Obamacare is pushing American families to take risks with their healthcare that the law’s originators never imagined. Consider Rebecca, a hairdresser in a suburb of Dallas, Texas. The mother of three children ages 12, 14, and 16, Rebecca is self-employed. Her husband, a graphic arts designer, also works freelance. Together they earn $60,000 to $85,000 a year, depending on the strength of the local economy, and because they are self-employed, they have no health insurance from an employer. When Obamacare went into effect, requiring that the family get insurance coverage or pay a fine, Rebecca and her husband opted for the fine. Their analysis? Buying Obamacare coverage would cost them $700 a month in premiums, or $8,400 a year, which was higher than the Obamacare tax of 2 percent of their annual income, or $1,450. What’s more, Rebecca’s out-of-pocket cost for the family’s healthcare was typically just $1,000 a year. Even with the fine, she judged they were still ahead financially. But then the worst happened. One of her children required surgery estimated to cost $22,000. Rebecca sprang to action and negotiated a better deal. She got the hospital to reduce her costs to just $4,000. “With no insurance, they slashed my prices dramatically because I self-pay,” she said. “My family cannot be denied medical care, so I know we will be taken care of.” Rebecca also knows that because she doesn’t have coverage, she can go to virtually any hospital she needs. “I can go anywhere,” she says.
Rebecca is one of millions of Americans who have opted out of the system. Although she is savvy about the healthcare system and uses its weaknesses to get the coverage she wants, the results, frankly, are not reliable. Patients simply cannot count on healthcare providers to discount their services. Yet there are some 35 million people still uninsured in this country who are making the same bet Rebecca is—that they can do better on their own than they can paying the hefty premiums and deductibles required by Obamacare. The irony is that Rebecca is doing exactly what Obamacare was designed to prevent, which is to say that she and her family are free riders on the system, taking services without paying for them. What is becoming increasingly clear is that the president’s healthcare reform initiative isn’t making affordable care broadly available; it’s making healthcare unaffordable for many.
In this chapter, I’ll help you and your family negotiate the confusing healthcare system that Obamacare ushered in. I’ll show you how to read a medical bill and negotiate prices and arm you with the information you need to strong-arm providers. You’ll learn how insurers “code up” your bill for maximum yield. I’ll guide you through the process of controlling your costs and improving your care. Forced to find a new doctor because of insurance changes? I’ll show you how to cross that Rubicon too.
To navigate this brave new world, however, you’ll have to understand how Obamacare has changed the healthcare system. As Rebecca found, the most financially sound way of getting care may not be the most obvious. Unfortunately, five years after the Affordable Care Act was signed into law, many of us are still delaying care as a way to reduce our healthcare costs. In a recent poll, one-third of Americans said they or a family member delayed medical treatment because of the cost. That may mean opting for home remedies, cutting pills in half to save on prescription costs, or simply ignoring symptoms. That is happening because Obamacare is actually raising prices for healthcare consumers rather than lowering them. The promises of the president’s signature healthcare legislation far outweigh the reality as the law enters its fifth year. One of the main selling points of Obamacare was that 46.3 million uninsured Americans would be guaranteed health coverage through the president’s plan or their employers, Medicaid, or the Children’s Health Insurance Program (CHIP). Yet at year 5, more than 35 million Americans, like Rebecca, were still not insured. The president promised that Americans could keep their employer-sponsored plans, saying on 37 separate occasions that “if you like your healthcare plan, you can keep it.” As the law went into effect in 2014, however, 4.7 million Americans lost their insurance coverage because their plans didn’t meet the ACA’s strict standards. Many of them were able to reenroll in new plans, but often with higher premiums in new provider networks that might or might not include their preferred caregivers. One of the great promises of Obamacare was that it would “bend the cost curve” and help “middle-class families.” This is another goal that continues to elude the president. The average deductible for Obamacare coverage under the bronze plan was $5,081 in 2014, 42 percent higher than in comparable plans available to Americans using employee-sponsored coverage. When insurers began to file their plans for Obamacare coverage and costs for 2016, some asked for premium hikes of as much as 50 percent as they began to understand firsthand exactly what sorts of people they were insuring and what it would cost to give them coverage. Even the costs of working Americans who get insurance from employers is rising, although the rate of growth of those costs has slowed. According to the Kaiser Family Foundation, average annual premiums for employer-sponsored family health coverage were $16,834 in 2014, up 3 percent from the previous year. Deductibles in employer plans continued to rise as well. Prices for policies in the individual market are rising as well, increasing 50 percent in 2014 as providers were forced to extend coverage to meet Obamacare’s strict requirements.
