But those are just numbers. Until now, the growing Max Out of Pocket crew has not actually needed to use the healthcare system all that much. That’s a good thing. It is usually scary things like illness and injury that launch people into the “system.”

But that all changed when our baby boy arrived a few weeks ago.

Having a baby is different than your typical illness or injury. Touchy-feely emotions like joy and amazement are tied to an experience like this. We were lucky enough to get both. And for us, there was intent and planning behind this special interaction with the healthcare system. For me, it was nice seeing things through a different lens. From a fancy whirlpool to the tasty breakfast sandwiches and name-brand coffee delivered right to our room, I was quite amazed at our luxurious hospital experience.

Unfortunately, things can change on a dime. The Max Out of Pocket crew found ourselves briefly dipping our toes into the scary side of things. Thankfully, little Max and mommy are home now happy and healthy!

Family Birthing Center

We chose to have our baby at a family birthing center. It’s a smaller unit embedded in our small community hospital. There are plenty of other options, such as home birth, but we decided to go the more traditional route. This particular birthing center has an excellent reputation, and we had heard great things about it leading up to our delivery.

It certainly lived up to the hype.

The birthing center is located just two short miles from our house. This location made the odds of Max getting lost on the way to the hospital near impossible. So when Mrs. Max OOP’s water broke on April 27th, and they gave us the green light to come in, we were there in no time.

As for amenities, our spacious suite came with a whirlpool tub, a small kitchenette, and comfortable furniture. We each got a water bottle with “mommy” and “daddy” handwritten on its lid. Small things like this go a long way. There was even cable television and free Wi-Fi.

They positioned the birthing center strategically right down the hall from the operating room. That way, if a natural delivery is not possible, there is easy access to those types of resources. The unit offered nitrous oxide, but we didn’t need to use it. Trust me, it wasn’t because it cost $5,000.

The Delivery

Mothers are amazing. I will never fully understand the effort that goes into labor, but I do know Mrs. Max OOP earned the title of superhero that day. I won’t get into specifics here, but she had a longer than usual labor process. The delivery included an epidural and eventual cesarean delivery. 

What I will say is the nurses and OBGYN supported us the entire time. It was amazing to watch this team work together. They kept us informed and encouraged us both along the way. Ultimately, Baby Max arrived on Wednesday, April 28th, just before noon. 

He peed on the entire OR team on the way out. That’s my boy.

Since the delivery method was a C-section, the new plan was to stay in the hospital until Saturday, May 1st. These few days in the hospital would give Mrs. Max OOP some time to recover from major abdominal surgery and the labor and delivery team time to monitor little Max.

I took advantage of our time in the birthing center post-delivery. I went out of my way to own up to my limited knowledge of basic infant care. Max didn’t even know how to hold a newborn properly.

The nurses were fantastic and showed me everything from how to change a diaper to how to swaddle a baby. My swaddle technique is now flawless. Additionally, many of the nurses were certified lactation consultants and gave Mrs. Max OOP plenty of tips on breastfeeding. They would deliver coffee, hot packs, and virtually anything we asked for to the room. I could dedicate an entire post to just how wonderful these nurses were.

The food was great too. We enjoyed every meal, from pancakes, eggs, and chocolate milk for breakfast to a steak and pork chops candlelight dinner. The nurses would even take little Max to the nursery at night for a few hours to give us some time to sleep.

It seemed like things were smooth sailing. Then Saturday came. 

A Worrisome Eye Infection

We noticed shortly after delivery that little Max’s left eye seemed somewhat irritated. The nurses and pediatrician seemed to think it was something call conjunctivitis. Nothing like a little conjunctivitis to toughen a kid up. To a finance guy like Max, it did not look like much. I just assumed it was related to the birthing process and would heal on its own. But as the days went on, it didn’t seem to be getting better.

Apparently these were more than just angel kisses.

Two separate pediatricians looked at his eye during our first few days in the hospital. It was evaluated on Wednesday, Thursday, and Friday and the message was consistent: conjunctivitis or a blocked tear duct. They did a culture of the eye to be safe, but those results would take a few days. They also put something called erythromycin in his eyes, which is pretty much the standard of care for all babies.

Then, on Saturday, as we were all set to discharge to our new life of diapers and swaddle competitions, a third doctor had a different take. They thought the eye discharge had a green look to it, which signaled a possible infection. They quickly snapped some photos and used our modern-day telehealth technology to send them off to a specialist in a faraway city for a second opinion.

Little did we know this action sealed our fate. 

An Unexpected Ambulance Transport 

The Max Out of Pocket crew quickly found ourselves in the scary realm of illness and injury. That’s a terrifying place to be with a newborn. 

