Third Party Payers In The US Healthcare Market: Patient Agent

An insurance company touts its ability to negotiate discounts from the posted price of a medical product. The charge master is the list of posted prices of medical services.

For the most part, Medicare and Medicaid demand large discounts. An example of charges filed to Medicare and its allowable fee taken from actual 2015 statements of service: The anesthesiologist charges $6,000 but the Medicare allowable is just $600. The discount in this case is $5,400.

Commercial insurance companies were able to negotiate smaller discounts; when I practiced, those companies “paid better”. You, a self-pay patient, can receive a 40 percent reduction off the charge master price of a physician or hospital service if you pay the bill on the day of care. You can do this because there is no wholesaler between you, the purchaser and the physician or hospital provider, the seller.

In 2015 numerous press reports read that commercial insurance companies also negotiate discounts off the price of the expensive medications; Solvadi and Humira are examples. It is hard to know the dollar sales value of a given drug; the ceiling is the product of units sold and list price per unit.

A more sophisticated reader of pharmaceutical company financial statements than I may be able to discern that actual annual magnitude of proceeds from a given medication. You, an individual, cannot negotiate a discount on the price of a new pharmaceutical from the list price by paying your neighborhood pharmacist cash. His cost is fixed by his wholesaler.

The upshot recent stories is that only the patient, not the insurance company, can assess the accuracy of statements entered onto the blue book pages of his medical record. To that end, knowledge sufficient to parse physician documentation of history and physical examinations performed at an office visit is an essential skill.

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