Reimbursement for health care services is unlike any other business. Two patients can receive the same service and there’s a chance those two patients, more specifically their insurance, will pay different amounts for those services. Both patients will be charged the same for the service but the money collected from their insurances will likely be different amounts.
Two of our bigger payers, Medicare and Medicaid, have set rates they pay for services. Most of our commercial contracts, Blue Cross and others, pay on a percentage of charges. You can begin to see how two patients receiving the same services result in different payment amounts for the hospital even though the patients are charged identical amounts.
When you or I go to the grocery store to buy milk we both pay the same amount. The same is true when we but clothing at a store and most other goods and services. The price marked is what everyone pays.
The other trend we see involves different payers requiring more and more pre-authorization before they will approve paying for a service. When pre-authorization is required our staff call an insurance company on behalf of one of our patients. The staff explain the procedure or service and provide reasons the physician believes it is in the patient’s best interest from a medical perspective. The insurance company then does one of two things, they either grant authorization to provide the service or they deny the service. When they grant authorization we move forward and provide the service to the patient with the expectation the service will be paid for (I will come back to this point in a bit). When they deny the service, the physician is consulted and if he or she believes the patient requires the service for medically necessary reasons we provide the service with no expectation to get paid. We do what’s best for the patient and I appreciate our organizations approach to always act in the best interest of the patient.
Let’s jump back to a previous point. There’s one specific insurer we work with who has changed the game when it comes to pre-authorization and it may result in us no longer being able to provide services to patients with that specific insurance. One of our insurers, I won’t name them because we are working through a remediation process, requires that we get pre-authorization for inpatient admissions. When a patient needs to be an inpatient they are sick but we follow the insurance companies rules and seek pre-authorization. They review the case and they provide us pre-authorization. Following the patient’s stay the insurance company is billed and for the past three months this specific insurance company has denied every inpatient stay, refused to pay, because they claim the stay did not meet medical necessity even though they approved the stay prior to the patient being admitted.
You can see the position this puts us in. We have physicians evaluating patients and determining the patient is sick enough to warrant and inpatient stay. We contact the insurance company and explain the physician’s findings and medical reasoning. The insurance company says “we approve the admission”. We treat the patient and make them better, discharge the patient and then bill the insurance company for the service they approved. The insurance company then sends us a letter and says “we’ve changed our mind” and they deny payment.
This practice is unfair to all involved except the insurance company. From their perspective life couldn’t be any better. They collect premiums from the patient, we provide services to the patient and help the patient get better, then they refuse to pay. It’s a brilliant business strategy on their part but unfortunately it may mean we are no longer able to provide services to patients with that specific insurance and that’s unfortunate and could even be catastrophic should a patient not seek services because they don’t want to leave their home town.