[Winona Online Democracy]
After subtracting the 8% overhead charge, the insurance companies do not pay
the balance of 92% in benefits. Somewhere in that 92% is profit and
exhorbitant salaries for CEO's.
----- Original Message -----
From: "Davis, William MD" <[EMAIL PROTECTED]>
To: <[email protected]>
Sent: Monday, March 06, 2006 9:41 PM
Subject: [Winona] Health Care and Insurance
[Winona Online Democracy]
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A few comments from a physician perspective. First, the "overhead" of
commercial insurance varies considerably. The best companies spend 8% on
administration (they pay out 92% of the premiums for health care) and the
worst may have an overhead of 50%. Currently Medicare and Medicaid are
running about 3% overhead.
Second, physician offices and hospitals have a "price list" for every
procedure they perform (office visits, shots, office surgeries, hospital
ER visits, operating room costs, etc.). They are all keyed to the CPT
codes (Common Procedural Terminology), a coding system developed by the
AMA to permit standardization. The CPT code for an "average" office visit
is 99213. This makes it possible to compare charges accross communities
and states for the same service. There is a detailed description of each
code in a manual that is published annually to allow "coders" to determine
which code to apply to a particular service. When new procedures are
developed (like laparoscopic appendectomy"), a code(s) is created for the
procedure so that insurance companies and the government can be billed.
What happens is that big payers (Medicare, Medicaid, BCBS, etc.) can
dictate to physician offices and hospitals what they will pay. It is
similar to Walmart telling its suppliers what they are going to pay for
goods Walmart will sell. It is a take it or leave it kind of deal. If we
don't agree to the contract that BCBS sends us, we can't see their
patients (we are "out of network"). For example, the charge for a 99213
at our office, based on our "charge master" (price list) might be $75. We
currently experience about 50% "discounts" from the big payers.
All patients get billed the same amount ($75 for a 99213) but what they
owe will depend on the deal with their insurance company. So BCBS may
have told us that they will pay only $40 and we cannot "balance bill" the
rest to the patient. You can see this on your insurance EOB (explanation
of benefits) that comes to you after a visit to the doctor. It gets more
complicated if you have a co-pay. You may have to pay $35 to your doctor
and BCBS only pays $5. The office is forced to "write off" the
difference. However, if you have no insurance, you get the bill for $75
and end up paying the whole bill. This is not so bad for a $75 office
visit but it can be a catastrophe for a $50,000 coronary artery bypass
surgery.
Some hospitals and clinics are discounting bills to patients without
insurance to match the discounts they give to the insurance companies but
most are not doing that. Fortunately, the number of uninsured patients is
still small in Minnesota but it is a growing number as employers stop
offering insurance to their employees.
Sorry for this long note but it may be helpful to see what is going on
from an "insiders" perspective.
William Davis MD
[EMAIL PROTECTED]
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