The law’s ballooning costs are largely the result of its failure to slow overall healthcare spending. Nationwide, health spending grew 5 percent in 2014, compared with 3.6 percent the year before, according to a report from the Altarum Institute. The Centers for Medicare & Medicaid Services forecast that spending would grow 6 percent per year between 2015 and 2023 largely as a result of the ACA’s implementation. The president was adamant in promising that the Affordable Care Act would not add a dime to the deficit. I wish it were so. The reality is that the law was riddled with budget gimmicks that made it appear as if it paid for itself, but it does not. He originally claimed the plan would cost more than $900 billion over the next decade, but that price tag has ballooned to $1.2 trillion according to the Congressional Budget Office.
Has the law improved the quality of care? The answer is no, especially for seniors. The ACA made substantial cuts to Medicare to fund the law’s subsidies for nonseniors on Obamacare, says Doug Holtz-Eakin, a former director of the Congressional Budget Office and president of the American Action Forum. Cuts to Medicare mean seniors will have less access to the doctors and care they need.
On every point, every promise, Obamacare has failed to deliver for Americans. What’s more, the law has transformed the industry, which accounts for a fifth of total economic spending in this country, into a monolith even more unfriendly to consumers. In a world driven by complicated Obamacare rules and regulations, doctors are searching for cover. Many are finding welcome partners in hospital groups that are expanding their market share. Fewer doctors are willing to operate independently. They are taking down their sole-proprietor shingles and becoming employees. That increases the difficulty of getting the best care because when a doctor works in a government-run system, taking personal responsibility day to day is simply not rewarded as highly as is getting along and going along. If the experience at the Veterans Administration is any example, we could be in for real trouble. Statistics on the patient-doctor relationship offer little encouragement. Patients spend nearly twice as much time on average waiting for their doctors as actually talking to them. Once you get past the waiting room, the average doctor visit lasts just 10 to 15 minutes. Slender reimbursement rates mean the clock is ticking even before you sit down on the treatment table. And if you thought you’d find an eager listener to your healthcare concerns, think again. The average patient gets interrupted just 23 seconds into describing what his or her medical problem is—by the doctor, no less. The old Marcus Welby style of practice—sit, listen, evaluate—is long gone.
Insurers are running for cover as well. ACA nationalized the industry, allowing government to decide appropriate levels of profit for every company. Insurers that were in merger mode even before healthcare reform was signed into law are doubling down on the idea that bigger is better. In the state of Rhode Island, for example, Blue Cross & Blue Shield controls 95 percent of the market. The result of all this consolidation? Less choice and fewer options for consumers.
It’s not just you against industry bean counters; it’s also you against the government, which controls roughly half of healthcare spending in the country through programs such as Medicare, Medicaid, the Veterans Administration, and CHIP. Government bureaucrats’ deep involvement in this industry results in erratic pricing. Want a Tylenol? If it’s dispensed in a hospital, a single acetaminophen tablet could cost $1.50. For $1.49, you could get an entire bottle of the stuff at your local drugstore.
All this might be acceptable if the country could boast the best care in the world. Unfortunately, it can’t. Among 17 high-income countries studied by the National Institutes of Health, the United States had the highest or nearly highest prevalence of infant mortality, heart and lung disease, sexually transmitted infections, and disability. The United States is at the bottom of the list for life expectancy. Men in this country live shorter lives—four fewer years—than do those in other wealthy developed nations. Yet we are paying more for care than are those in similar countries, an average of $8,402 per year per person. In other words, more spending, worse results.
