Episode 64 - How Insurance Works and Will I Be Billed?

How insurance works and will I be billed


Speaker 1: 00:00 This is Dr Chad Edwards and you’re listening to podcast number 64 of against the grain.

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Speaker 1: 01:01 today I’m joined with Dr Chad Edwards, who believes that 80 percent of medical recommendations are crap technically speaking. Here he is a certified family physician. Is it enough to just say certified, say board certified? Well, that’s Kinda the. That’s what the news. Yeah, would otherwise. It’s to me it’s saying certified. It’s like I’ve got my CPR card. You have your CPR card. He does have that two ladies and gentlemen. But he also served in the US army. He’s the author of revolutionize your health with customized some supplements. Excuse me. The last word is supplements. Um, but, uh, Dr Edwards, welcome to this episode. How are you doing? I am fantastic. That’s good to hear. It’s Friday. I’m ready for a weekend. Okay. All right. Well, I, I know that we meet here every week and we talk about, uh, against the grain topics and uh, we just got through, uh, you know, talking about in the last podcast, a low dose naltrexone.

Speaker 1: 02:04 What are we getting into today? So this, this topic may not be quite as glamorous or sexy, but I think it’s important. It’s important when you, when you start looking at, one of the things that I’ve seen with the affordable care act is that insurance rates have gone up, costs more to get insurance, your deductibles are higher. So you know, for the average person they ended up spending more for their healthcare. And so then when they go to their doctor, they, uh, they, I told this story before, there was a, I had a nurse practitioner for a while and she was at a clinic here in town that was in network before she came and worked with me again. So she was at this other clinic and had a patient that came to see her, came, came in for two visits and got an ekg and lab work.

Speaker 1: 02:53 Each visit was about 30 minutes. So basically what we would do for the most part on average, kind of what we would do in clinic and her bill in network, her bill was, she had to pay out of pocket was $800. Wow. In our clinic, the same thing, ekg labs and, and the, uh, and the two office visits would have been 300. So we could have saved her almost a, you know, 70 percent, um, you know, or whatever it would have cost her 30 percent of what she had to pay, I mean a big, big difference or 40 percent, whatever those numbers are a. So we can often save money because we’re out of network, we don’t interact with insurance companies, we don’t deal with insurance companies will give you the paperwork and you can follow on your own. But um, we can save patients a lot of money.

Speaker 1: 03:39 And so this whole concept just results in a lot of questions for people. You know, 10 years ago you just went to your doctor, you gave me your insurance card. Stuff was, you know, it was what it was and you might get a little bill, you know, later on now that that’s not the same thing. And I’ve seen that change more and more and more the further we’ve gone through the affordable care act and that there’s just been a lot of fallout with that. And it seems like it’s costing people more and more money. And we’ve talked about this before, especially early in the early episodes in the podcast, and so a lot of those questions, I want to address some of them today specifically, you know, when, when, um, when patients come in and they’re asking us how can you save me money on, uh, on healthcare?

Speaker 1: 04:23 And I say, I’ll just let him know. First of all, you’re going to know exactly what you need to pay when you do it. There’s nothing behind the scenes. There’s nothing later. There’s no, I call them Ninja bills. Nothing lingering exactly. And part of my problem with that is, you know, obviously I work in the emergency room and, and we’ll get patients that come in and they, uh, I remember specifically we had a patient that came in that was exposed, had a, had a dog bite for a dog that we didn’t know about and the, the patient did. We knew the patient didn’t have insurance. And in the emergency departments, not a good thing. Uh, that’s, I don’t make decisions based on whether or not they have insurance. So I’d rather just not know it all. And because you don’t want anything coloring that you make the absolute best medical decision you can based on the information, the medical information.

Speaker 1: 05:16 So this patient was exposed to or had a, had a dog bite. We’ve talked about this on a podcast before, um, and the, uh, the rabies shots, we’re going to cost tens of thousands of dollars. And so the question was, are we going to give this medication that’s tens of thousands of dollars and knowingly give that patient at tens of thousands of dollars, bill when we know that only have insurance. And you know, I looked at the nurses, I think it was my, uh, my nurse practitioner who was seeing the patient and I just said, do we, do we ask this question about anybody else? And they’re like, no. And I was like, then we’re doing it that, that’s what we have to do. We have to stay objective. The problem is, is that this patient’s going to get a bill for tens of thousands of dollars for rabies, which is arguably a relatively low risk based on his injury.

