill telling them to pay, say, $100, the cost of the MRI is still the same for any patient.
posted by atinna at 6:28 PM on December 9, 2016

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