What The Patient Pays

To find that out ahead of a medical procedure takes a good deal of digging

Few things are more infuriating than trying to figure out how much your health plan will pay for a medical procedure. Oh yes, the glossy brochure from your benefits department seems straightforward: You pay, say, 10% of the costs if you stay in the network or 30% to 40% if you go out of network.

What your benefits handbook doesn't tell you is that prices vary even among in-network providers and that if you leave the network, you may have to pay more than 50% if your doctors charge beyond the mysterious amount the insurer deems "reasonable and customary." As more of us are pushed into plans with high deductibles, we need detailed cost data more than ever. What's a consumer supposed to do?


Before you schedule any treatment, ask your doctor or hospital to provide the Current Procedural Terminology, or CPT, code expected to be used for your medical services. "The key is in the codes," says Matthew Holt, a health-care consultant in San Francisco. Because he works in the medical industry, Holt knew he wouldn't have much luck finding out how much his former insurer would pay to cover knee surgery until his physician's office provided the five CPT codes the doctor expected to submit.

Yet even with the right codes, Holt found that his insurer wouldn't tell him the actual reimbursement. "I had to play 20 questions," he says. "I asked: If a bill I submitted was $2,000, would insurance coverage be above or below that?'" After some back and forth, he managed to narrow the spread to a couple hundred of dollars per procedure.

Why won't insurers just provide their rate schedule? Most consider the rates they negotiate with doctors and hospitals to be proprietary, says Barry Barnett, a principal at consultant PricewaterhouseCoopers. "[They] don't want to share this information for competitive reasons," he says.


While pending federal legislation may require more cost transparency in the future, some insurers are shedding light on costs now. Aetna (AET ) and Cigna (CI ), for example, are putting cost and quality-of-care databases online in an effort to steer consumers to medical providers who deliver the best service. "The first variable is always going to be quality. People want to get out alive. They don't necessarily want to get out cheap," says Joseph Mondy, a Cigna spokesman.

Cigna's online tool (mycigna.com) allows members to search by medical providers with the best patient outcomes and cost efficiency. You can get cost data, sorted by Zip Code, on 43 of the most common kinds of medical visits and procedures. At aetnanavigator.com, participants can search among 70,000 physicians in 11 states and the District of Columbia to find the in-network rates for common treatments. The cost information provided by Aetna and Cigna is pegged to a member's specific insurance plan, telling you what you can expect to pay out of pocket.

If you aren't an Aetna or Cigna customer, try to find someone who is and can look at the data on your behalf. The results probably won't jibe with your own plan, but they should help set a benchmark. In addition, make sure you check out your insurer's Web site. Companies such as UnitedHealthcare and WellPoint (WLP ) provide broad cost estimates based on regional data.


Most people are aware there's a cost incentive to stay in network. Just don't assume that every in-network provider gets the same reimbursement. In anticipation of turning 50 in March, Kate Scott decided to schedule her first colonoscopy. Because the Littleton (Colo.) financial adviser has a $5,100 deductible, she is especially cost-conscious. Yet after several hours of digging, Scott came up with in-network estimates that differed by $1,400, making her out-of-pocket costs $700 to $1,100.

If you must go outside your network, be prepared for another level of complexity, because you enter a realm where coverage is determined by what the insurer deems "reasonable and customary." For example, a New York City resident in a UnitedHealthcare plan can expect to shell out an estimated $667 for heart bypass surgery if it is performed in-network. Go out of network, and the out-of-pocket cost soars to an expected $38,000. Figuring out how much of that is "reasonable and customary" is probably enough to give anyone a heart attack.

To avoid sticker shock when using an out-of-network provider, get a cost breakdown of a treatment or procedure, suggests Abbie Leibowitz, chief medical officer at Health Advocate, a Blue Bell (Pa.) company that employers retain to help their workers resolve insurance problems. Also ask if the doctor has worked with your insurance company. If so, the physician's staff may have a sense of what fee is considered "reasonable" as well as what won't be covered.

Once you have that information in hand, see if the doctor is willing to accept a lower fee. A Health Advocate customer was billed $17,000 for an out-of-network mastectomy and biopsy, of which just $2,700 was considered reasonable and customary. With some negotiating, Health Advocate got the surgeon to knock $7,300 off his fee.

Eventually health insurance costs will be more transparent. Until then, most of us will have to doggedly pursue the information we need to make smart decisions about our health care.

By Lauren Young

    Before it's here, it's on the Bloomberg Terminal.