Monday, June 2, 2014

Three Lessons from My Obamacare Approved Surgery

I haven't posted anything recently, but I have a good excuse.  I had major surgery on January 2 and have been recovering since.  Also, I have had several opportunities for adjunct faculty work which has been consuming a good deal of my time.  We'll get to how Obamacare impacts adjunct instructors in a future post, but I have some pointers from my surgery and the financial process surrounding it first.

1. Game the System by Shopping for the Right Policy
In January 2014, the first Affordable Care Act exchange policies became effective.  Open enrollment ran through the spring making many choices of policy available.  Because insurers may no longer exclude pre-existing conditions, it pays to shop around if you need expensive healthcare.  "You've had a major back injury for 15 years and need $50,000 worth of surgery tomorrow?  Sure, we'll pay for that."  Why?  They have no choice.

I looked at two options.  My current, grandfathered high deductible plan and the possibility of moving to a Blue Cross Blue Shield Obamacare-approved policy.  Because I was going to need an expensive procedure, I looked at top of the line ACA policies.  A slightly higher premium is worth it when you're going to wipe out a low deductible and out of pocket maximum quickly.

Let's use $50,000 total cost as an estimate.  With my "substandard" high deductible health plan, I pay the first $3500 and the insurance company pays the rest of covered costs.  That's it, no more complications.  So with that plan, I pay $3500 and the insurer pays the rest.  Because I pay through my health savings account, the funds are tax deductible.

The premium is lower for my current plan, but it does not cover prescriptions.  Thanks to Canadian pharmacies, the cost of prescriptions turned out to be merely nominal.

The only attractive Obamacare plan I could find with my chosen surgeon and hospital in network was from Blue Cross Blue Shield of Michigan.  Given that I was looking at a major expense immediately, I looked at their top of the line gold PPO policy (BCBSM does not offer a platinum policy).  The math gets a bit more complicated, so bear with me.

Deductible:  $150
Out of Pocket Maximum: $5100 ($4950 coinsurance maximum, i.e. the deductible of $150 counts toward the out of pocket maximum)
Hospital care and surgical services:  Covered 80% after deductible is met (There is a wrinkle of a $500 copay for hospital care, but we're dealing with big enough numbers here that we hit the out of pocket maximum).

So, if I'm doing this right, I pay the first $150.  That leaves $50,000 - $150 = $49,850.  The insurer picks up 80%, or $39,880.  That leaves my share as $9,970.  Because $9,970 > $5,100, I get tagged for $5100.  The insurer therefore pays $44,900.

It looks like my little substandard high deductible plan is a better deal than the Affordable Care Act plan by about $1600.  If my prescriptions cost more, that might offset the higher out of pocket maximum and higher premium.  In my case at least, it was not enough to make a difference.

I'll hang on to my grandfathered plan for as long as they'll let me.  Bottom line for you--if you're going to have a major procedure during the open enrollment period you should run the numbers and figure out the best deal for yourself.  Keep in mind that if you give up your grandfathered plan, you're never going to get it back.  If it's a close call and your happy with your old plan and you're one of the lucky few that gets to keep it, then I'd probably stick with the old plan.

But Chris, you say, this is not fair.  Insurance companies are people, too.  It's wrong to take advantage of the pre-existing condition rule to screw over the underwriters.  My answer--tough.  The insurance industry was instrumental in passing the Affordable Care Act.  They wanted the government to force millions people to become their customers.  They set the rules, they set the rates.  We have every right as smart consumers to follow the incentives their rules create.  If they didn't like it, they should have lobbied against the act, it's as simple as that.

2. Watch that EVERYONE Providing Service is in Network
People on Medicare tend to be extremely savvy about the health insurance world.  My parents warned me that many times anesthesiologists are billed separately from the hospital and the surgeon.

Being paranoid, I checked and double checked with the hospital's billing department.  I also double-checked the list of network providers.   It turned out everyone was in network, critical for me because my plan pays almost nothing for out of network.

Many exchange policies will not pay for non-emergency out of network service.  People have been burned already by anesthesiologists who were out of network even though the hospital was in network.

Be sure to check with BOTH the insurer's list of network providers and the providers themselves.  Everything is in flux and the lists may not be up to date.  Do not trust just one source.

3. Read and Understand Your Bills
Being an insurance lawyer, I'm probably more fearful than most about the risk of a denied claim.  I tell myself that as a lawyer you only see the really weird claims, not the routine paid claims.  All will be well.  When I finally received my big bill from the hospital and the statement of benefits from my insurer indicating it had been paid, I was greatly relieved.

I was therefore a bit taken aback when I received the anesthesiologist's bill for $3,875.  I also received a notice from the insurer that it had been sent off for a process called "repricing."  Repricing is insurance jargon for changing the bill to reflect the negotiated rate between the insurer and provider.  In this case, the repriced rate was only $1,674.  The insurer promptly paid that amount.

Is it fair the uninsured pay more than double the rate for this service?  In other areas of commerce, this is called price discrimination and in certain cases can get people in big trouble.  In healthcare, it seems to be business as usual.

The story doesn't end there.  The anesthesiologist re-billed me for the balance of $2,211.  I knew I had met my deductible and I thought I understood the re-pricing system.  I was unable to defeat my insurer's security (i.e. phone system) to talk to someone about the problem, but I contacted the anesthesiologist's billing department and they promptly fixed the mistake.

I knew what the problem was and could articulate why the bill was inappropriate.  How many people would have just paid it?  How many people would have been forced to pay a large bill that was not really due?

It pays to stay on top of this stuff.  If you have a story or questions about mine, please post a comment.

Cheers!