I have come to understand that babies are not supposed to get infections. Since their immune system has not developed much yet, an infection such as this is worrisome. I stole the term ‘worrisome’ directly from the *quirky infectious disease expert we worked with. Although she didn’t have a cane or a Vicodin addiction, she clearly knew her stuff. Not only did the clinical team need to understand the source of the infection (virus vs. bacteria), but they also needed to make sure it had not spread to other parts of his body. 

To test for this, they would need to do a lumbar puncture on little Max and gather some spinal fluid. They would then systematically infuse the little man with antibiotics to take out whatever was causing the infection. We were not crazy about either of these solutions. 

Since the local hospital we were so happy with did not have a specialist to offer this type of service, little Max would need to be transported 62 miles by ambulance to a special hospital that could handle this type of thing. They had a whole team on “standby” to come to our hospital and pick him up. They just needed our consent.

At the time, for adult Max, this all seemed a little much. The little man seemed completely healthy to me. But finance people count beans for a reason, so we left it up to the experts and gave them the okay for transport and to move forward with the lumbar puncture. 

Baby Max Lands in the NICU?

Baby Max went on ahead of us to the big city hospital. He landed in the neonatal intensive care unit (NICU). As a first-time parent, I had a hard time accepting this. How did we go from being discharged home to the NICU unit? 

Since we were a few hours behind due to complications from Mrs. Max OOP’s spinal headache, they offered us donor milk to keep him fed. This is a fantastic program that I will not touch on in this post, but we approved them to use donor milk in lieu of formula.

They also needed to move forward with the lumbar puncture and requested our consent over the phone before we got there. We gave it.

The clinical team had basically completed everything by the time we got to the big city hospital. The lumbar puncture was complete, lab work was processing, and antibiotics were flowing. It was now a waiting game. We would need to wait about 48 hours for the cultures to grow to rule out the more concerning possibilities. They put Little Max on contact precautions, and the clinical team would gown up before each visit. 

On day two, they were able to transfer us out of the NICU to a more appropriate pediatric hospital. This move was nice because we could now all be in the same room. Little Max remained on contact precautions throughout our stay in the hospital. At this point, his eye was looking better by the hour. 

Discharged Home

After about 48 hours, they could rule out some of the really ‘worrisome’ viruses and bacteria. They even discontinued one of the antibiotics during the second night after one of the tests came back negative. After meeting with the infectious disease specialist and the attending physician on the second day, they discharged us. They determined the cause of the infection was likely a bacteria regularly found on our skin. Evidently, the antibiotics nipped it. 

We headed home for some peace and normalcy. Our two-minute drive home would now be an hour and a half. That’s a long drive when you are still recovering from a spinal headache and can’t lay flat. Max didn’t get lost on the way home.

Out-of-Pocket Costs

As it turns out, my $22,450 health insurance plan will come in handy this year. I used to poke fun at this number; maybe I need to think through that some more. This is why we have insurance, and why we paid into the system for so many years. Insurance is risk-adjusted, and this event is built into the risk equation.

As for out-of-pocket costs? As you all know, it is easy for me to get stuck in the weeds here. But at the end of the day, itemizing these services out doesn’t make sense for us. Any way you cut it, this baby delivery is going to cost us $6,600, which is our 2021 out-of-pocket maximum. The insurance company should pick up the rest. This $6,600 will include antepartum care, ultrasounds, the delivery, prescriptions, and postpartum care for both little Max and Mrs. Max OOP. And it’s really not something we need to worry about. After years of planning, we have over $60,000 in our health savings account. This will be just a drop in the bucket.

Final Thoughts

After a few extra days, we still got to bring our little swaddled bundle of happiness home. That is all that matters. I can now kick off my parental leave and bond with baby Max.

I am still thinking through what happened. Initially, I thought this was way too much of an aggressive approach in treating little Max’s eye. I could probably find a media outlet that would go as far as to accuse the doctors of ‘running up the bill.’ 

But I don’t see it that way. 

The bottom line is this. Our baby was less than three days old, and he had an unexplained infection that was not getting better. These things can move fast. We left it to the experts to do what was right. The situation also wasn’t unheard of. One of the nurses in the NICU said she saw this type of thing three times in the last month.

In the end, I continue to be amazed at the healthcare resources this country has just waiting on “standby” for us to need them. I will say this, though – the further we got away from our small community hospital, the more I felt like we were being pulled into a “system”. Even for me, it was difficult to keep up with and connect one specialist with another or understand who was the ultimate decision-maker. That just wasn’t the case at our local hospital.

I am fine spending a heavily tax-subsidized $6,600 on the delivery and proactive treatment of little Max’s eye. I probably drank a few hundred dollars worth of hospital coffee. They even put us up in a family room for a night right outside the NICU.

But I have to say, I am on the edge of my seat wondering how much that 62-mile infant transport will cost. Any wagers? I am thinking $5,000 or more. Hopefully, the insurance doesn’t try to deny it. They would be picking a fight with the wrong person. 

