My wife had scheduled an elective but needed surgery for late December, 2016 (just days before I left her with the kids to go to North Carolina**). We had good insurance through my former employer. The individual deductible after the health incentive bonus is $600 and then there is a 20% co-insurance for the next $10,000 in expenses. By a rough estimate it is 83% to 85% actuarial value coverage. It is somewhere between a Gold and a Platinum plan. Up to the surgery, she had spent less than $50 in deductible so she still had a lot of deductible to satisfy before the co-insurance kicked in.
Any an-patient surgery for a non-bundled case will produce at least three sets of claims. The first claim is the surgeon’s professional claim. It compensates the surgeon for their skill and time. The second claim is the anesthesiologist for their skill and time as well as the good drugs. The third claim is the facility fee from the hospital. It is the rent for the operating room, recovery room and then room and board. This is the simplest billing situation. There are numerous situations where the claim situation will be far more complex.
And now let’s see where this split system produces a very patient unfriendly experience that has a root cause of increasing cost sharing obligations.
The week before the surgery, the surgeon’s office pre-authorized the diagnosis and procedure codes. They also received an estimate of how much cost sharing my wife was subject to and the split between deductible and co-insurance. Before the operating room reservation would be confirmed, the billing manager told my wife that she would have to pay her estimated cost-sharing for the surgeon’s professional claim. This was deductible plus some co-insurance. My wife was surprised and asked why. She was told that with increasing deductibles the surgeon’s office does not want to chase patients for co-pays and deductibles that they won’t see. My wife pulled out a credit card and made the payment.
A week later, she checks into the hospital, gets her surgery and is released the next afternoon.
All is good and then we get into claim processing cycle heck.
In the middle of January when I am home for a week from Duke, we get the first bill from the anesthesiologist. The topline number looks fine, and I expected to see only the co-insurance apply. Instead all of her deductible was applied and then co-insurance was applied to the increment. This is odd.
My wife asked me to look into it. I happened to have worked at the insurer in question for years and I know a couple of things about claims. I saw that the anesthesiologist belonged to a group that tends to cycle their claims quickly. They submit claims multiple times a week. My guess is the claim arrived by Christmas Eve sat over Christmas then hit payables to generate a partial payment to the provider and an Explanation of Benefits for us within fifteen business days.
The surgeon is not obligated to bill quickly. He belongs to a group that tends to both bill slowly and bill complexly. Any claim that he submitted for my wife’s surgery either had not arrived or had not worked its way through the pre-payment cycle when the anesthesiologist claim was initially satisfied. The claims system never saw that my wife paid her cost sharing to the surgeon before the surgery. So the claims system applied the full deductible to the anesthesiologist bill.
We called UPMC and we called the surgeon and we called the anesthesiologist. Everyone agreed that this scenario was the one that was most likely to have occurred. The anesthesiologist’s office wanted us to pay the inflated bill in full and they would refund us eventually when their claim got adjusted. We declined that gracious offer to float them interest free cash. Instead, we were told to wait for the surgeons’ bill to clear claims.
On Tuesday, I’m again in Pittsburgh for the week. We received the hospital facility explanation of benefits and bill. It again had her deductible satisfied and then co-insurance kicking in for the rest. I was somewhat amused. My wife was very frustrated. Again, we were hitting timing problems. The two technical charges were most likely getting backed out and reconciled so for a time, her cost-sharing bucket had been emptied out as the professional charges were getting cleaned up manually. During this window, her hospital claim went through and was charged the rest of her deductible again. Each of her claims hit maximum deductible the first time through.
These timing issues are not unusual. All claims were received and then processed initially within sixty days of service. That is well within typical expectations. Most commercial contracts will allow providers to submit their initial claim for a service within at least a six month window. Claims will usually take at least a week to process internally and can sit for months if there is something odd going on. All claims in and out within sixty days is the system operating under normal specifications.
We will be able to resolve the problem without too much more frustration because I used to be a claims system plumber. I know where things can go loopy. Most people don’t have a claims system plumber of any sort much less the specific claims system in question in their immediate families.
This is not patient friendly.
The root cause of this failure is the lack of provider trust that they will get paid all of their contracted amount in an environment of higher individual cost sharing obligations. If they perform a service and don’t get paid, they are out either the time and effort to collect or they are completely out of some increment of the money. Their fix (which is completely rational from their perspective) is to require pre-payment of the estimated individual cost-sharing ahead of time. If the patient does not pay, they are not performing the surgery. If they underpay slightly, the surgeon is out very little money and if they overpay, the surgeon cuts a check in sixty days.
This would work, well enough, if there was a guarantee that both the surgeon’s technical claim was subitted ten minutes after the surgery was completed and that it was guaranteed to pay first. Deductible and out of pocket accumulators would be properly credited and every other related bill would be paid correctly with the appropriate cost sharing attributed.
There is no way under the current fee for service model that this can be guaranteed. Most of the time, it won’t matter or it won’t be noticed but weird stuff will happen that is patient unfriendly.
This problem is resolved under bundle payment systems where the provider is taking on performance and cost risk. It could also be managed better if the surgeon in an acute care episode was forced to act as the general contractor. They would take on no performance or financial risk but they would be charged with coordinating both care and the financial arrangements with the other billing and service providers. At that point all of the associated claims would hold until the general contractor claim went through even if the order of arrival was random.
But as long as we are in a system of higher deductibles and cost-sharing and a system where there is significant incurred but not reported claims that just have not arrived yet, it will be patient unfriendly.
** I had to include this line in order to get her permission to tell this story