30 sec brief
Deciphering medical terminology is a challenge; research says most of us lack a proficient level of health-care literacy. That can mean struggling to correctly follow a prescription or understand a medical document. That can make it hard to make informed decisions and follow a recommended course of treatment. An added burden is trying to make…
Deciphering medical terminology is a challenge; research says most of us lack a proficient level of health-care literacy. That can mean struggling to correctly follow a prescription or understand a medical document. That can make it hard to make informed decisions and follow a recommended course of treatment.
An added burden is trying to make sense of the cost of care. Patients rarely are given out-of-pocket estimates before they receive care, making it hard to compare pricing for non-emergency procedures.
When there is public pricing information, it is often irrelevant. This year the federal government required hospitals accepting Medicare patients to publish the list price of their services. But when you have health insurance, you don’t pay the list price; your share is based on a (lower) negotiated price between the insurer and medical provider.
Making health care more understandable could improve health and potentially help consumers spend their health-care dollars wisely. Here are some possible approaches to reducing the stress of navigating the high language and financial bars of health care:
Help consumers shop for plans based on their potential out-of-pocket costs.
Well-meaning employers often offer health insurance plans that offer the lowest premiums and deductibles. That sure has its appeal, but it can be penny-wise, pound-foolish if you’re also on the hook for a high coinsurance share. (Coinsurance is the percent of a procedure you, not the insurer, pays.) Explaining a plan beyond the simple premium and deductible will help consumers make informed decisions.
Provide out-of-pocket cost estimates before a procedure.
Technology should make it easy to cough up an estimate for care based on a patient’s actual health insurance coverage. Yet it is the rare hospital or medical provider that currently provides this personalized estimate.
Increase real-world price transparency.
Some good news is that there are now third-party providers that give consumers a window into the range of charges in their area for specific procedures in their region. But the quality of that data is often lacking. It may be based on the list price—not the more relevant negotiated price with the insurer—and it is often not clear how up-to-date information is. This is an area where federal legislation or regulation is likely needed to light a fire under health care providers and insurers. Consider checking out Healthcare Bluebook or Fair Health Consumer.
There are helpful sites such as goodrx that directs users to the cheapest source of prescription drugs in or near their zip code, or the cheapest mail service providers.
Explain the EOB to plain English.
Every time you place a claim, your insurer sends you the Explanation of Benefits (EOB). Yet line-item charges are presented only as an arcane billing code, making it extremely difficult to decipher. When payment is denied or adjusted, that too is in code. It’s such a quagmire that it has led to the emergence of medical billing advocates—specialists who know their way around all the codes and how to negotiate with insurers and medical providers. The fact many of us need to turn to medical billing advocates is a perfect example of how consumer-unfriendly health care can be for patients.
About the author
Carla translates business and personal finance concepts into engaging content that helps individuals make more confident choices in how they manage their money. Her work appears in The New York Times, Money Magazine, Barron's and Consumer Reports.