HOW TO GET THE MOST OUT OF YOUR INSURER
Clearly, costs are continuing to rise for Americans, and behind the scenes doctors say they struggle to get reimbursed by insurers to cover their costs. A pediatrician at a major New York hospital told me the excuses she receives from insurers run from “We didn’t receive your paperwork” to “You didn’t fill out the paperwork correctly” to “You’re not covered anyway.” In fact, there is a war between insurers and doctors. Behind the scenes, an entire industry has grown up that advises medical offices on how to apply for reimbursement. Doctors spend hours learning about the complicated coding required by insurers to file a claim. There are seminars, newsletters, and even hacks describing these codes, which are called CPT (Current Procedural Codes) and are similar to SKU numbers on products in stores. File too aggressively and ask for too big a reimbursement, which is called “coding up,” and the doctor’s office is subject to fraud charges. Ask for too little and the doctor’s costs aren’t reimbursed.
Hospital groups are putting the pressure on doctors for savings by using “big data” to monitor doctors’ work. The move is possible because of Obamacare requirements that patient data be made electronic. The upshot of these trends is that consumers are stuck in the middle and are being asked to foot a bigger proportion of their costs. “The insurers don’t want to pay and hospitals and doctors do want to be paid, and the patients would like to have their services covered,” says one surgeon.
Getting the best outcome, then, can be tricky. To get the best results, start by reading your insurance policy. No doubt it’s boring, but reading it is the only way you’ll know what you’re covered for. If you have employer-sponsored coverage, you can get a copy of the policy from your human resources department. The details of ACA coverage also are available directly from insurers. If you are lucky enough to have your coverage provided by an employer, use that leverage to help get your bill paid. Your human resources department can run interference. Many large companies hire healthcare advocates who can help employees negotiate costs. If you are facing an expensive surgery or procedure, an advocate is paid a percentage of any settlement he or she gets for you. If you aren’t in a corporate plan, you can independently hire an advocate to take your case. At a minimum, a healthcare advocate can review your bill and your situation, looking for errors and getting the bill adjusted on the basis of his or her knowledge of competitive rates. Some people hire healthcare advocates to manage all their healthcare needs, including booking appointments and managing bills. The truth is that any three people can walk into a doctor’s office with the same problem and be charged different amounts.
To get the most out of your insurer, you need to understand deductibles. Eighty percent of workers with employer-provided health coverage pay a deductible, an out-of-pocket payment made by employees, before their coverage kicks in. In 2014, the average deductible was $1,217, up 47 percent from $826 five years earlier, according to Kaiser. The amount you pay out of pocket before your insurer starts picking up the tab can be confusing. Even if you pay the entire bill from a doctor for a service or test, the full payment may not be applied to your deductible. An insurer may credit you for less, say, the costs that Medicare would reimburse plus 10 percent. Let’s say you run up a $250 bill for an exam from your primary care physician. An insurer may credit you for the amount Medicare would reimburse the doctor for a similar service, say, $80, plus another 10 percent, or $88, rather than the $250 you paid. You also may find that you have multiple deductibles, one for medications, another for your provider’s treatments, and yet another for hospital treatments.
SHOPPING AROUND FOR THE BEST POLICY
Typically, every fall, employers offer their workers options when it comes to healthcare coverage. Don’t let your insurance renewals go on autopilot without first understanding any changes in coverage and costs. If you have coverage under ACA, make sure you understand whether you will be automatically renewed in the same policy you had last year. Be sure to compare both monthly premiums and deductibles to get an apples-to-apples comparison of your total costs. Inside or outside Obamacare, healthcare insurers change their policies every year. One way to save money is to use a health savings account. On average, the cost of coverage associated with a health savings account is 20 percent less than that of a plan structured as a health maintenance organization. That’s the case because many employers make contributions to a health savings account (HSA) on your behalf and the money is yours to keep even if you switch jobs. HSAs offer a triple tax advantage. Tax-free contributions generate tax-free interest that can accumulate until retirement and be used tax-free for medical expenses. Contributions are limited to $3,350 per year for individuals and $6,650 for couples. Some employers offer flexible savings accounts (FSAs), which allow an employee to set aside pretax dollars to pay for certain medical expenses and some dependent care expenses. Limits for contributions are $2,550, and some require you to use the money or lose it, unlike HSAs, which are more like 401(k)s. The trick to managing an FSA effectively is to submit all your eligible expenses, deductibles, copayments, and coinsurance costs not reimbursed by insurance. Check your balance well before the annual December 31 deadline to be sure you use all your money. It also pays to evaluate your spending from year to year to make sure you set aside enough dollars to cover routine costs.
