In CA, regulators are working to impose a ban on “balance billing” – the practice of billing patients for amounts over what their health insurance companies will pay for a given procedure. While most health insurance networks prohibit balance billing, there are only eight states that regulate the practice, and a good number of patients tend to just go ahead and pay bills they get from their providers.
Medical trade associations are generally opposed to a ban on balance billing, saying that doctors would be more likely to just send the entire bill to the patient and not even deal with the health insurance companies if they had to comply with a state law regarding balance billing. But the part I don’t understand is why there’s such a discrepancy between what health insurance companies consider “reasonable and customary” and what providers charge. And why two doctors in the same town, performing the same services, can have such different prices. And why “reasonable and customary” pricing can be so different from one health insurance network to the next.
My parents live here in Colorado, and my father has been on dialysis for nearly seven years. For the first 18 months, he had health insurance through Cigna, but was then switched over to Medicare, which is standard practice for dialysis patients. Over the years, he’s been treated at a handful of dialysis clinics and hospitals within Colorado and outside of the state. Medicare reimburses about $3000 – $4000/month for dialysis, depending on the services provided, and it’s pretty much the same for all patients. But the hospital and clinic bills my parents have received have been all over the map. Anywhere from $3,000/month to $31,000/month (that’s not a typo). They all get reimbursed the same amount from Medicare – and Medicare does not allow balance billing – but I find it interesting that there can be such wild differences in charges for roughly the same services. Are some providers just trying to generate higher profits? Or do they have some hidden overhead expenses that other providers aren’t paying? Overall, the health care industry needs a lot more transparency in pricing, which would probably help narrow the gap between “reasonable and customary” pricing and what the providers are actually charging.
