Insurance incentives for medical providers

[JL13]

I got a quote for a procedure that was $13,000, and insurance was going to cover very little of the cost. I called the insurance company to find out why and found out that the surgeon was actually not in-network, even though she works out of an in-network office. Who's in network is determined by the individual, not the location, apparently.

I made some calls, and it turns out that the same procedure can be done in-network for $4,000. That's before insurance covers their portion also.

I very curious how this dynamic can exist. The person who's charging $4,000 also has to pay someone to process all the insurance paperwork, leaving them even less.

Do some surgeons in the same field doing the same procedures in the same city earn vastly different incomes? Why wouldn't these two rates converge? I would think that the headache of dealing with insurance companies would incentivize someone to undercut the in-network guys, since they don't have the additional overhead, but for some reason it's the opposite?

Anyone work in the industry and can shed some light?

[Riggerjack]

My nieghbors works in bookkeeping for the local hospital. She is certain that it's the lawyers and irresponsible litigation that causes this.

And then, she tells stories about all the poor, unfortunate souls who come through, and how she kindly shuffles their costs back into the system, because they can't pay.

The rules of economics don't apply to medicine, because nobody is allowed to make a rational decision based on pricing. Costs are calculated after the decisions are made, and influenced by insurance, lawyers, doctors, bookkeepers, and most importantly, apparently, just how sympathetic your story is.

The same cost disease runs in college, as again, every price is secret and varies by individual.

[SavingWithBabies]

Another facet on the in-network vs out of network is you can go to a hospital that is in-network and then they sometimes assign someone who is not in-network to work on/with you. We just had a kid and some of the charges are out of network. It's not that big a deal but I don't know how you're supposed to deal with this -- do you ask every single provider if they are in-network or out of network? What if you're drugged out for a procedure and they swap in another surgeon (so you can't ask)? It all seems so convoluted.

The billing isn't all done on my example so I'll watch to see if maybe it's just a billing issue but...

[Ego]

If you are up for a fun experiment, call the same facility and ask what they would charge if you were to pay for the procedure yourself. No insurance involved. You might just find that it is even less expensive than both the in and out of network costs to you.

[Scott 2]

Anything significant, we precertify with insurance, argue with the insurer when the bill comes, then argue with the hospital after the insurer is done with it.

The real price seems completely fabricated.

[JL13]

If you are up for a fun experiment, call the same facility and ask what they would charge if you were to pay for the procedure yourself. No insurance involved. You might just find that it is even less expensive than both the in and out of network costs to you.

Ine I explained the situation to them (the out of network would only cover about $2,000 for the $13K procedure), they offered to trim it down to $10,000. Not really much of a discount.

I'll keep everyone posted once I get a quote from a competitor and see if I can get some more details.