One of the negatives of Obamacare is that it has encouraged insurers to offer fewer doctors and fewer hospital options to consumers, a phenomenon health experts call narrow networks. About 50 percent of ACA plans and almost 25 percent of employer-based plans are narrow network plans that may include only a third to half of the largest hospitals in their network and a similarly small number of doctors and specialists. As you shop around, be sure that the doctors and facilities you need are in your plan. Getting care that is out of network will cost you (I will explain in a moment). There’s only one source of funds for doctors who are not in your insurance network, and that’s your pocketbook.
WHEN YOU SHOULD CHANGE DOCTORS
People spend more time researching and buying a car or choosing furniture than they do picking a primary care physician, according to the American Institute for Preventive Medicine. Not only do consumers do little due diligence in choosing a doctor, they are unlikely to change doctors voluntarily. Many people are reluctant to switch even if a doctor is no longer in their network. They’re nervous about offending the doctor and reluctant to dump a physician who knows their history. But here is the new reality: as insurance companies consolidate and networks change, being forced to find a new doctor is much more likely. What’s more, as you change and age, the doctor you originally chose to serve your family may not be the right fit anymore. That said, choosing a new doctor isn’t easy. In fact, with some 850,000 doctors out there, it can be overwhelming trying to find the right match for you.
Here are the key factors to picking the best physician: Start your list with the doctors who are in your insurance network. Picking a physician outside your network is a recipe for financial disaster, because you probably will end up picking up most of the bill for every single visit even if you are simply getting a flu shot. If you figure that the average cost per visit is $200 and the average family of four goes to the doctor’s office 16 times a year, you could be facing a hefty $3,200 tab every year. It is much better to make the average $22 copayment.
Solicit advice from friends and family. Often, those closest to you have experience with local doctors. Ask them the questions that are difficult to answer: Is their doctor responsive? Do you spend hours waiting to see him or her? Ask whether the doctor is a good listener; remember, the average physician interrupts his or her patients just 23 seconds into their description of their ailments. Does your physician take questions by e-mail? How nice is the office staff? When you’re sick and seeking care, all these issues take on greater importance.
Find out your doctor’s credentials. Credentials matter, and many of them have to be updated periodically. A gynecologist, for example, has to pass a written and oral certification every six years with the American Board of Obstetrics and Gynecology. Your insurer’s website may give you basic information on the educational and professional backgrounds of its member physicians. If it does not, check out these organizations: Administrators in Medicine (DocBoard.org) provides information on licensing and disciplinary actions for doctors in 18 states, and the American Medical Association’s DoctorFinder (https://extapps.ama-assn.org/doctorfinder) has comprehensive information on member doctors, including their educational backgrounds and areas of specialization.
Check out online patient reviews as well. Sites such as HealthGrades.com and Vitals.com rank doctors on the basis of patient reviews.
HOW TO DECIPHER YOUR MEDICAL BILL
There was a time not that long ago when a patient might never see a medical bill, much less have to read it. However, few of us can afford to be blissfully ignorant anymore as rising costs force insurers and employers to push higher deductibles and co-pays onto consumers.