*Quirky is not a negative, I like quirky people.

The post Baby Max Arrives, By Storm appeared first on Max Out of Pocket.

Fortunately, we get to benefit from all those before us who studied this kind of thing. In many ways, their work has made it the standard of care we enjoy today.

It’s easy to lose sight of this and let service delays and out-of-pocket costs overshadow how advanced our healthcare system is. That might even be something worth reflecting on the next time your exam is running 10 minutes late. Are you still feeling a little “inconvenienced”?

Don’t get me wrong; I still enjoy doing these “how much should it cost” write-ups. But that’s mostly because it helps me better understand the clinical side of the services I spend so much time analyzing the finances on.

So let’s get to it. What is a nuchal translucency ultrasound and how much should it cost?

Mrs. Max OOP is Ordered a Nuchal Translucency Ultrasound

If you have been following along at home, you might know that Mrs. Max OOP is expecting on or around 4/23/2021. She had her first ultrasound back in September 2020 while she was up in Canada. As it turns out, several ultrasounds are required throughout the pregnancy process.

I guess I always assumed it would just be a one-and-done type of thing.

So up next for us was a screening ultrasound that measures nuchal translucency. On the street, you might hear this called a “nuchal scan”. But what the heck is a nuchal translucency ultrasound and how much should it cost?

Frankly, after learning about this screening, I do not really care how much it costs. We would have it done regardless. I am largely doing this write-up for my own personal benefit to make sure I understand the general clinical concepts behind the screening.

What is Nuchal Translucency? 

Nuchal translucency (NT) is a collection of fluid under the skin at the back of a fetus’s neck. This fluid level is usually measured between eleven and thirteen weeks into pregnancy. The fact that we have this narrowed down to a three-week window makes this screening even more impressive. At this point in the pregnancy, the fetus is about the size of a lime. Apparently, the short window to do this test is because, after 13 weeks, the tissue gets so thick it is no longer translucent.

Depending on where you look on the internet, a nuchal translucency less than 3.5mm is considered normal when the fetus measures between 45mm and 84mm. However, it can be difficult to define a fixed abnormal measurement because the nuchal translucency increases as the fetus grows. This website suggests an NT of up to 2mm is normal at about 11 weeks, and up to 2.8 mm by 13 weeks.

Normal Levels

Evidently, as these fluid levels increase, so does the risk of Down’s syndrome. This test helps provide a probability of the fetus having chromosomal abnormalities. A nuchal translucency of more than 6mm has a high probability of Down’s syndrome and other chromosome abnormalities. That said, the NT scan results on their own have an accuracy rate of about 70-75%. It is important to remember the nuchal translucency is a basic screening test that is best combined with other lab tests. In other words, it is just one piece of a complex equation that can be used to increase the accuracy rate.

This random study from the internet published in 2015 evaluated over 1,600 pregnant women. The average NT thickness was 1.3 (+ -) 0.54 mm.¹ Increased NT thickness > 2 mm was only found in 89 of the women (5.5%). It is worth noting these were pregnant Iranian women. Mrs. Max OOP is not Iranian, so my reference to this study is likely already suspect. The study does specifically say the reference range in their study was different than that reported in other ethnic groups.

Internet Calculators for Nuchal Translucency

I did find this internet calculator that can help compare a specific NT to the averages. It references a few studies from the 90s. Retirement calculators are more of my thing, but I went ahead and dropped in our numbers.

This calculator said our NT was in the 48th percentile which is right where we want to be.

It also accurately predicted our gestational age at the time of this ultrasound to the day (13 weeks, 5 days).

I am not a clinician and have absolutely no expertise in this field of study. Random calculators and studies from the internet are not good enough for me. Having some background certainly doesn’t hurt, but I tend to defer to the experts and review these numbers with the doctors we hire who actually know what they are talking about.

Back in October, our doctor up in Canada said our test came back normal. Even better, when compared with some other labs drawn around the same time, things looked great. We were happy. But even that’s not a guarantee.

What Code Represents the Nuchal Translucency Ultrasound?

In healthcare, we track everything with a code. This service is no different.

The CPT code 76813 represents the ultrasound where the fetal nuchal translucency is measured in the first trimester. For this ultrasound, we can use 76813 universally regardless of whether the exam is transabdominal or transvaginal.   

The measurement is taken from the image of the maximum thickness of the zone between the inside of the fetal skin and the outer side of the soft tissue that overlies the cervical spine or occipital bone. As I mentioned above, an increased nuchal translucency thickness in the first trimester is associated with chromosomal and genetic abnormalities. This can include Down’s syndrome, trisomy 13 or 18, and heart abnormalities.

