When Jay had an MRI on his knee last month, we were charged $1200. The EOB tells us that the Vail Valley Medical Center in Vail, Colorado, charges $1600 for the procedure. Our Humana health insurance has a negotiated rate of $1200, which is what we paid (we hadn’t met the deductible yet, so we were responsible for the whole amount). So we paid $400 less than someone without health insurance would have paid. But I wonder what someone with Anthem Blue Cross Blue Shield would pay? Or someone with United HealthCare or Aetna? I don’t know, because negotiated rates are proprietary. Whatever secret dealings that go on between health insurance companies and providers are not public knowledge.
When we help our clients shop for health insurance, we look at price, coverage options, and provider networks, especially if the client has a particular doctor in mind. But we can’t know how well each health insurance company has negotiated pricing on specific procedures with various providers. I understand the economics behind network negotiated rates. Providers can give a better rate when they know they’ll get more volume, and health insurance companies send volume. It’s sort of like buying in bulk – I pay less for my oats because I buy them in 50 pound bags. The store knows they’re going to sell all 50 pounds at one time, so they can charge me less per pound than if they have to make 50 separate sales to sell the whole bag.
But the secret nature of the pricing seems to be to the detriment of the patient. If I call the health food store and ask them how much they charge for a pound of oats, and what the discount is for buying 50 pounds at one time, they will give me both numbers. But try calling a hospital and asking for the network negotiated rates for an MRI for five different health insurance carriers. Could get tricky. Most people find out what the negotiated rates are after they have a procedure done and get the EOB in the mail. Makes it tough to comparison shop for health care procedures and for health insurance.
Network negotiated rates need to be much more transparent. They should be available to any interested consumer, not just someone who already has a particular health insurance policy. Health insurance carrier websites should have detailed pricing lists with billing codes and allowable amounts for a wide variety of procedures. Then consumers – especially people who are interested in high deductible health insurance policies – could really compare apples to apples.