What’s worse, when you get your bill, you may realize it’s written in a language you don’t understand. Bills are full of complex coding and shorthand that I think insiders hope you never really understand. That strategy is working so far. Fully 77 percent of Americans say they don’t understand either the medical bills they receive or their health insurance. But it pays to be persistent. According to Medical Billing Advocates of America, 80 percent of medical bills contain an error. The most common ones are duplicate billing, typos in which the wrong coding or price is entered, charges for work that was canceled, and inflated operating room fees. These errors could be in your favor. Either way, it pays to know if your bill is wrong.
Charges can come from a variety of different sources, such as your doctor for the exam, the lab for testing, and maybe radiology for x-ray services. The list can go on and on. With different sources the possibilities for mistakes and errors escalate.
The second thing you’ll notice on an itemized bill from your doctor or hospital is the five-figure codes. These are the CPT codes we discussed earlier in this chapter. They are assigned to each and every service a primary care physician, specialist, or technician provides to a patient, including medical, surgical, and diagnostic services. You can look up what these codes mean by going to the American Medical Association’s CodeManager on its website (https://ocm.ama-assn.org/OCM/CPTRelativeValueSearch.do). You’ll have to fill out some details about yourself and promise not to use the information for anything but your personal use, but going to this extra trouble will allow you to see precisely what you are being billed for. That said, remember that some healthcare workers spend their entire careers mastering the CPT codes, so if you’re having trouble understanding them, ask your doctor’s office for details.
The story of what you pay doesn’t end with the doctor’s bill. You’ll also receive an EOB (explanation of benefits), from your insurer or Medicare. It will show how much of each service was paid for on your behalf. As on the doctor’s bill, each service is coded. You’ll want to verify that the CPT codes on your doctor’s statement match the codes on the insurer’s statement to be sure that you’re being charged for the services you are receiving. If they don’t match, contact your doctor and the insurance company.
The bottom line? At the bottom of your final bill, you’ll see a line item called the charge. Consider this the sticker price, not the final price. The discounted price, or adjustment, will follow, which will factor in anything you’ve already paid from your co-pay. The balance (sometimes called the patient responsibility) is your final bill with whatever late fees or credits have accrued.
HOW TO LOWER YOUR BILL
When Dr. Jeff Rice, a Nashville radiologist, was looking for a hospital for his son’s foot surgery, he was surprised to find a huge disparity in prices. The first institution he contacted said the price would be $15,000. Surprised, he started to shop around and contacted other surgeons he knew were good at other facilities. Just three blocks away at another hospital, he was quoted a price of $1,500—a tenth of the first price. Don’t be surprised; such inequalities are common. Rice had no regrets about choosing the cheaper institution and doctor. His son’s recovery went as scheduled, and it all worked out just as he hoped. The differences in prices, he says, don’t necessarily speak to the quality of care. Instead, they are the result of the prices that different insurers are able to negotiate with providers. Many other factors can come into play, such as whether the hospital you choose is a teaching hospital or takes on a lot of uninsured patients. One of the biggest factors in terms of the cost is your insurer’s ability to drive down costs. It was that experience that caused Rice to start Healthcare Bluebook (HealthcareBluebook.com), where people can find out the average cost of procedures, tests, and surgeries all over the country. By simply filling in your Zip Code, you can access Rice’s impressive database, which can guide you in learning whether you’re getting a fair price.
Getting that fair price, though, will require you to negotiate, and that can be easier said than done. To negotiate your bill effectively, you’ll need facts. In the New York City area, prices for a colonoscopy can range from $2,000 to $25,000. The differences in those tests? Not a thing. Go to HealthcareBluebook.com or NewChoiceHealth.com to compare prices on everything from drugs to surgeries. In this case, knowledge is power. In the best-case scenario, you’ll negotiate prices before receiving treatment. Once you have had the service or procedure, it’s much harder to negotiate prices because a bill is considered a legal document in the healthcare industry. Thus, when you negotiate is as important as how you negotiate. Offering a doctor or hospital speedy payment—say, before the billing even occurs—can net you as much as 50 percent in savings. In contrast, it’s more difficult to get the hospital and the staff in the hospital’s billing center to lower prices that already have been entered into the system. That is doubly true for uninsured patients. One community hospital board member said government billing practices encourage hospitals to boost the cost of services to patients with no insurance by as much as half. By simply calling and asking for a price reduction, those who are uninsured can net big savings, he said.
