Thinking About Health: What does your insurance pay for?

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If you’ve signed up for Obamacare or have begun using the coverage you already had, you’ve moved from the buyer’s stage to the owner’s stage.

Like owning a car, you have to read the fine print in the owner’s manual to know what to do when things go wrong. In particular, you need to know who pays what for your care.

And that brings me to those hard-to-understand Explanations of Benefits, or EOBs, that insurers and doctors send out sometimes months after you’ve had treatment. The EOBs appear to show what insurers or Medicare have covered after they’ve evaluated or paid a claim on your behalf.

In reality, those EOBs are so confusing, it’s hard to resist throwing them in a pile and forgetting about them. Yet, they will take on even greater importance as people enrolled in Obamacare policies realize they have bought high-deductible insurance, which may require them to pay several thousand dollars out of pocket before insurance kicks in.

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Courtesy photo

Trudy Lieberman

A man I know recently had three cardiac studies, including a stress test, at a New York diagnostic testing center. The center sent a bill for $2,100. It showed an “adjustment” of $1,474, a “balance” of $197 and a column called “received” with an amount of $547.

An adjustment? For what, he asked.

The numbers didn’t seem to add up. Nor were they labeled in a way he could understand them. Columns labeled “adjusted” and “received” meant little without an explanation of who was doing the adjusting or the receiving or who was paying the doctor.

Fine print under each of the three tests seemed to say his Medicare supplement carrier Emblem Health had made a $41 payment for one test, $117 for another and $40 for a third. However, those amounts also appeared under the “balance” column and presumably meant that’s what he owed. If the carrier had paid those amounts, how could the patient still owe them?

And what did Medicare cover? For that, the man had to check the EOB from Emblem Health since Medicare had not yet sent its own Explanation of Benefits. They come quarterly, making it tough to match up the numbers in a timely way.

Emblem Health said the doctor billed Medicare $744, and Medicare paid $476. There was no amount for $476 listed on the doctor’s bill.

“They don’t make clear what the numbers mean and what they apply to,” the man who got the tests said. “When you don’t know what they mean, how do you know if the doctor is overbilling?

This was not the first time an EOB from Emblem Health caused confusion. Maybe other policyholders have had trouble, too. The latest EOB from the insurer advised that the carrier was working to improve its statements.

“You’ll see changes,” it promised. “A streamlined look and clear, easy-to-understand explanations of how benefits work.”

That’s the problem. Each insurer is free to design its own disclosure statement. Without oversight from insurance regulators — historically, they’ve paid little attention to this problem — carriers can do as they please. That, of course, makes it hard when people switch insurers at open enrollment. Millions more will be doing that now that they have insurance.

A study reported last month in the health policy journal “Health Affairs” estimated that about half of new enrollees in the state insurance exchanges are likely to lose coverage during the year because of changes in family income. More income could mean a lower subsidy, for example, and that means a higher premium a family may have to pay out of pocket. That might be tough.

When and if they do re-enroll, it means learning how to decipher a new insurer’s EOB. People insured through their work also face this task when employers offer new carriers, which many do every year or so.

This man’s trouble understanding a simple claim shows how hard it is to take charge of our care, as some health experts say we should. Imagine how difficult this exercise would be if a patient had dozens of claims forms and EOBs for a serious illness.

Health care is not like other market goods we buy. It is not like toothpaste or canned peaches where we clearly see the price of what we are buying and understand what it means. Health care fundamentally is different. Despite all the talk about health care consumerism, it’s still darn hard to find out what a medical service actually costs.

The mess of the jumbled up EOBs needs to be tidied up, possibly with standardization or regulation if we’re really serious about health care consumerism and the promise of transparency and clarity advanced by health reform.

It needs to be fixed if we’re expecting Americans, including seniors, to take on more of the burden of paying for their care.

The confused man in this story walked over to the diagnostic center and asked office personnel to explain his bill. He came back satisfied. Complaining in person to your doctor or calling 1-800-Medicare may be the best remedy for the time being.

The Rural Health News Service is funded by a grant from The Commonwealth Fund and distributed through the Nebraska Press Association Foundation, the Colorado Press Association and the South Dakota Newspaper Association.

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