Speaker 1: 06:06 But if you miss it, it’s fatal. So we have to make a good medical decision and what frustrates me is that thing we don’t know how much it’s going to cost. We don’t know. We don’t know. We don’t know. The patient has never given the opportunity. Yes I want that. No I don’t. And I don’t want to take that information in the emergency room because I know what he’s gonna say no, I don’t want a $20,000 bill. But some patients don’t understand the medical implications well enough to make an accurate decision. I mean it, it’s a bad, bad position. And I, I don’t like that at all. So in my clinic, everything is upfront. You know how much it’s gonna cost before we do it. So you have the opportunity, you know, Marshall Unit, Ekg, it’s going to cost 25 bucks. Do you want to do that or not?

Speaker 1: 06:52 And you know our, I strongly recommend that you get an ekg. You can decide to not do it. Now the cool thing is is we’ve got options. I can send you to your in network physician and you’ll be able to save money. Problem is, is what’s going to happen as you go ahead and you pay your copay and then you know, two, three months later you’re going to get a bill for five times more than I would have charged you cash and my clinic. So it’s. But I mean we’re there to do the best job we can for patients. We’re just upfront about how much those things cost. So when it comes to the labs, that’s like a big issue and we can often save patients a lot of money. What would be a couple of examples of labs that you might run? Well, we’ve got an extensive panel, I call it my full panel lab assessments and it depends on what’s going on with the patient, but you know, a complete blood count chemistry’s inflammatory markers, lipids, lipid particle testing, a crp phospholipase, a two vitamin D levels, a full hormone panel, a full thyroid panel, uh, diabetes prevention and management panel which has 19 different tests.

Speaker 1: 07:56 Looking at how your body processes blood sugar and insulin, looking at risk for diabetes, looking at insulin resistance, looking at some metabolic markers. We often look at a celiac or I should say a gluten sensitivity antibodies. We look at there, it’s an extensive lab assessment because we’re trying to identify why these patients don’t feel well. And is there a potential for, um, for any conditions that would show up later on down the road. We want to be as proactive as we can. So the, uh, you know, the patients will come in and they’ll, they’ll feel bad. We’ll say we’re going to get a bunch of labs and the labs it, the, the, we don’t charge for those labs. If, if they’ve got insurance, we don’t charge for that. The lab will bill the insurance company. So we do collect their insurance card and we send that information to the lab.

Speaker 1: 08:50 The lab will then build the insurance company based on, um, you know, uh, everything that’s been sent to them. And this is where it gets a little bit sticky. Uh, you know, six months ago the patient would never get a bill for that. Um, you know, maybe a year ago, depending on the lab, they would never get a bill because of the way the lab works. Many patients said, well, how in the world can they do this? And some, it all depends on the insurance reimbursement. Some, you know, like for example, I don’t remember the exact number, but I’m going to, it’ll be close. Medicare for example, if you get a complete blood count, CBC, Standard CBC, uh, I think Medicare reimburses like $7 and fifty cents a. So the lab is going to get paid from Medicare $7 and fifty cents to run that lab. Will the cost on the lab based on volume.

Speaker 1: 09:39 Um, you know, if they’re doing a ton of them, you know, the costco down a little bit, but you’re looking at a couple of bucks, maybe a for them to run that lab. So they’ve got a $5 a flex your profit margin, um, you know, for, for that lab. And of course they’ve got to cover their overhead, they got to cover personnel. So their costs is acting them a little bit higher than that. But it’s, I mean, you’re, you’re profiting a little bit or you’re making money off of a complete blood count. Now some insurances might pay 17 or $18 for a complete blood count. So then you make a lot more money from that one lab, but you don’t know until you get the, the, the reimbursement from the insurance company. That’s exactly right. And the other thing is this, and I think we’ve talked about this in previous podcasts, but if you’re out of network, if you’re in network, usually they, the insurance company will let you know what they’re in network reimbursement rate is.

Speaker 1: 10:35 And the difference in, in network and out of network is that an in network provider, clinic, lab, radiology, whatever they have signed a contract with that insurance company that says that they agree to, to their, uh, their, their payment rates. And let’s say I charge $100 for a lab. Now the insurance company may say we’re only paying $50, $50. That’s what we pay for, for that lab. And so then if I’m, if I as the lab, I’m in network with that insurance company, I made typically bill $100 and I can make up whatever I want, I can build 5,000. I mean it’s, you know, you can build whatever you want. It’s like the pharmaceutical companies that are now increasing their rates dramatically on drugs that have been out for 50 years just because they can. I mean, it’s, it’s Asinine what they’re doing. They’re raping the American public.

