The Money Triangle between Providers, Insurance, and Patients
I get asked by people all the time why I choose to have my practice be “out of network” and why I don’t bill insurance. I want to respond “why would I?!” I want people to understand how this payment scheme really works, and why insurance and big businesses are the only people that benefit from this set up. If you want to check the information I am providing please see this link below to Blue Cross Blue Shield’s website.
If a provider is “in network” it means they have “agreed” to a “reduced” rate. This is true, but I used quotations for a reason. “Agreed” does not mean negotiated, more like strong armed from the insurance company into a certain deal. Huge PT chains/providers have more power to “negotiate” but small clinics get steam rolled with terrible rates. And “reduced” is a relative term. For example, BCBS pays roughly 20% of PT charges. So if a PT clinic billed $100, they would get paid $20. For this reason, PT clinics (and other healthcare providers) inflate their charges. I am not saying they bill fraudulently, they simply charge an inflated amount for their services. It is not abnormal to see a single PT visit bill from the insurance company for $400-$500+. Check out your next explanation of benefits (EoB) and look at the charges if you don’t believe me.
Now what does that mean for you as the patient? If you see an “in network” provider, they will bill your insurance let’s say $500, for ease of math. Your insurance company will process the billing codes for 20% of the charges, so $100. Additionally, you as the patient may be responsible for a co-pay in the clinic depending on your specific plan, so anywhere from $0-$50. Now if your deductible is met, you are still responsible for your copay (until your max out of pocket is met) but otherwise, you’re in the clear. However, given today’s insane deductibles, that is almost never true. Unless you had surgery, I don’t know how anyone would ever meet their deductible. A couple months down the road, after you have seen PT, you will get a bill for some amount unbenounced to you. It’s like monopoly, land on chance and surprise! That will be $1200 for 12 PT sessions plus whatever you spent on “co-pays”. Wouldn’t have been nice to know that in advance?
If you are a patient seeing an “out of network” provider who is billing your insurance, this set up can really get you. “Out of network” means the provider has NOT “negotiated” a rate with your insurance. If you don’t know the “fee schedule” (costs) and they bill your insurance, rather than you directly, this can be a bad day. I have seen this first hand as a provider. People would come into the clinic with out of network insurance and get slammed with a bill for $400 for a single session of PT (because the charges are still inflated and patients don’t see the charges to “shop around”). Needless to say, they were NOT happy.
Occasionally if you have a low enough deductible, some providers may “wave” your deductible which really does you solid, but is kind of sketchy with the insurance agreements. This means, they “bill” the insurance $400-$500/visit until your deductible is met, but do NOT collect the payment from you. For example, if your deductible was “low” at $2000, your deductible can be met after 4 visits. Once your deductible is “met” the insurance company will now pay the PT clinic at the inflated rate of $400-$500/visit! Explain to me why the management of a PT clinic, after giving you 4 FREE PT sessions, is going to want to get you better as fast as possible if they can bill your insurance for $400-$500 a visit!?
Here are the advantages of working with a provider, specifically PT provider who is “out of network” and does not bill your insurance.
You know the cost of your care upfront and can work with the PT to find a way to make it financially manageable for you. No monopoly, “land on chance,” surprise bills here! This may be slightly more expensive, the same cost, or perhaps even more affordable depending on your specific circumstance and plan.
This business model is designed to make seamless patient care the priority. No insurance telling providers what they can and can’t do and when they can do it. No cheap reimbursement forcing increased patient volume in the clinic. Meaning you will NOT be in the clinic with 4 other patients at the same time seeing one PT.
You can still utilize your insurance! Although the provider does not bill your insurance, you can still submit a claim to your insurance company similar to submitting a claim to an auto or homeowners insurance. Furthermore, you can ( and should) utilize the benefits of having a health savings account (HSA) to pay for health care services like this with TAX FREE MONEY (and it lowers your taxable income).
Healthcare is a business, and that means it is dirty and corrupted by greed. I like to believe most of us who are providers went into it with intentions of serving and helping others to make this world a little better. Unfortunately, the insurance companies, investors, and management take advantage of patients and providers to turn huge profits. Don’t get me wrong, there is nothing wrong with making a good living, and all businesses MUST be profitable to stay open. But when it comes to money, for most businesses (and people), no amount is ever enough. Cutting out the middleman (insurance) from the patient (consumer) and provider payment scheme may be part of the answer to the healthcare crisis the country faces today. Ultimately, restoring the relationship of normal consumer economics (no middle man/insurance payment), providers are forced to provide superior quality care, and with money leaving the patients’ hands directly, it encourages consumers/patients to be more selective and prudent in their spending.
In summary, “in-network” does not mean better or cheaper. And “out of network” does not mean you can’t use your insurance. You need to take responsibility for your own care and inform yourself about your plan. Select a provider based on what best fits your specific needs.
As always feel free to reach out with any questions.