“Medical billing is a predatory practice that needs to be reformed.”
I have to agree with that. I use a CPAP machine and the billing is nearly impossible to decipher. “Durable Medical Equipment Company 1” (DME1) seems to have one or two subsidiaries that they tossed into the mix (DME2). DME1 has DME2 submit invoices to our insurance company. It has a statement like “Our cost $300 but we are billing insurance $100.” Then insurance pays $84 and I get a bill for $16.
How did the original DME2 bill of $300 get submitted as a $100 invoice?
I’ve talked extensively to DME1 and the insurance company and nobody can answer. The subsidiary DME2 is never involved in the discussions.
It is weird and messed up beyond belief. And this is a very simple business deal where I’m buying (they call it “renting” but it’s an actual rent-to-own deal) a CPAP machine and even that is all foiled up.
Then there are equally messed up invoices for supplies.
I can’t begin to imagine how fouled up it must be for an expensive operation and hospital stay.
The $100 actually billed to the insurance carrier is mostly from a negotiated contract price for the service or good. Or it's the Medicare rate if you are a Medicare patient.
Normally Medicare pays 80%, or $80 for a $100 "invoice". The patient is responsible for the 20% difference. In certain cases, the patient balance is written off if the patient qualifies based on income and other factors. If you are actually paying the balance, the provider has no reason to find out if you qualify for a write-off.
And the whole system just gets more complicated from there.
I can answer that.
There is the retail price. That’s the $300.
Then there is the Medicare contract price. That is the price that Medicare tells providers it will pay. Honestly, that is the basis for most hospital based healthcare costs.
The insurance companies will look at the Medicare contract price and determine what their base will bear—that is, what do their customers need and what can they pay to insure a profit for the insurance company.
This is the price the insurance company will contract with your provider. That is the $100 price.
Since you haven’t hit your deductible or out of pocket, they will pay the 85% of their contract price. You owe the $16.
Think of the first price as the un-discounted suggested retail price. And no one pays retail.
In a lot of cases its the few thousand before the deductible that end up as bad debt for the hospitals. Unfortunately…it’s THAT money that ends up paying for the hospitals uncovered expenses.