Self-Insured for Health Care

It is clear that greater numbers of people are either uninsured, self-insured or insured with so high a deductible that they are, for all intents, self pay. After thirty years in medical practice and now twelve years flying in the North, we are among the later. Negotiating for health coverage is foreign to most of us, but it may be the only way to go.

That health care costs have spiraled out of sight may be common knowledge, but the reasons and the patient’s options may not be so well recognized. In the past patients when sick were not so tempted to ask the cost before seeking relief and the provider priced the service based upon his or her sense of fair value. There was, at least in retrospect some sense of accountability one on one. Today there are administrators manipulating intermediaries for maximum profit. More often than not, that profit derives from the higher insurance premium and the highly discounted payment made to the provider on your behalf. The motivation is pure profit so the higher the premium and the deeper the discount the better for the intermediary. The only way for the provider to control his or her rising costs is to charge much higher in order to offset the discount and to rely on his or her uninsured or indemnity insured customers to make up for the discount. This phenomenon of higher and higher charges to offset discounts happens with doctors, laboratories and hospitals. The later two are rather more successful with this strategy of increasing charges than providers because they are better organized with national organizations or cartels. Furthermore, the corporate administrators of these health facilities are not interested in the patient but with the profit of their enterprise. In either case, however, there results a cost shifting and unfair pricing for the uninsured or under insured. The intermediary responds with deeper discounts. As you can see this leads to a continuing upward spiral of pricing. The self-insured pay excessively while the uninsured wageworker has his or her credit ruined through an inability to pay it all. As you would expect the corporate and government intermediary has caused rule changes requiring these institutions to make “good faith efforts towards collection” of these outrageous and outstanding accounts.

Just this month our local doctor asked us to have a series of tests. By their nature they would have to be done at the hospital, the price quoted was in the thousands. We put the request out to bid among medical schools and in other cities. As it turned out, we had the tests done for less than 25% of the local fee schedule. This can only be done by negotiating in advance. If you wait until the charge has been made, it is illegal in some cases for them to reduce the charges. If you contract in advance, however, it is perfectly acceptable. Do it in writing. The provider may actually come out ahead. (One cannot fault the logic of buying drugs in Canada. The drug problem is a similar thing.) It is all about greed in administrators whose loyalty is to a board of directors or to stockholders. It’s not that corporations are bad, but for a critical human need, they are just obscene.

So, negotiate in advance. “Can I pay you in advance a negotiated price for this service?” That word, in advance, gets immediate attention. Obviously, you have to be talking to the provider himself or to the director whoever he or she may be. Get on the phone and call several medical school hospitals for a negotiated price. Find a current HMO or Medicare fee schedule for reference. Start with an amount slightly above the discount. That discounts usually runs from 15-35%, higher for the provider and lower for the institution. Compare to the offered price and negotiate from there. It does not hurt to have a couple of competitive telephone offers to back up your position. Be extraordinarily polite, even bring vegetables (Nobody does that anymore; it will put you in a class by yourself. It helps if they remember your name.)

The dirty little secrete is that the quality of care or accuracy of results is likely to be in an inverse relationship to the cost. That turns out to be true because the institutions that run more towards patient benefit and care, will be crowded and will likely charge with the fair needs of the patient in mind. Whereas the low volume, struggling institution, without enough volume to support the latest equipment, charges according to the need of their own bottom line. Think supply and demand. Don’t be left holding the bag with outstanding charges that subsidize the institution or the intermediary and the executive’s retirement.