HealthCare Advocate Blog

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Constantly hearing in the media about three particular major shortcomings of the healthcare system in the U.S. and a recent encounter of a friend, has lead me to pursue “The Uninsured Patient Experiment.”

The three shortcomings of the U.S. healthcare system I’m referencing are the increasing cost of healthcare, the number of uninsured people and bankruptcy filings due to medical bills. Every time you visit a provider or try to renew or obtain health insurance you are seeing the effect of the increased costs. There are over 40 million people without health insurance coverage and everyday that number is increasing. The combination of the first 2 issues leads to the third. Rising prices and no insurance have made medical bills a leading cause of bankruptcy in the U.S.

A close friend of mine (we’ll call him Mr. X who was uninsured at the time) needed some laboratory tests performed at the direction of their doctor. These tests included a routine chemistry profile (12 tests), a thyroid profile (3 tests) and the quantitative measure of 3 other hormones. I spent 25 years in the in-vitro diagnostics industry as a salesman and manufacturer for many of the reagents used in these tests and therefore I have a unique perspective on their actual costs and the significant markup hospitals mandate. When the bill arrived and was $579 due in 30 days a shocked Mr. X promptly came to me for advice. He wondered if it was possible to negotiate a cheaper price? Certainly the insurance companies aren’t the only ones who get to bargain with the hospitals…or are the only people that pay list price really those who can least afford it? Sure, hospitals must make money to continue to offer high quality services, but at whose expense? Should there not be room for the uninsured to bargain or should they be forced to pay a price that ultimately may lead them to bankruptcy and put a further burden on society?

I armed Mr. X with some information and told him to call them and try to bargain. He called the hospital and spoke with a billing person who said that because they had no insurance there wasn’t a negotiated fee schedule and they had to pay the full amount. However, the hospital would be happy to work out a payment plan which spread the payments out over 18 months with no interest. Mr, X had no other recourse other than to pay the full price over 18 months. Now, $32 a month shouldn’t force a bankruptcy, but what about more expensive procedures such as surgery or diagnostics? This piqued my interested, so began “The Uninsured Patient Experiment.”

My hypothesis was that most hospitals would not give an uninsured patient the discount they give insurance companies, but may give a payment plan. What I found is encouraging and disturbing at the same time.

The experiment starts by calling 11 hospitals in 5 states posing as a patient who made too much to receive government assistance but not enough to pay for health insurance. The procedure that was used to get prices on was a Computed Tomography, lumbar spine; with contrast material, in layman’s terms a CT scan. I chose a CT scan because they are normally not an emergency procedure so there is opportunity to shop for this service. The table below shows the data collected.

		Cost & Terms for the Un-Insured for CT Scan
State	Hospital	Terms	# of Beds	List Price	Best Uninsured Price	Un-scaled Medicare rate
Mass Hospitals	Beth Israel Hospital	If paid in full at time of service a 30% discount is applied. If not paid in full 50% down and remainder on a payment plan	509	$2,401.00	$1,680.70	~$372.75
	MetroWest Medical Center	Patient accounts quoted that the procedure is normally $1300-$1500. If patient does not have insurance, Metrowest Medical Center charges them the medicare rate of $204.07	360	$1,400.00	$204.07	~$372.75
New York Hospitals	Mt Sinai Medical Center	Needed to call the doctor to find out what he charged for the last 3 CAT scans	1171	Would not divulge		~441.62
	St Vincents Midtown	Patient must come in and speak with a financial counselor or a physician about cost	150	Would not divulge		~441.62
Texas Hospitals	Hendrick Med Center	50% discount payable in full at time of service or 25% discount and a payment plan for the balance. Person believes it is interest free but is not positive.	362	$1,013.39	$506.70	~$340.6
	Christus Spohn Shoreline	Financial counselor said if patient brings in proof of income there is a 60% discount up front, payable at time of service. If no proof of income then a 40% discount is applied. Further payment plans need to be discussed w/ counselor.	148	$3,970.00	$1,588.00	~$340.6
North Dakota Hospitals	Meritcare Health System	They offer a 10% discount and payment schedule. Balances of $500-$1000 to be paid in 3-5 months but will allow 8 months. The reading charge of $175 they want pd 3-5 months	582	$1,275.00	$1,147.50	~$299.93
	Altru Hospital	Patient services quoted approx $2600 for 1 view. They want 1/2 down and balance paid in 6 months. If 1/2 payment can’t be put down, payment arrangements can be made.	277	$2,600.00	$2,600.00	~$299.93
	Mercy Med Center	Quoted $2178.54 plus a reading charge (didn’t know what it was). Hospital gives 20% discount if paid in full within 60 days. Financial application must be filled out before terms can be set up	87	$2,178.54	$1,742.83	~$299.93
Florida Hospitals	Tampa General Hospital	Patient accounts quoted $2095 full cost/will apply 30% discount($1466.50) of which they want 70% down at time of service($1026.50)/have to sign promissory note for balance/interest free payment plan initiated	818	$2,095.00	$1,466.50	~$353.79
	Heart of Florida Regional Hospital	Offer 50% discount. If payment can’t be made at time of service balance can be financed.	142	$2,487.19	$1,243.60	~$353.79

Here are some quick observations:

• The list price varies by 75% ($1,013 to $3,970).
• The best uninsured price varies by 92% ($204 to $2,600).
• List price discounts range from 0% to 86%.
• To get many of the discounts hospitals offer the balance needs to be paid in full at the time of service or a large down payment made, to receive it.
• Some hospitals are unwilling to divulge the price over the phone and others will not call back.

