Feb. 6, 2019
Patients often have trouble weeding through their health-care benefits to understand pricing on the services and products they need, and which you have prescribed. Fortunately, writes Timothy M. Smith, a senior news writer with the American Medical Association, there are answers you can provide to help.
The following insights are summarized by Smith from an article published in the AMA Journal of Ethics (@JournalofEthics) by medical faculty from the University of Chicago, the University of California, San Francisco, and Harvard Medical School.
Three basic but slippery terms
If you’re a patient, cost is simply the amount you pay out-of-pocket for health-care services. For physicians, it’s the total expense you incur to deliver health-care services to patients. If you’re an insurer or a government agency, this is the amount you pay physicians or hospitals for services rendered.
Then consider that patients with health insurance might not pay the full charge, but rather a “co-payment”—either a fixed amount for a service, often paid at the time the service is received, or a percentage of the charge.
The amount a patient owes is further affected by the health-care setting. If a Medicare patient, for example, is seen in an emergency department and is not admitted or is kept under “observation status,” he or she is considered outpatient, for which co-payment might be as much as 20 percent of the total charge.
Charge, or price
This is the amount requested by a physician, hospital or other provider for a good or service. This is the “you pay” amount that appears on a patient’s bill, and there might be no clear relationship between this number and cost.
Most hospitals have a “chargemaster”—an itemized list of prices, similar to a restaurant menu, with prices that are many times the amount for which the hospital is paid by insurers. This stratagem enables hospitals to set high starting prices for closed-door bargaining with insurers. Unfortunately, it is also establishes very high charges for self-pay, or uninsured, patients.
This is what’s paid by an insurer to a health professional for services. It might be tied to each service delivered (known as fee for service), day in the hospital (per diem), episode of hospitalization (for example, diagnosis-related groups), or patient under care (referred to as capitation).
Two Key Responses
These sources of variability make it difficult to predict how much healthcare costs, how much a given patient will be charged, how much a given patient actually pays, and how much physicians and health-care organizations are paid.
There are two basic actions doctors can take to keep patients from spending more than is necessary:
Order useful services
“First, we physicians should take ownership of our clinical decisions and make sure they are actually going to make our patients better,” wrote the authors, Vineet Arora, MD, Christopher Moriates, MD, and Neel Shah, MD, MPP. “More than one-third of the health-care services we deliver do not help patients get better, so there is clearly room for improvement.”
Screen Patients for Financial Harm
Simply asking, “Do you have difficulty paying for your medications?” can help identify patients who are at risk for cost-related non-adherence. Also, having conversations with patients about their finances can help them decide to switch to cheaper, alternative prescription drugs.
The AMA Code of Medical Ethics is AMA policy. The AMA Journal of Ethics, however, is an editorially independent scholarly publication of the AMA.