PPO Pricing Question

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Robert - 04 Dec 2004 16:14 GMT

My understanding of PPO pricing is thus:

1. Dr. Smith states his procedure costs $40,000.

2. PPO contracts to pay Dr. Smith $10,000. Of this $10,000, patient
pays a small part.

3. Dr. Smith never gets the balance of his stated $30,000 fee.

Can we assume that no one who sees Dr. Smith for his $40,000 procedure
is uninusured? If that is true, why do we even have the fiction of a
$40,000 fee???

Here is my suggestion:

1. Dr. Smith now says his fee for the procedure is $10,000.

2. PPO contracts to pay Dr. Smith $9,000. The patient pays the
$1,000 balance.

Is this a better solution? Would prices be better for us all if the
unrealistic fees were brought back down to reality??

This would mean we would have to pay more for health care....but if we
have a job with PPO health care in the first place, it does not sound
unreasonable to me.

thanks,
Bob R.

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Mark & Steven Bornfeld DDS - 04 Dec 2004 16:47 GMT

> My understanding of PPO pricing is thus:
>
[quoted text clipped - 8 lines]
> is uninusured? If that is true, why do we even have the fiction of a
> $40,000 fee???

Why would you assume that is true?

> Here is my suggestion:
>
[quoted text clipped - 5 lines]
> Is this a better solution? Would prices be better for us all if the
> unrealistic fees were brought back down to reality??

    To a certain extent, there is an element of fee inflation due to
managed care. In some cases fees can be shifted onto patients not on
managed-care plans, with the effect that patients without insurance wind
up subsidizing those with insurance.
    To a certain extent, it is just book keeping. I can't speak for the
usual case scenario in medicine except as a patient. In dentistry we
are advised by some of the insurance companies to bill our regular fees,
and these are automatically reduced to the contracted fee. However,
where there are deductibles and copayments we are obligated to collect
the balance of the contracted (not our regular) fees from our patients.
Waiving copays is considered insurance fraud.
    As for the fees I write down on the form--these are my real fees, and
these are the fees we collect from non-PPO patients--whether they have
insurance or not.
    I'm sure that the proportion of managed care patients in a practice
varies widely--by locale, practice setting and specialty. A cosmetic
surgeon won't have many managed care patients. I would guess that the
bulk of an ophthalmologist's practice in an urban area is Medicare. You
can't generalize on something like this.

Steve

> This would mean we would have to pay more for health care....but if we
> have a job with PPO health care in the first place, it does not sound
> unreasonable to me.
>
> thanks,
> Bob R.

Signature

Mark & Steven Bornfeld DDS
http://www.dentaltwins.com
Brooklyn, NY
718-258-5001

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awthrawthr@yahoo.com - 04 Dec 2004 16:47 GMT

You can't assume that no one who sees the doctor is uninsured.
According to the contracts that doctors sign with insurance companies,
the doctor is required to charge the uninsured a higher price than
those covered by their insurance.

There is presently a class-action law suit about this situation, but it
is what exists at this time.

An uninsured person is on the hook for the $40,000. Maybe the doctor
only ends up collecting $15,000 ot $20,000, but he still gets more than
if he had charged 'only' $10,000.

Sometimes the doctors end up collecting when the person dies, by
collecting from the estate. I'm not saying this happens with every
doctor, but it does happen.

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Mark & Steven Bornfeld DDS - 04 Dec 2004 16:59 GMT

> You can't assume that no one who sees the doctor is uninsured.
> According to the contracts that doctors sign with insurance companies,
> the doctor is required to charge the uninsured a higher price than
> those covered by their insurance.

The insurance companies don't care what an individual doctor charges
his/her uninsured patients. They just don't allow collecting more than
the contracted PPO fee for patients covered by the contract--except that
if your regular fee is LESS than a contracted fee, they'll base their
payment on your (lower) fee rather than the contracted fee (fat chance).

Steve

> There is presently a class-action law suit about this situation, but it
> is what exists at this time.
[quoted text clipped - 6 lines]
> collecting from the estate. I'm not saying this happens with every
> doctor, but it does happen.

Signature

Mark & Steven Bornfeld DDS
http://www.dentaltwins.com
Brooklyn, NY
718-258-5001

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Robert - 06 Dec 2004 02:19 GMT

> > You can't assume that no one who sees the doctor is uninsured.
> > According to the contracts that doctors sign with insurance companies,
> > the doctor is required to charge the uninsured a higher price than
> > those covered by their insurance.

Ok, maybe I am off-base assuming that everyone who has a $40,000
surgery has insurance. That is why I posted the note.... I am a
patient, not a medical worker. I am just guessing that only a few
people actually pay the full stated fee....if that is a wrong guess,
then so be it.

My point is, would we pay less for health care if there were NO fee
inflation by doctor offices submitted to insurance companies? My
company, among many others, says that health care is only going up. I
ask, what can we do about this? If it means I pay more for visits,
(in addition to my monthly insurance pay-in), then I am willing to do
this if eventually it will bring down the monthly costs.

Or, is this an insurmountable problem that will only pass after the
baby boomers pass on?

thanks,

Bob Rutledge (baby-boomer)

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