Speaker 1: 11:33 Um, and yes, I said they’re raping. It’s ridiculous and criminal and they should never be allowed to get away with it, but they are. Um, and I’m a capitalist, so I mean, I support their ability to do that. I don’t support them doing it. Maybe that’s a paradox. I don’t know that it is what it is. So, um, but since you’re in network, you agree that your own, you’re willing to accept what the insurance company pays. That’s, that’s the contractual obligation or that that’s the legal thing where you do this service, we’re going to pay you this amount. Doesn’t matter what you charge, you’re going to accept this. Now if the insurance company is going to pay 50, but you only charge 30, guess what, you only get $30. So you want to charge. I mean, it’s just, it’s just the business of it. You want to charge as much as you can to get as much as you can.

Speaker 1: 12:26 I mean, it’s, that’s the American way Sorta, um, sort of. But since the, since the consumer, the patient is out of the loop on that whole thing, they get no say in, you don’t shop around, you don’t find the best rate you can, you don’t. There’s none of that. So you lose this whole competitive advantage. You now it’s the good old boy system, which it’s ridiculous. My opinion. So if you’re out of network, the lab, the insurance company will not tell you what they pay for lab x. So again, you may, you know, if you charge $100 and you got a check for $100, then they clearly would have paid more. So you charge 1:50 and if you get a check for a 1:50 then one 75 and now you get a check for $163. Okay, now you’ve seen what they’ll pay because you don’t know, you tend to raise your rates.

Speaker 1: 13:23 Now the reason that I would even say yeah you should raise your rates is because that insurance company, since you don’t know what they’re gonna cover a and you don’t know how much they’re going to cover. You might do a test, you might do two tests, both of them costs $50 and you bill $100 for each of them. Test one, test two, and insurance. The insurance plan may pay, um, you know, 90 percent or 100 percent of test one. And so they actually reimbursed $99, $100, whatever, um, but no more. And so you’ve made $50 profit on that test, but test to it costs you $50 to run it. But you may only get reimbursed $5 from that insurance plan. So in theory you’ve lost $45, but because you made $50 and the other one, the net gain from those two tests is $5, not a wide profit margin, but you’ve covered your cost and you’ve made a profit.

Speaker 1: 14:18 And so that, that’s the deal, since you don’t know how much you’re going to get based on each insurance company, they, it, it becomes a monopoly money game. It’s just this arbitrary, okay, we’re going to charge $5,000 for this widget and it costs you 10 bucks and you know, the insurance company’s only going to pay what they’re going to pay. So you know, you accept that. And again, when you’re in network, you, uh, you had this contractual obligation. When you’re out of network, you bill, whatever you deem as appropriate. Insurance pays what they deem appropriate. And then you can bill the patient whatever you want with some insurance companies, they require the lab to bill the patient for anything that they don’t cover. And so this is, this is kind of the quandary or how it gets a little bit Mixi for some patients and why there is some concern about this. So let’s take a quick break and then we’ll come back and close the loop on, on, on why they do that and what does that mean to the patient and why is this Gary, and what can we do about it? Let’s take a quick break.

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Speaker 3: 15:56 Okay. We are back with Dr Chad Edwards and we are getting into a little bit about insurance and billing and the labs and how labs charge the insurance companies and we’re, we’re really working through this and understanding better a little bit about why sometimes you get a bill, why sometimes you don’t get a bill, why insurance companies only reimbursed so much. Why it’s not the same across the board. It goes on and on and it’s a very complicated issue. And Dr Edwards is helping us understand it a little bit better. Um, Dr Edwards before the break we were talking about why it gets a little bit scary. Okay. For, for uh, for a patient as they’re kind of maybe awaiting a bill, but they don’t know if they’re going to get a bill. Uh, can you, can you walk us through that?

Speaker 1: 16:45 Sure. So first a year ago, one of the labs that I was using would file insurance and they got paid what they got paid and then they would write everything else off and there are some patients that we knew that their insurance company wouldn’t, you know, like an Hmo for example. They’re not going to cover this lab because it’s out of network there. They’re just not going to cover it. There’s no way. But the lab would go ahead and run the, the labs for that patient and they do it because they can. The physician can’t sit there and determine, okay, this insurance company, we can run this lab, this insurance company. We can’t. I mean it’s, there are too many things for the clinic to think about. Other than which, which lab can I send? Which patient? It just gets way too complicated. So again, because you know that the example that we used before the break the test one test, $200, $50, all that thing, $5 profit for the, for the net.