Be sure to document any doctor visits. Trips to the hospital are often stressful and time-consuming. It’s likely that you won’t pay attention to all the medical details about what procedures you’re going to get, but that’s where you can save money: by paying attention! While you’re at your doctor’s office, take notes or have a family member take notes about which doctors came to visit and when, what tests were ordered, and what supplies were used. Then ask for an itemized statement when you leave. Again, billing errors are common because the staff often fills in an incorrect coding number or types that number in duplicate. Then review your bill. Here’s where the pedal hits the metal. Compare your notes from your visit with the itemized statement and the final bill that has been through the insurers’ offices. You may already have caught discrepancies between the itemized statement and your notes from the doctor’s visit. Look for any discrepancy between the doctor’s bill and that of the insurer. If you feel there are miscellaneous charges or the bill is too expensive, contact the hospital’s billing department for an explanation as well as your insurer to see what you are covered for. If all else fails, call in the experts. Negotiating medical bills is tricky business, especially for a complicated and expensive operation or procedure. Many consumers turn to professional advocates such as MedicalCostAdvocate.com and BillAdvocates.com to get bills lowered. Medical billing advocates are familiar with hospital and insurer systems. They also have a relationship with people inside the healthcare establishment and usually can contact the right people, which can be difficult for those of us who are not part of the healthcare system. The services are not free. Most billing advocates charge 35 percent of the reduced price if their negotiating is successful; others charge an hourly fee. Keep in mind that if they are unable to get your bill lowered, they should charge you nothing at all. Ask about the charges up front.
LOWERING DRUG COSTS
Half of all Americans take a prescription drug regularly, spending a collective $374 billion in 2014 for a range of drugs, everything from blood thinners to painkillers. The thing your pharmacist won’t tell you is that the price for your prescription allergy meds may be higher than the price of the same prescription drug at a different pharmacy down the street. You may assume that the price is the same everywhere, but it is not. Fortunately, an app called GoodRx can help you compare prices at drugstores in your area. Check out drug coupons at RxRevu.com or go to a legitimate online pharmacy to shave 35 percent or more off the cost of your medication. Keep in mind that pharmaceutical companies offer patient assistance programs for those who can’t afford their medications. Another way to save is to use over-the-counter remedies for conditions that aren’t life-threatening, such as seasonal allergies, heartburn, and insomnia.
Another hidden secret of the healthcare industry: the expiration date on your prescription or over-the-counter medications may be virtually meaningless. An expiration date is required by the federal government and some state governments, but drug experts say that with only a few exceptions there is very little science to prove that drugs are less effective or dangerous when used beyond the expiration date. In fact, most drugs aren’t even tested for shelf life. One of the rare studies conducted found that 88 percent of drugs could be used past the expiration date for a period of 66 months, or five and a half years. Some drugs can last even longer. According to the Federal Drug Administration (FDA), users of amoxicillin, ciprofloxacin, and diphenhydramine can extend the shelf life of their drugs anywhere from 1 to 15 years. There is one exception: tetracycline, an antibiotic that can become toxic if used after its expiration date. To extend the life of your drugs, move them out of the medicine cabinet, where humidity can hurt their effectiveness. If you’re nervous about whether an expired prescription is still safe, stick to the sell-by dates on drugs you absolutely must have, such as an EpiPen or heart medications, and keep nonprescription drugs such as aspirin on the shelf longer.
CONCLUSION
In sum, getting heathcare at a reasonable price is not a simple endeavor in today’s world. Obamacare has made dramatic changes in the structure of the industry, and costs continue to rise. More and more of those costs are being passed on to and paid for by working Americans. To get the best solution for your health and your wallet, understand what you are paying so that you can go elsewhere if necessary. Increasingly, doctors and hospitals are on the hook for providing fair prices to consumers. By having information about relative prices in your area of the country, you can hold their feet to the fire.