Remember there are two parts to this service. There is a facility/technical fee that represents the specialized ultrasound equipment, space, supplies, and trained technician performing the actual ultrasound.

Then there is the professional fee. This fee is for a radiologist to write a written report of his or her interpretation of the image.

Some clinics and imaging centers will combine these together into a global charge.

How Much Should the Nuchal Translucency Ultrasound Cost?

But with a blog called Max Out of Pocket, we have to at least peek at cost, right? 

In my limited experience, it seems that this ultrasound is often farmed out to an imaging center that specializes in this type of thing. I believe specialized, highly sensitive ultrasound equipment is also required. I am sure some hospitals do it, but that does not seem to be the norm particularly in the rural areas I spend a lot of my time in. So, I will not bother going too deep into hospital pricing for this particular test. Feel free to chime in in the comments if I am oversimplifying anything here.

But we should look, at least, at one hospital price. I will go ahead and pick on the University of Michigan again today. Their hospital charges $659 for just the ultrasound. That wouldn’t include the professional read.  

I would typically recommend having this type of thing done in the clinic or imaging center setting. There, this test would generally come in between $200-$475. The 50^th percentile, according to the Medicare standard analytical file, would have the test at $330. That said, Medicare statistics might not be the best place to look for pricing on this test because not a lot of Medicare-aged patients have this done.

How Much Would We Have Paid in the United States?

If Mrs. Max OOP was in New England, we would have had this service at an imaging center because our local hospital does not offer it. The imaging center would have charged us about $295 for the nuchal ultrasound. Unfortunately, we would have needed to drive about an hour and a half to get it.

According to the clinic, about $170 of that represents the facility/technical component and the remaining $125 is for the professional radiologist to read the images.

My $22,450 insurance plan would get us a discounted price of about $170 out the door. This covers both the professional fee and the facility fee for providing the equipment, tech, supplies, and space to perform the service. Since we did not have any healthcare services up until that point in 2020, this entire $170 would have been applied to our family deductible. In other words, it would have come right out of our pocket.

How Much Did We Pay in Canada?

Since Mrs. Max OOP was hanging out in Canada for several months, she had this service north of the border. Even though she is a citizen, she was still considered an uninsured cash patient because her insurance did not turn back on right away.

With no car, she also walked about 40 minutes to her appointment; what a trooper!

She paid $207 Canadian for this service. The exchange rate at the time puts it at $154 USD. That is another $16.00 in savings by not using our insurance and paying cash in Canada.

Final Thoughts

The infrastructure our medical industry has in place continues to impress me. Countless services are out there just waiting for us to need them. People like me might not even know they exist until there is a need for it.

The fact that humans know this nuchal translucency measurement association exists is amazing on its own.

It is obviously not perfect, and I saw a few studies out there that seemed to question the detection rates. But at the end of the day, we will go with the recommendation of our doctor since they are the experts. We will never turn a blind eye to the cost, though.

In the United States, this exam really should cost less than $300 in the appropriate setting, which is generally not a hospital. We paid $154 (USD) in Canada.

Citations

1. Sharifzadeh M, Adibi A, Kazemi K, Hovsepian S. Normal reference range of fetal nuchal translucency thickness in pregnant women in the first trimester, one center study. J Res Med Sci. 2015 Oct;20(10):969-73. doi: 10.4103/1735-1995.172786. PMID: 26929762; PMCID: PMC4746871.

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Let’s be real. I am probably the last person the healthcare finance industry wants going through this process. As healthcare pricing and surprise medical bills have become a hot topic in recent years, more and more expecting parents are asking questions about how much things are going to cost them.

They should. Some of the wild pricing swings I have witnessed throughout my career in healthcare finance are almost unexplainable. But you need to know what questions to ask.

One of the early expenses during the pregnancy process will be an ultrasound. This is often initially done during the first trimester to both confirm the pregnancy and estimate how far along the mother is. The first trimester is generally considered the period of time when the mother is less than 14 weeks pregnant.

But how much does an obstetric ultrasound cost in the first trimester?

Great. Is Max going to take one of the hallmark moments of pregnancy and financially dissect it? Absolutely. But now, I have good reason to.

Two Approaches to the Ultrasound Exam

The first thing to know is there are two approaches to the obestetric ultrasound exam: the transabdominal approach and the transvaginal approach.

The transabdominal approach is typical of what you might see on a TV commercial or in the movies.

Another approach is transvaginal. My understanding is the transvaginal approach is mostly used early in the pregnancy when transabdominal ultrasound did not provide enough information.

In my experience, depending on the clinic, I sometimes see these both ordered together right from the start. Physician preference or protocol might have something to do with how these are ordered, but I am not an expert on ordering patterns. So as always, talk through this with your provider if you have questions about the appropriate approach.

