Healthcare Hullabaloo: Consumer Reports

Consumer Reports has been saving America money for over 50 years. Many thrifty Americans have grown to depend on heir sage advice, unbiased product reviews, and money saving tips. Many of us won’t make a major purchase until we consult Consumer Reports.

I only wish I did before I bought that Yugo.

Recently, however, Consumer Reports gave some advice on how to save money at the doctor’s office. Unfortunately, uncharacteristically, this piece of advice was bad. It could get your doctor into big trouble. Yikes!

Consumer Reports recently suggested that you negotiate with your physician in order to get a lower price on your medical care. So your doctor wants $800 to remove that mole? “Tell you what, Doc – let’s just make it $400 bucks and we’ll call it square. There is a doctor down in Tijuana that’ll lop that sucker off for $25, but I’d rather give the business to you….”

On the surface, this seems to make sense. After all, most of us are inclined to negotiate other professional services, like having our house painted or our tax forms completed. So, why shouldn’t we try to negotiate with our doctors as well?

The primary reason why this is a very bad idea is that the doctors can get into trouble for foing this. A lot of trouble.

You see, around 95% of all doctors ‘participate’ with at least one health insurance carrier. This means that they have a contract with that carrier, where the carrier will allow their subscribers to treat with that provider under their health plan and, in return, the doctor will agree to a lower (then their ‘normal’) fee for the services that they provide.

These contracts are very specific how they constrain the doctors, and in almost every case they place severe penalties on the doctor if they were to provide discounts to non-contracted parties.

In other words, let’s say that Dr. Jones has negotiated a contract with Blue Cross to be in their network. Dr. Jones, who normally charges $100 for an office visit, agrees that she will accept only $60 from Blue Cross for the same service – a 40% discount. In return, Blue Cross will provide Doctor Jones with a steady stream of patients. Now, Blue Cross won’t be very happy if they discover that another patient has negotiated a fee of $50 for the same office visit. That patient doesn’t have insurance, and therefore doesn’t have a contract that entitles them to the discount. This means that the $50 charges for the visit is really the ‘normal’ fee, and Blue Cross really should have a 40% discount off of that figure. They should only be paying Dr. Jones $30 for an office visit. They may demand (and are contractually entitles to) a refund from the doctor of $30 for each office visit they paid for under the contract. Ouch.

By the way, Blue Cross doesn’t care if the doctor gives carriers a discount, so long as they too have a contract with the doctor. There is honor amongst thieves, after all.

You might ask “So what if I got a discount – who’s to know?” Well, it turns out that the Health Insurance companies are very good at finding this information out. Usually, what happens is that the patient who received the discount turns around and submits the claim for the discounted visit to their insurance carrier. Once they do this, the cat is out of the bag, and the doctor is in big trouble.

There are ways around this, of course. A clever provider will code the discounted office visit differently then their normal visits – clling it a ‘consultation’ or a ‘brief office visit’. So long as they never use these billing codes for insurance visits, they should be covered, but since they really don’t benefit from giving their patient’s discounts, why should they take the risk of being discovered and persecuted? After all, the repercussions are great, financially and otherwise.

The clever solution to this dilemma are ‘health discount plans’. These plans are sold everywhere, including Costco. For a small annual fee, you get a card and a list of providers who are contracted to give discounts to plan members. Because the providers are under contract, they are immune to the pitfalls of of the cuff discounting. These plans are not health insurance – the’re more of a buying club. However, they can save you a lot of money, and save the doctor a lot of aggravation. And they can help cut the health insurance carriers out of everyone’s’ finances.

They’re a Win-Win-Win solution.

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