The process to collect the information was laborious requiring numerous phone calls and conversations with people in multiple departments. Although the idea of shopping for procedures is a good one, the reality is the information is not easily obtained or not the answer you were hoping for. The healthcare industry stands alone with its lack of shopping convenience and pricing consistency. The most important thing to recognize is that when a hospital’s Medicare/Medicaid admissions constitute 50% or greater of their total admissions and gives significantly reduced prices, it shows that the lower prices are financially acceptable. How can they then justify the astronomical markup they charge the uninsured?.

What if the government mandated that any hospital that accepts Medicare/Medicaid, must also allow the uninsured to pay based on the same fee schedule? It’s not universal healthcare, but it’s a step towards fixing the much broken system.

While we wait for the government to act, there are steps you can take to reduce your potential burden of medical expenses. Knowing your local hospitals policy for the uninsured today can save a tremendous amount of money and hardship if you have an emergency tomorrow. If you don’t know the hospital’s policy upfront, you may be subjected to higher prices, perhaps even the threat of bankruptcy if the procedure or procedures you need done exceed your financial means. Instead of going to the emergency room for routine and non life threatening tests, consider a stand alone walk-in clinic or one that you are starting to see show up in your local pharmacy or discount mega-store. New tools are being introduced every day to help consumers navigate the health care system. Find them and use them, before you have to and recognize that all hospitals are not equal.

What can providers do to reduce the burden that the high price of medical care puts on the uninsured? First and foremost, set reasonable list prices for procedures or offer discounts that an uninsured person can actually get without paying the majority or entire balance in full at the time of service. Perhaps introducing a sliding scale pricing structure based on income would be a fair way of helping the uninsured. A whole other can of worms that parallels this issue is the rate at which hospitals are litigating against patients for unpaid bills. Maybe instead of paying the lawyers, they could give the proper discounted rate to the uninsured and avoid the legal cycle and debt disputes from the onset.

Some hospitals will work with the uninsured proactively and should be recognized for it. How would you suggest approaching this financial and societal crisis?

Part two of our experiment found that the variation in the price of generic drugs is three times more variable than the name brand equivalent…it pays to call around!

Inspired by the findings of part 1, I have continued the experiment in another area of healthcare where the consumer can save a lot of money, but often don’t…prescription drugs.

Have you ever shopped around for your prescription drugs? Many organizations recommend that you do, but most people don’t. Generic drugs provide savings over name brands, but be careful, the price of generics can vary by more than three times that of the name brand drug. So there’s more to shopping around then getting the generic, you have to shop around for the best price for the generic also.

Continuing our series on comparative healthcare shopping we decided to see what the price differences were for two commonly prescribed drugs and compare those to generic drugs if they were available. We contacted 30 pharmacies in 5 States (see table 1).

We chose Ceclor and its generic counterpart Cefaclor @ (500 mg) for 30 capsules, (an antibiotic used to treat certain types of infections) as well as Lipitor (a cholesterol lowering drug) @ 20mg for a 30 day supply (30 tablets). Lipitor had no generic substitute. It should be noted that the Ceclor product in most cases is a short term prescription (15 - 30 days), however Lipitor is a drug that you will most likely take for an extended period of time. The findings are once again very enlightening. You could be throwing your money away if you do not shop around!

In our investigation of Ceclor we found prices varied from $168.00 to $123.71 which is a variation of 26.4%. The generic brand, Cefaclor varied from $126.95 to $26.42 a variation of 79.2%! While this generic drug offers significant savings over it’s name brand counterpart your real savings comes from shopping around for your generic choice. Don’t assume that by just accepting a generic substitute from a single pharmacy it will provide your only savings. When we investigated our options for Cefaclor we found that most every pharmacy we contacted mentioned that there was a generic substitute and were very willing to quote the price of the generic. Think about this…if the pharmacy tells you that there is a generic substitute you should then start calling other pharmacies and pricing those generic alternatives also. It may be possible that you can get the lowest price for the generic from another pharmacy. After all if the pharmacy that quoted the generic substitute for Ceclor was $126.95 (highest) by making additional calls you could find a pharmacy that offered the same generic for $26.42 (lowest). Now you have really saved money… over $100 for a single prescription!

