… and the bill was $28,395.50, of which her insurance company paid $25,865.24. If the samples were sent to an in-network lab, the bill for the tests would have been $653 (and even then, some of the tests were probably medically not useful, so the bill for medically useful tests at the in-network lab would have been less).
Crazy, but in the end, the patient was not responsible for any of the charges. I’ve had a similar issue in the past.
I think I’d be shopping for a new MD. My MDs always warn me if they need to use any non-network labs or things are not well covered by my insurer and let me have options.
I’m glad the patient complained! It’s totally unreasonable — the sequence of events and I hope these types of situations get more publicity and those medical providers are exposed for this type of unreasonable, conflict-ridden behavior.
That’s a HUGE price difference between the labs and the excessive fees insurer paid will be included as overhead and contribute to higher premiums for all insured under that insurer.
This is embarrassing for the medical community. There is no reason to start ordering DNA testing for something like this. Then we wonder why our premiums are so high. We have seen reps to push certain DNA testing the last few years.
One question I ask is how will this benefit the patient? I haven’t heard of a good reason in 4 years… Especially not as a first resort. Not standard of care in any state.
The article indicated that out-of-network lab was likely owned by the same Physicians who owned the practice that ordered the tests.
Sounds like something that the state insurance regulator should be looking at for fraud.
I have been urged by an MD to get DNA testing for a chronic health condition I have. I asked the md whether that would change treatment—he agreed no.
I also asked whether he’d want me to be in a clinical trial where they’d do the sequencing at no cost to me and possibly be of some scientific benefit—he said he’d try to ask his colleagues who are running trials & get back to me (several years now and no reply).
However, insurance paying the excessive fee means that that much additional cost has been inflicted on the system, to the detriment of all except for the provider who got away with the excessive fee. It adds that much more to the high cost of medical care in the US and the burden on employers and the government who pay for most peoples’ medical care (and on those who self-pay or individually purchase medical insurance).
This is usually the case with some financial incentive. Depending on how much of the percentage of the lab it can be a Stark law violation.
Yes, understood.
But aren’t there market forces that drive the system toward efficiency? For example, if this doctor routinely runs expensive tests, wouldn’t an insurer kick him/her out of their network, putting his/her own income at risk?
I don’t have a good grasp on health care economics.
I’m not an expert on health care economics, but the gross motivations are clear. Under ACA, no more than 15% of the premium income an insurer receives can go to non-medical expenses (I may not have the terminology right). Although the insurer has a short-run incentive to cut costs by say helping people substitute inexpensive PT for expensive surgery, such a cost cut would likely lead to premium cuts in subsequent years. Hence, the cost-cutting innovation would reduce profits over time.
Thus, in the long run, a profit-maximizing firm should seek to maximize gross revenue by incurring costs and driving up premiums. That is effectively the behavior I have seen.
Employers have at times gotten together and demanded cuts in premiums, but over the last decade, they seem to have opted instead for shifted costs to employees by a) increasing the percentage born by employees, b) accepting higher co-pays; and c) allowing for co-insurance. Thus, the market forces that could have pushed for greater efficiency have just decided to cost-shift instead.
The big threat that might provide some discipline is probably the Amazon/JP Morgan Chase/Berkshire Hathaway push to go outside the insurer world and figure out how to cut costs. https://www.bloomberg.com/news/articles/2019-03-06/amazon-jpmorgan-berkshire-health-care-venture-to-be-called-haven. The article says, “The companies have characterized the venture as a long-term effort that would be free from profit-making incentives and constraints.” That is, it will focus on delivering service at lower cost to the three owners.
I think that is promising as I don’t believe that health insurers add any value to the system at this point. They are fragmented and don’t have bargaining power with pharma manufacturers (certainly relative to other countries). They don’t really manage risk – if they have a bad experience with your company this year, they just raise premiums next year. And large corporate clients typically self-insure, so they are not necessarily taking risk at all for those clients.
Again, I’m no expert, but that’s my view of why there isn’t much pressure at the moment on cutting costs or being customer friendly (e.g., not punishing doctors for sending tests to an out-of-network lab or bringing in an out-of-network anesthesiologist). Maybe others will know more.
When I saw that article I immediately sent an email to my daughter (who lives in NY) with the subject line “If you get sick, do NOT use this doctor”.
(It was helpful that NPR included the name of the doctor and the clinic. )
This really is just an illustration of the problems with our profit-driven health care system. I mean, Canadians probably don’t run into this sort of problem. I’m assuming that this particular medical practice represents an extreme – but the fact that there is even a potential for this sort of abuse is problematic.
The overpriced lab was already out of that insurer’s network.