Today, I will be covering the traditional transabdominal approach during the first trimester where a transducer is moved over the abdomen. The mother is asked to present with a full bladder to help get clearer images. The transducer produces ultrasonic waves directed at the fetus, pregnant uterus, and surrounding pelvic structures of the mother.

And just like that, hopefully, you have an image of a fetus. Here is ours from back in September.

Obstetric Ultrasound CPT Code

In healthcare, we represent almost every little service with a five digit code.

The CPT code that represents this first ultrasound is 76801. It is an abdominal ultrasound of a uterus that has been pregnant for less than 14 weeks. There is both a fetal and maternal evaluation done during this service. The radiologist reviews the images of the fetus, pregnant uterus, and maternal pelvic structures and provides a written interpretation of the images back to the OBGYN and midwife.

The “consumer-friendly” description of this service is “an abdominal ultrasound of a pregnant uterus“.

If the mother happens to have a second routine ultrasound done in the first trimester, 76801 is used as well. As you might expect, she will be charged again for the service. 

I should mention, a separate ultrasound where they measure some fluid near the fetal neck is also often ordered at some point, but we will learn more about that in another post.

Facility Fee vs. Professional Fee

There are often two separate fees for an ultrasound. This is one of the harder concepts for patients to understand.

The facility fee represents the equipment, supplies, and trained technician performing the actual ultrasound. You might also hear this called the “technical” component of the service. Unlike what you might have seen on daytime television or Dr. House, the obstetrician or midwife normally wouldn’t do the official ultrasound where measurements are taken. It is often farmed out to a trained sonographer.  

Then there is the professional fee. This fee is for a trained radiologist to write a written report of his or her interpretation of the image. The radiologist should not be confused with the sonographer as these are two separate skill sets. This is sometimes called a “read fee” for “reading” the image. Again, generally, the obstetrician or midwife wouldn’t necessarily do the formal interpretation of the image.

If the service is provided in a clinic or imaging center, both the facility fee and radiologist interpretation are often combined into one charge. This is sometimes referred to as a global charge.

However, if the service is provided in a hospital imaging department, the radiologist interpretation will often be a completely separate charge/claim from the hospital facility fee.

How Much does an Obstetric Ultrasound Cost in the Hospital?

Sometimes, the OBGYN office will be conveniently located on a hospital campus not too far from the imaging department. A short walk down the hall will take you out of the clinic setting and into the hospital setting. It might even be right across the street.  

In my experience, unless it is an emergency, this convenient walk will cost you. The second you walk into that hospital you are subject to the inflated prices that come along with it.

I have personally seen hospital pricing for this ultrasound range anywhere from $250 – $1,200. The hospital I would likely have this service charges about $925. But let’s hope Max never needs to report to imaging to have an obstetrical ultrasound.

Of course, that is the retail price. I would get mine on sale with a discount through my insurance. My insurance negotiates that $900 hospital price down to $475. That entire $475 balance would hit my deductible and come right out of my pocket.

So, I am already out-of-pocket $475, and the radiologist has not even read my image yet. I would get a separate bill for that. I believe my insurance would get the “read” fee down to about $70, all of which would hit my deductible.

$475 facility fee + $70 read fee = $545 out-of-pocket

I wonder how many ultrasound images a radiologist can read per hour? Could make for some good cash flow.

A Few Examples

I thought sharing a few examples of hospital pricing might be helpful.

You might remember, I defended Hudson Hospital in Wisconsin last year against NPR on a little billing mishap they had with nitrous oxide. I called that one Midwife Crisis, $5,000 nitrous. The midwife was clearly trying to stir the pot.

Since we happen to be talking about the pregnancy process again, I was wondering what Hudson Hospital charges for the abdominal ultrasound. According to their chargemaster, they charge $502. Their price comes in about $400 less than the local hospital I would go to.

The University of Michigan charges a little more.

Johnson Memorial in Indiana charges $679. I love their chargemaster because they went above and beyond by including the CPT code.

How much does an Obstetric Ultrasound Cost in a Clinic/Imaging Center?

If you receive this service in an actual clinic or imaging center, we would be looking at a much more reasonable price of $150 – $325 for the entire service. The 50^th percentile would come in at around $220. If you have insurance, it would likely negotiate that price down even further.  

My own insurance has negotiated this down to about $170 for everything at a clinic in my market. That includes the procedure itself and the professional interpretation.

For us, that’s $375 cheaper than having it in the hospital.

So, unless you have already hit your max out-of-pocket for the year, I would try to have the ultrasound in a clinic setting. It might even make sense to drive to an imaging center if your clinic/OBGYN does not offer an ultrasound within the clinic walls.

How much does the Government Pay?

I always like to compare what government payers like Medicare might pay for the same service. They have the ultimate pricing power and are a good indicator of what it actually costs to provide a service. State Medicaid programs often pay less than cost.