Speaker 1: 17:43 They know based on years and hundreds of thousands, millions of tests what their profit margin is and based on the current reimbursement. And so they know that if they’re making um, you know, 80 percent profit, they can run eight tests, a kind of pro bono sort of. And since they don’t, you don’t ever want the physician wondering can, can this patient use my lab or not? I want as the lab, I want the physician to say, send me all of your stuff if I can afford to do it because they’ll send me the ones that the insurance plans pay well, but they’re going to send me the ones that they pay bad, but I know or they don’t pay at all. But I know that across the board I’m going to get enough of the ones that pay well that I can still make a profit and I can still do well.

Speaker 1: 18:39 And they’ve done the numbers on it. They’ve run a, they, they know their business model, they want that physician sending them the insurance plans that pay well. And in order to do that they take a hit on the ones that don’t. So that’s just kinda the general concept of that. So the patient may get often they’ll get what’s called an explanation of benefits and you know, so like a year ago, I would, if you came in to see me, he got your lab, send it off. You would never get a bill, but you would get something from the insurance company that says this is an explanation of benefits. So it says that we, we performed this test and we usually have a procedure code. Um, you know, it’s normally for a procedure goes like five letters, one, two, three, four, five, and that goes along with the complete blood count for example.

Speaker 1: 19:24 And uh, then it, it’ll say you’re the lab build us $52 will authorize 1652, and so the difference is x. and especially if you’re out of network, then the lab has the right to bill you for that difference because there’s no agreement that says that they’ll accept what the insurance pays. So the insurance is going to pay, you may have to pay the difference. And so that explanation of benefits at the end of that thing, it’ll say amount. You may owe your provider or your lab and it might say like $3,000 or $5,000. But again, we’re talking about monopoly money. This is just the insurance company saying they built us this, we paid this. That’s the difference. You may have to pay it, that’s all that is. It’s not a bill, it’s not telling you you’re going to have to pay it. It’s none of those things.

Speaker 1: 20:15 It’s just a communication between the lab and the insurance company and then ultimately to the patient for what the insurance company paid and what they may have to pay because of the labs. But many labs do not bill the patients now that resulted in some problems because when you’re in network, the insurance company can require, you know, based on the contract, they can require the lab to bill the patient and many of them do because they don’t think it’s right. That in a, I guess I get it, uh, that, uh, patient there. It’s just the insurance that the company that has the, uh, the skin in the game so to speak, while the patient has to pay to, um, so, um, they will, based on the contract, they’ll require the lab to build the patient. So on some of them, not all of them. And in my clinic we don’t have any idea who’s going to get a bill and who’s not.

Speaker 1: 21:09 Uh, it’s not, we’re not in the loop on that, I don’t know, so we just let them know that you may or may not get a bill. The lab is required by the contract to according to the, the parameters of the contract required to build a patient. So some of our patients will get a bill from the lab and it will be the amount that they build insurance minus what the insurance paid or uh, you know, it might be, um, the uh, you know, we’re not covering test x so the patient may have to pay 100 percent of what was billed for test x or they, you know, they’ll, they’ll bill them for them. So then you’ll get a bill from the lab for all of those things. Now the contract says that the lab has to make a reasonable effort to bill the patient and that’s, you know, different, different insurance companies, you know, will stipulate different levels.

Speaker 1: 22:07 So most of the time it’s either one, two or three bills or it might be a couple of phone calls or, you know, depending on, on what the contracts say. Um, but one, two or three bills that the patient may get and it’ll be a standard bill, you owe us $1,500 or $5 or $50,000 now. So a lot of our patients will get freaked out by that and it goes against what we talked about earlier about knowing what you’re going to pay right up front. The difference is, is the, is the lab going to require you to pay that bill? Are they going to send you to collections? Are, is this going to go against your credit? The insurance company does not stipulate that at all. They talk about billing. They don’t talk about collections. So the mini labs, I’m going across the, um, there’s, there’s hundreds of them.

Speaker 1: 23:01 Some of them will require the patient to pay the bill. The lab itself, not the insurance company, some of them will require the patient to pay the bill and they’ll send them to collections if they don’t. Often, these are some of the bigger labs that are out there. I don’t work with them and they’ll go nameless, but they’re big, well name a well known labs. Uh, in fact, one of them, if I were to send you to this lab for a complete blood count, it’s $35, you know, where if you come into my clinic and you pay cash for a complete blood count, I use a different lab. And if you don’t have insurance, I don’t remember the exact price, I think is like $7 and fifty cents. So we’re talking almost a $30 difference. Twenty $8 difference on one simple lab, $28. Now if your insurance company doesn’t cover the CBC, you’re going to get stuck for $35.

