Anyone know about PPO "discounts" ?

[leapyrtwins]

I am totally clueless about how medical insurance works, but I am extremely grateful that I have it and that it covered virtually 100% of my AN costs.  My bills, including surgery, came to approximately $100,000 and I only had to pay $400 deductible for my MRI. 

My plan has a PPO network, and thankfully both my surgeons and the hospital where my surgery was performed belong to it so my insurance company picked up the entire tab.

So, here's the question - my insurance company took the hospital and surgeons' fees and discounted them by a huge amount so that the payouts were minimal compared to the billed amount.  One example, the neurosurgeon charged roughly $18,000 for his 7 1/2 hours of time, but the insurance company discounted it and he ended up getting paid approximately $3,000.

While I'm glad the insurance company paid everything, because there is no way I could afford to, I am also left with the feeling that my medical providers (specifically the doctors) got "gyped".  Brain surgery is a huge deal, they spent lots of hours in surgery, my outcome was wonderful, etc., and I feel guilty that they were not reimbursed much, much more.

Does anyone know, when doctors belong to a medical network, are they getting some advantage I'm just not seeing? or are they just getting paid less than the norm?
 

[BeJoi]

That's a really great question, because the same thing appears to be true about my radiation treatment.  The hospital and doctor definitely get a lot less than what they charged.  But, I also suspect that that the charges are inflated to some degree, at least by the hospital.  The truth is that hospitals and doctors are profit motivated just like any other business, and so they must be getting something from the relationship with the insurance company.  I have Kaiser, and Kaiser contracts with certain hospitals in the area and not with others.  I can imagine that there are many Kaiser patients in the area, and so the hospitals affiilated with Kaiser are guaranteed a continual influx of patient "customers."  I would not have gone to the hospital I went to if it weren't 100% covered by Kaiser.  But, what I found out is that they offered the exact thing I wanted and the radiation oncologist I worked with consulted with and was trained by the radiation oncologist that worked for the teaching hospital here in Atlanta.  So, I ended up with the same treatment I would have gotten at the more well-known hospital.  Now, this isn't true for every hospital and doctor, and if I had opted for microsurgery, I would have fought to be operated on by a very experienced doctor.  But, at least for now, that is not the case.

When the hospital and doctors sign the contracts with insurance companies, they agree to the fees the insurance companies will accept.  It's known ahead of time, so they know exactly what they're signing on to.  They sign these contracts because they believe they will get more patients than if they don't accrept insurance.  I know my radiologist told me that his hospital has a set rate for all radiation, and they get paid that no matter what's involved.  Again, I suspect that if it weren't profitable for the doctors and hospitals, then they wouldn't maintain the relationship with the insurance companies. 

Anyway, these are my thoughts on the matter. 

Beverly

[OTO]

Those "provider adjustments" shown on the Insurance statements... are just that, the doctor's have agreed with the HMO that there is an acceptable reimbursement.   They just "eat" that adjustment.    I have several high school friends who are doctors and they hate the HMOs because the allowable reimbursements are so low.   However, it's obvious that the physician's charges are inflated too (their overhead and insurance cost)... 

The House Clinic is still providing information to my HMO (Blue Cross Blue Shield of Hawaii - HMSA) because they have said that the charge is not accepted.   Theoretically, if the insurance company doesn't accept the charge, House Clinic will bill me, because of the contract I signed.   So I'm holding my breath.... for that $20,000 bill....   The insurance company isn't allowing charges for the surgical consultant (the RN that sets up everything, and does all paperwork); they rejected one pre-op test; and they rejected some of the surgeon's time.   I think it maybe because it appears duplicate (e.g, during the surgery there was a neurosurgeon and a neuro-otologist).

[leapyrtwins]

Actually, I have a PPO, which is much better than an HMO in my experience, but it sounds like they follow the same "rules" when it comes to paying providers.  I'm not so much concerned about the hospital fees - which in my mind are TOTALLY inflated - but what they paid the doctors just doesn't seem fair.  I mean, these 2 guys were inside of my head (literally) for 7 1/2 hours and they both have extensive training and loads of experience.  To pay them a combined total of approximately $7,500 for 7 1/2 hours of work is hard for me to imagine.  I hope they both got something more, in the long run, from my insurance network.  The way it was, the anesthesiologist got about the same amount of compensation that each doctor did, and not only was his role much less intense, he didn't visit me in the hospital daily for the next 6 days.  It just seems to me that the 2 docs should have gotten a lot more.  At my next appointment, I'll have to ask one of them how this whole "discount" thing works.

[OTO]

My mistake... I use PPO and HMO as the same thing, although there are differences.   My insurance company is PPO - Hawaii Medical Service Association which is a independent licensee of Blue Cross Blue Shield.  The provider adjustments are the difference what the doctor would charge and what the PPO has set as the acceptable charge pay.   If the doctor is not contracted with the PPO, the doctor could bill us for the difference.... but since he has contracted with the PPO, he eats that difference. Yes in looking at the billings, it doesn't seem fair.  On the other hand... even with their overhead costs (e.g., malpractice insurance, equipment cost, office rent, etc.,) they are getting roughly $500 per hour.   Its hard to find a middle ground...

[Jim Scott]

leapyrtwins:

My provider was Blue Cross/Blue Shield, a PPO. 

I'm not an insurance expert but I can tell you that my neurosurgeon was paid the full amount of what I considered a modest fee of $23,000.  His surgical partner (another neurosurgeon) was paid $5,000. for her part in the 9 hour surgery.  I thought their fees were reasonable for the time spent and the expertise involved as well as the fact that I had an excellent outcome. The anesthesiologist charged around $6,000. and because he is a vital part of the surgical team, I think he was fairly paid.  The hospital charged a total of $58,000. for their services (4 days in the ICU @ well over $5,000. per day).  That seemed very high, but I realize that most hospitals have to cover the costs of treating the indigent and Medicare patients.  I believe the insurance companies know that, too.  My co-pays totaled over $2,000.

I assume that, these days, most doctors know full well what the insurance companies will pay for a specific surgery.  I also realize that most surgeons perform many surgeries every week.  If you do the math, they're receiving a reasonable income for their work.  My doctors never complained.   I'm good with that.

Jim

[leapyrtwins]

Jim -

my docs didn't complain either - I just feel like their time and efforts were worth SO much more than they received from the insurance company.  I'm sure none of them chose their profession just for the money, and like you say, they make a decent income, but in my eyes their services were invaluable - which may be why I wish they had received more compensation. 

Jan

[Betsy]

I could be wrong, but I think the doctors receive some sort of compensation for agreeing to be part of the HMO or PPO network.  Otherwise, how could it be worth it to be part of the network and accept the negotiated cost?

Betsy

[leapyrtwins]

I have an appt with the neurotologist on 9/19 and I plan to ask him how these "network discounts" work, since I'm still bothered by this.

I'll let you know what he says.

Jan 

[goinbatty]

I've worked in the insurance field awhile now.  This article does a good job of explaining this issue.

http://en.wikipedia.org/wiki/Preferred_provider_organization

A few other points.  For whoever is considered an assistant surgeon, the fee could be cut to around 50% or more depending on what is allowed per the insurance plan. 
If you check your benefit, there will be deductibles that must be met and then an out-of-pocket at which time coverage should be 100% of what's considered reasonable and customary.  Another point to make is that if the provider is a PPO, they cannot bill the claimant the difference between the billed charge and the PPO rates.  Hope that makes sense.