How much does an obstetric ultrasound cost the Medicare program? Although not a lot of Medicare patients are having babies, they will pay about $118 for the entire service in the clinic setting in 2021. That covers both the ultrasound ($73) and professional interpretation ($45). That rate would be adjusted slightly depending on where in the country the service is provided.

If the service was provided in a hospital, Medicare would pay the hospital $109 in 2021. Another $45 or so would be paid for the professional interpretation. That’s about $154 out the door.

North Carolina Medicaid would pay a clinic $107.22 for the full global charge according to their most recent fee schedule from 12/21/2020. It is not uncommon for the state Medicaid programs to come in under Medicare rates like this.

Take-Home

As you can see, the pricing differences for a relatively simple service can be stark. If you are lucky enough to have insurance, you have even more work to do because you need to find out how much they have negotiated the price down to. That goes for both the clinic and hospital setting.

My recommendation for most consumers would be to have the ultrasound done at a clinic or imaging center, assuming it’s not an emergency. It would save the Max Out of Pocket crew about $375 to drive to an imaging center for this service.

That said, if you know you are going to meet your max out-of-pocket for the year, pricing starts to go out the window. If you are due late in the year, odds are you will hit your max out-of-pocket and your insurance will start picking up all the bills. That makes all this a moot point and convenience might come more into play.

But it is worth keeping an eye on things, particularly if your services are going to be split up over two calendar years. These early tests can really add up as they all hit your deductible. Then, the deductible will re-set again for you in January. Keeping pricing in check and going to a clinic or imaging center might save you some serious money.

Homework: How much does an obstetric ultrasound cost at your local hospital?

The post How Much Does An Obstetric Ultrasound Cost In The First Trimester!?! appeared first on Max Out of Pocket.

It was the second day and we were scheduled to go until about noon. I was toward the end of my morning conference routine of dodging salespeople and capitalizing on free breakfast when the first speaker started his presentation. Max quickly realized we had a quality speaker on our hands. So I put my phone down, picked up my coffee, and I started listening.

Turns out this wasn’t a presentation, it was a call for action. And it got my attention.

“I Heard it at a Conference…”

Now, a little disclaimer here. Usually, when someone goes to a conference and comes back all amped up about something, I take it with a grain of salt. Do they fully understand the subject matter? Have they vetted it? Does it even apply to our organization? It’s part of the reason I went home and drafted this post and then proceeded to sit on it for ten months.

Clinical people (usually techs and nurses) often come back from conferences ready to change the world. They call my office with concerns about how we are conducting business. I usually need to talk them off the ledge.

“We should be billing for (insert clinical service here). They told me we are losing millions at a conference.” 

“We shouldn’t be doing this. They told me it is against the law at a conference.”

“Are we committing fraud? They told me we are committing fraud at a conference.”

They certainly mean well, but these things usually don’t materialize into much.

Max, on the other hand, I am usually pretty grounded. I strategically let some of the ideas from this particular talk stew before finally clicking the “publish” button on this post. Ultimately, in this case, I’m still pretty amped up about the concepts this speaker touched on.

Part of the idea behind this blog is for it to help me formalize my thoughts on personal finance, healthcare, and retirement. This could potentially impact all three.

The Message

The title of this presentation was Financial Sustainability: Creating A Revenue Strategy.

I know, it sounds quite exciting. But revenue cycle directors like me eat this stuff up.

‘Sustainability‘ is a pretty powerful word when we are talking about hospitals and health systems potentially closing their doors. Jobs and access to care are at stake here, so this is some pretty serious subject matter. One of the early slides showed that 118 rural hospitals had closed since 2010 and 160 had closed since 2005. Seventeen hospitals had already closed by that point in 2019.

This guy was with a consulting firm out of New England. I could immediately tell he knew what he was talking about. From his talk, I got the impression he travels all over the country doing consulting work for rural health providers. It just so happens a lot of my work over the last few years has been in rural health. Regardless, something got my attention.

I suppose the fact that he was also a Stephen Covey fan certainly didn’t hurt. I went through “7 habits” training years ago and loved the concepts. He made a few comments about abundance and getting burned by people with a scarcity mindset. I’ve been there. Watch out for those people. We come from the abundance camp here at Max Out of Pocket.  

I think what really got my attention the most was early on in the presentation he mentioned the average premium for a family in the United States had recently crossed the $20,000 mark. This was a fact I already knew because I had just written about how my 2019 premiums came in over $20,000. I even compared them to other line items in my budget. His comments validated that I am not the only one who took notice.

The focal point of this particular talk was this:

Healthcare is going through an extremely difficult transition of walking the shaky bridge from the fee-for-service payment system to a population-based payment system. It will take some significant strategy and effort to get a population-based payment system implemented, and those who don’t adapt will likely become casualties along the way.