The incident happened in New York, where there is a law protecting patients against “surprise bills” (otherwise, the overpriced lab would likely be trying to collect from the patient, and many Americans have so little cash that they would be forced into bankruptcy by such a bill). Unfortunately, it may not protect insurance companies enough from predatory providers, who now get an even easier target to overbill.
There are bills in the US Congress. Incredibly, the general concept of stopping “surprise bills” has strong bipartisan support. However, lobbyists for interest groups (providers versus insurance companies and employers) are doing bipartisan lobbying that is slowing down the progress of such bills. The insurance companies and employers want to limit the “out-of-network surprise” prices to benchmark prices set by in-network prices, while the providers want to allow for arbitration if they cannot stop such a bill from passing.
Medical care economics is very warped compared to standard two-party buyer-seller microeconomic supply-demand models, because:
A. Most consumers / users (patients) are not very well informed.
B. The system is very complex, making it even more difficult for consumers / users to be well informed about it.
C. For most consumers / users, purchases are not entirely voluntary, at least in the short term (e.g. physician tells the patient that s/he needs something expensive). “Out-of-network overpriced surprises” are often chosen by the seller / provider, out of the control or even knowledge of the consumer / user.
D. Transactions are actually a three party transaction in many cases, between the consumer / user, the seller / provider, and the payer (a private or government insurance company). If the payer is not resistant to overpriced bills, many consumers / users become price-insensitive, allowing overpriced sellers / providers to be overpriced. If the payer is resistant to overpriced bills, it may get a lot of backlash from consumers / users.
E. Sellers / providers themselves are often under heavy professional school debt, so they may “need” to chase money (sometimes in ways that may stretch the boundaries of many people’s ethics) to pay off their debt.
I agree it’s very problematic and I would vigorously object as the patient, regardless as to who is paying the bill, directly or indirectly. It is egregious.
One of the cardiologist clinics I went to would invariably tell me at every visit I should have another EKG, as well as other tests. I refused until I met with the MD ordered the 1st EKG and we could go over the results.
He also kept wanting me to a nuclear stress test. I had a 30 minute discussion with his partner about pros & cons of running the test in light of my allergies and medical conditions and we agreed risks outweighed the benefits. Sadly, NOTHING of the conversation or conclusion was added to my medical chart and the other cardiologist kept urging me to have the testing (they do it all in-house & bill for it). I refused, citing my 30 minute conversation with his partner and the unnecessary medical risks.
After a few more bad experiences with that clinic, I reported the multiple bad experiences to my internist and lung doctor, both of whom recommended that clinic and cardiologist and urged them to for a referral elsewhere, for me and other patients. The chart had NONE of the tests or results from any of the testing they performed on me, no info about my allergies and other medical conditions.
I happen to know a thing or two about DNA testing… and I smell a huuuge rat. There is no way a sore throat - even at a non-network lab - would cost $28k to test for all likely culprits using FDA-approved tests.
Right? This isn’t about what it is pretending to be about. This isn’t about network vs out of network, this isn’t about a medical test, this is about fraud.
Best part of the story is where the patient told the doctor’s office that she was going to report them to New York state’s Office of Professional Medical Conduct.
Sounds pretty close to fraud to me. Hopefully there are local/state laws to stop this sort of thing.
I really hope the patient did report this and will send them the article. It IS very wrong. Insurer should also have challenged this.
I hope she did…especially since it appears the lab is owned by the same physician group. This is beyond just sending to another out of network lab. This is more about ordering tests which jack up prices…that have nothing to do with the medical issue presented by the patient.
My initial comment was going to be that I was disappointed in the insurance company that immediately cut a check for $25k. Then I read,
It looks like fraud to me, and it should be the insurance company’s job to spot it, and stop it (without an article being published first). I don’t see how or why a patient should be responsible for spotting and reporting this fraud, especially when the medical practice will immediately accept the $25k as payment in full (WHY WOULDN’T THEY??) and waive the $3k or so patient portion. The lab is owned by the same physicians who order the tests. To me it is a clear case of fraud. Where do you draw the line? If they can charge $28k for these tests - and the insurance company automatically pays them without question, why not $100k? Why not $5 million?
Drawing the line closer to usual pricing is a lot harder. If that set of tests is $653 at in network labs (and the medically useful subset is less), what should be the line at which fraud alerts start ringing? $654? $1,000? Of course, then there is also insurance companies trying to police unnecessary tests and care, but that tends to cause backlash about “rationing”, “death panels”, etc., as well as legitimate differences of opinion about what is necessary for the specific patient.
This case may be obviously suspicious, but there are probably many others that “fly under the radar” by not being so egregious.