Speaker 1: 23:57 Or if you had come to me, it would have saved you $28 out of, out of network and you can go get a greasy burger with that $28. You can, you can darn near get a, like a nice steak for what? $8 anyway. Um, but the, uh, so ultimately the question then is, is the lab going to send you to collections? Are they going to report this to your credit? And many labs independent of whether or not I work with them. Many labs do not. Do that. They don’t have, it may cost them more money to collect it than it does to just write it off. I’m not, I don’t get in the middle of how their business models work. That’s just how a lot of them do. They’ll just write it off and not worry about. And there’s a lot of people that, you know, you try to collect them if you have a most hospitals, if you have a bill, if you go in and say, I’ll pay you a dollar a month, most hospitals are like, we’ll take you because you’re making an effort, you know, you pay a dollar a month for the rest of your life and how much is that going to be, you know?

Speaker 1: 25:01 Um, so it ultimately, it’s going to require, require you to pay by sending you to collections or sending you to a or, or reporting it to your credit. And many of them do not. So it, you know, what, what you do with that, it’s up to you. Uh, but there’s a big difference.

Speaker 3: 25:21 Yeah. And so that, that helps everybody understand a little bit more about that landscape in that environment and what that process of what goes on with billing. That’s not to say that just go in expecting not to ever pay for the lab because it should that go to a collections that’s going against your credit. That’s a real thing. Yeah, exactly. And so, but with some patients they might be worried, Hey, am I getting a bill? I got this thing from my insurance company. It said, you know, x amount of dollars and you know, it’s a huge, scary number, you know, the lab might not be billing you for that in the first place. Do I understand that correctly? Okay. So what else am I missing here as part of this, this concept in this, uh, this topic here?

Speaker 1: 26:11 Well, this, this concept and this topic applies to more than just lab. This applies to any clinic, any, any body that provides a medical service and they bill insurance, uh, this dynamic is across the board. And so, you know what, we didn’t talk about our copays. And so if you have, you know, many of them will have like an 80 20, and so if you bill insurance for $100 and you have an and a 20 percent copay or I should say a coinsurance, then you have to pay 20 percent of that bill and the insurance company will pay 80 percent some it’s 50 slash 50, you know, you just, you don’t know a while. I mean the people should know based on their insurance plan, but there’s a lot of different ones. Uh, so there’s no way to predict how much is this going to cost.

Speaker 1: 27:00 Ultimately, how much is that lab worth to you in some labs? I know if you get a bill for a thousand dollars and you say you call them and say I can’t pay it, a lot of times the next question is how much can you pay? And if you said 10 bucks, there’ll be like, okay, we’ll take 10 bucks. I mean, I’ve, I’ve seen that before. I’m not encouraging people to pay $10 for a thousand dollars of labs, but that, I’ve seen that happen before. Uh, so, you know, what, what is it worth to you? I mean the lab is incumbent in business to make money and provide a service. I want to support that as much as we can and at the same time we want to save patients as much as we can and save them as much money as we can and across the board, our labs are the most cost effective that I have seen.

Speaker 1: 27:46 I do the best I can to make sure that the patient gets great value at the lowest cost with the highest quality. And so you just gotta you kinda wrapped up with this but, but breakdown for me just briefly as we’re finishing up here, how does revolution health do it a little bit differently? Well, because number one, you’re going to know what you’re going to have to pay right up front. We tell you what the, what the prices are right up front. When it comes to the labs, um, it, it’s impossible to say how much the bill is going to be a, but that’s between you and the insurance company. And I do not utilize labs, at least I have not to date, utilize labs that send patients to collections because you don’t know how much that’s going to be and I don’t want to set a patient up for failure.

Speaker 1: 28:27 And so you’re, you know, how much the lab is going to be, but you don’t know how much the insurance company’s going to reimburse for it. That’s exactly right. That’s exactly right. I gotcha. Okay. Well this has been eye opening. I’ve learned a ton on this particular podcast episode and I really appreciate you walking myself and all the other listeners through this. I appreciate it a lot. Dr Edwards. Well of course it’s, again, it’s not a very sexy topic. It’s not, you know, one that’s still, that’s a lot of fun. But I think the mechanics are important and I think, you know, for people that come to our clinic or really any clinic on a functional medicine realm that out of network and that we’re just that whole insurance thing. I think, uh, I think this information is important. So. All right, until the next time that we get to talk to you, we’ll see you later. Talk to you later. All of the above, although have a good weekend. Thanks for listening to this week’s podcast with Dr Chad Edwards. Tune in next week where we’ll be going against the grain.