It got me thinking, could I inadvertently become one of those casualties? 

Max is going to go out on a limb and say some of my readers have probably never heard of fee-for-service or population-based payment systems. Stay with me, though, because these things impact us. So let’s briefly define a few things. 

Fee-For-Service Payment System

The Fee-For-Service payment system is just how it sounds. The hospital or medical provider will get a predetermined fee for providing a specific service. This payment model makes the volume of services provided very important to the bottom line of the medical provider or health system they work for. Just like in traditional businesses, higher volumes help scale costs.

It is very similar to how we purchase most services today. Take an Uber driver for instance.  

The problem is healthcare is a bit more complicated than hiring an Uber driver. In healthcare, we aren’t always the ones deciding what services we are going to consume. A lot of times, we don’t even decide where we are going to get those services. In other words, someone else is often not only deciding what we are going to buy but where we are going to buy it.

This takes away the market pricing pressures we might see in other industries. This results in very little incentive for patients or medical providers to buy less or shop around. Ultimately, it inadvertently creates a conflict of interest and rewards overutilization of services. Both government and commercial payers use out-of-pocket costs to try and curb utilization, but that comes with its own set of problems.

Population-Based Payment System

A population-based payment system is a little more sophisticated. It better aligns the incentive for a medical provider to keep a patient in good health while reducing the utilization of unnecessary tests.  

Essentially, a provider entity is agreeing to accept responsibility for the health of a group of patients in exchange for a set amount of money. If the care management team performs well on quality metrics, then they will get to keep a portion of the savings generated by this model. They are essentially taking on some of the risks that traditionally live with the insurance company.  

In a population-based payment system, my care team is paid a set amount of money to take care of the “whole me”. They don’t have to order my $108 comprehensive metabolic panel for the health system to get paid. The provider entity theoretically already has their money. They can certainly order it if there is an evidence-based rationale to do so, but they don’t need to do it to generate revenue. They are also incentivized to actually poke around a bit during my annual physical, something that didn’t happen at my free preventive exam with primary care last October. Again, oversimplified, but the general concept applies. 

The population-based payment system is where the speaker said we are going, but it was going to be a tricky balance to get there.

Walking the Shaky Bridge

Fee-for-service has a target on it’s back. Adam Boehler, the former Director at the Center for Medicare & Medicaid Innovation (CMMI) has said that on record. He has since moved on to other things, but others have followed with similar comments.

“I’ll tell you a lot of what I do in my role running CMMI as senior adviser to Secretary Azar is to blow up fee for service,” he said during a fireside chat at the Office of the National Coordinator’s annual conference. “That’s one of our prime goals—is to get rid of fee for service.

FierceHealthcare – Adam Boehler

The speaker at my conference had a slide dedicated to comments such as this one from big players in the industry. This included Seema Verma, the current administrator for the Centers for Medicare and Medicaid.

One of the points he spent some time emphasizing was that it was going to be a painful transition getting from fee-for-service to a population-based payment system. He even had a timeline mapped out in the form of a bridge.

Indiana Jones

On one slide he had a bridge representing a timeline with the years 2014 and 2026 on each side of it. Under the bridge were alligators chomping at the bit.

Picture the final bridge scene in Indiana Jones and the Temple of Doom. These alligators represented the risks involved in completing a monumental payment system transformation such as this. I have thought about emailing the speaker to ask if I could publish the slide here on the blog and formally cite him on this post. However, he is just a bit too close to my market for comfort, and I am still trying to stay anonymous at this point. I am sure he would get a kick out of it that someone dialed into his presentation so much.

The presentation went on to discuss a very specific framework for implementing population health management and a provider-based health plan. I may get into some of those details in a later post, but we are going to stay high level here.

The speaker did mention Kaiser Permanente out of California has done extremely well with the population-based model. They are leading the way both operationally and in their financial metrics. They must have Harrison Ford on their team. Perhaps I will finally be able to convince Mrs. Max OOP to move to the west coast. Then, I could join Indiana Jones in his domination of the healthcare system. For now, I am stuck in New England while she gets to hang out in Alberta, Canada with a nationalized healthcare system in her back pocket.

Primary Care Practice – A Simple Valuation

Another thing emphasized was the importance of primary care clinics in this new model. They are basically the gateway for premium dollars entering the system. The presenter compared these practices around the country to several “small businesses”. He put a value on them by doing some very simple multiplication. If a primary care practice takes care of 1,000 families, they are the gateway of almost $20,000,000 in premiums. Some large practices may have thousands of families in their provider panel. Primary care will be a key player in “managing” these premium dollars.

1000 families X $20,000 insurance premiums per family = $20,000,000

Perhaps this is some additional support for my medical office buildings being a solid long-term investment.