Lipitor, which has no generic alternative, varied from $138.99 to $90.00 which is a variation of 35.2%.

The same strategy would hold true. First find out if there is a generic substitute and if there is no alternative you really need to continue to shop around for the best price on the name brand drug. The results are the same. If you shop around and fully understand what your choices are you can achieve the savings that are best for you.

MA Pharmacies *	City	#30/500mg/ Ceclor	Generic Ceclor	#30/20mg/ Lipitor
CVS	Waltham	$168.00	$64.99	$138.99
Brooks	Wayland	$169.79	$69.79	$134.29
Walgreens	Natick	$149.89	$71.19	$131.99
Eaton Apothecary	Natick	doesn’t stock this drug	$56.47	$131.60
BJ’s Wholesale Pharmacy	Framingham	doesn’t stock this drug	$26.42	$105.10
Tremont Drug	Boston	approx $150	$126.95	$133.65
Minnesota Pharmacies	City	#30/500mg/ Ceclor	Generic Ceclor	#30/20mg/ Lipitor
Capitol Pharmacy	Minneapolis	doesn’t stock this drug	doesn’t stock this drug	$128.00
Snyder Drug	Roseville	$148.00	$45.85	$141.73
Target Pharmacy	Bloomington	$149.99	$54.49	$114.99
Medicine Shoppe	Duluth	doesn’t stock this drug	doesn’t stock this drug	$125.99
Kmart	Duluth	$134.97/would have to order	$49.99/would have to order	$122.39
Erickson Drug Inc	Lakeville	doesn’t stock this drug	$37.05 for 60 of the 250mg	$113.88
Nevada Pharmacies	City	#30/500mg/ Ceclor	Generic Ceclor	#30/20mg/ Lipitor
CVS/Las Vegas	Las Vegas	$147.99	$66.99	$119.99
Albertsons	Reno	$146.00	$68.99	$118.69
Longs Drugs**	Sparks	doesn’t stock this drug	$66.95	$130.00
Village East Drugs	Las Vegas	“~ 3 times the price of generic”	$33.72	$127.00
Wal-Mart Pharmacy	Carson City	$140.46	$40.32	$124.88
Dons Pharmacy	Reno	$144.54	$78.89	$122.97
Oregon Pharmacies	City	#30/500mg/ Ceclor	Generic Ceclor	#30/20mg/ Lipitor
Ainsworth Drug	Portland	doesn’t stock this drug	doesn’t stock this drug	$144.83
Fred Meyer	Portland	$123.71	$87.00	$113.99
Safeway	Eugene	$154.99	$26.49	$128.49
Bi-Mart	Eugene	$131.39	$101.31	$122.99
Walmart	Klamath Falls	$136.46/would have to order	$38.54	$101.25
Target	Medford	$142.99	$54.49	$114.99
Virginia Pharmacies*	City	#30/500mg/ Ceclor	Generic Ceclor	#30/20mg/ Lipitor
Professional Pharmacy	Richmond	$155.90	$132.20	$139.30
Rite Aid Pharmacy	Richmond	doesn’t stock this drug	$84.99	$131.99
Barr’s Rexall Pharmacy	Virginia Beach	doesn’t stock this drug	doesn’t stock this drug	$90.00
Eckerd	Virginia Beach	$140.00	$66.09	$135.29
Green Valley Pharmacy	Arlington	$137.00	$121.00	$125.00
Costco Wholesale Pharm	Arlington	$129.39	$27.68	$105.50

 

 

*MA & VA law states that if a drug has a generic equivilant, then that must be given except where the doctor has written no substitutions

**Longs Pharmacy told me retail prices may vary because pharmacies carry different brands so I should call around and get different prices

 

Consider what you can save by shopping around for Lipitor and look at what the savings are for a one year period. A whopping $587.88 per year. What can that buy over a year?:

 

• 233 gallons of gas (based on $2.52/gallon)
• 5 weeks of groceries (based on $100/wk)
• 7 doctors office visits (based on $84/visit)
• A weekend away for your family
• 10 months of your electric bill
• 380 gallons of home heating oil

 

Many times we receive a prescription from our doctor and simply go to our usual pharmacy to have it filled. We want you to recognize that you can save significant amounts of your hard earned dollars by simply knowing what the drug is that you have been prescribed, asking if there is a generic substitute and then shopping around. If it takes you three hours to perform this research you are paying yourself $195.96 per hour. Not a bad rate of pay!

 

It’s time to start recognizing that we have options and these options are only realized by our diligence in comparative shopping. If you don’t care about the cost of your prescription drugs, then keep throwing your money away, or if you need help spending it, send some my way. Most uninsured people don’t have the luxury of acting this way. If you have a prescription drug plan then you are lucky, because your insurer has already negotiated the best price for you and them. If you are uninsured, there’s no negotiating, but you can shop around to get the best price. You have options…exercise them.