Time for Max to Sharpen the Saw?

Now, I have spent a lot of my own time working and providing value in the fee-for-service world. This payment model filled up health system business offices across the country with hundreds of people to take care of the clerical tasks that come along with it. This includes things like registering patients, authorizing services, posting charges, coding, filing claims/bills to the insurance company, fighting with them to get paid for the medical services provided, and finally posting the cash if they ever get paid. We also have an army of people standing by to collect on the supersized out-of-pocket costs often left to the patent after this process takes place. We called this process the revenue cycle.

Someone had to help manage these people, and Max fit the bill. No pun intended. 

I was successful at leading teams of cubicle farms while putting up some pretty material value for some health systems over the years. For the most part, I enjoyed the work. I still have a lot to offer in this arena and it will be particularly important for crafting a revenue strategy in the interim while we move the system to these modern payment models. But at the end of the day, things are going to be different.

I could almost envision a world without claims and oversized hospital business offices in this new payment model. I recall the speaker suggesting that could be where things are going. Imagine payers and providers working together to care for people instead of spending billions fighting over the dollars.

Imagine if Mrs. Max OOP and I turned over our $22,450 annual premiums from 2020 to a provider-based health plan to “manage our care”. A retainer fee, if you will. How much easier would the billing world be and how much smaller would those hospital business offices get? Patients and families would no longer have to fumble through a billing system that has become almost impossible to navigate. Dr. Medimetary mentioned in his review of the direct primary care model that this very simplicity is one of the draws to that particular model of care.

We just need to make sure we have solid quality metrics in place to make sure providers don’t skimp out too much on providing care to pad their bottom line.

The Take Home

Max still has a lot to learn here.

I have poked around some of these “value-based” models on the Medicare side over the years, particularly the payment incentives. But a lot of my work continues to be in the outdated “fee-for-service” realm.

In other words, I still work for Sears and an Amazon drone is knocking on my door.

There are obviously risks and barriers that come along with a population-based payment system. We won’t cover those today. But either way, 10 years from now the system is going to look a lot different. Big names are moving into this market at a rapid speed and will force change if the government doesn’t blow it up first. Health systems are well-positioned to implement a population-based payment system for their employees.

Fee-for-service is a broken model that needs fixing. Higher deductibles and CMS’s efforts on price transparency in 2021 will put some traditional market pressures on the industry, but it won’t be enough. Population-based payment systems are coming.

Unfortunately, right now, the general population and rural hospitals are feeling the brunt of this transition with exorbitant premiums and out-of-pocket costs. Perhaps this is one of the early steps of the transition.

My industry is in constant transition, and I will always have plenty to keep me busy. But the next several years are going to be tricky and I need to make sure I align my skill sets with the way things are going. Perhaps shifting my trajectory into population health or strategic planning would be a reasonable path at this point. I am close enough to clinical operations that there are a lot of different directions I could go. Who knows, maybe I will take it to the house and make CFO one day.

The post Crossing The Shaky Bridge To Population-Based Payment Systems appeared first on Max Out of Pocket.

As a purchase moves into the several thousand-dollar range, a deeper analysis is required. It might even require an excel spreadsheet or two. This assessment should be at the bedrock of any responsible personal finance philosophy. Frankly, when we are spending thousands of dollars on something, we need to make sure we understand the product or service we are buying.

Unfortunately, this analysis just doesn’t happen with most medical insurance plans when they are provided by our employer. We might briefly flip through the hundred-page document provided by the Human Resources department, but we do not go much deeper than that. We tend to trust that our employer is vetting the purchase on our behalf.

Max is here to change that.

Every single year, I carefully read through the specs of my medical plan to make sure I understand what I am getting. Last year, I noted that I could buy a couple of used cars for what was being paid for my premiums and still have a few thousand dollars left in my pocket. This year, I am sticking to just talking about the specific specs of my plan.

If you want to follow along at home, go grab your summary of benefits and coverage. You have a right to this document per the Affordable Care Act.

Premiums

Premiums are the payments made to have health insurance. A membership fee to be dumped into an actuarially sound country club pool that helps pay down your medical bills.

In 2020, the high-deductible health plan (HDHP) that covers me and Mrs. Max Out of Pocket will run $22,450 for the calendar year 2020. These premiums are split between me and my employer. I will pay approximately 22% of the tab and my employer will pick up the remaining 88%. Here is how the split looks in real dollars:

• Max pays $4,950
• My employer will pay $17,500

2020 Premiums = $22,450

This is a 3.85% increase of about $860 from 2019.

My current employer is the first of my career that shares the full premium information. It is nice to see how much money is really exchanging hands on my behalf behind the scenes.   

Even though it is just me and Mrs. Max OOP, our plan is still considered a “family plan”. There is not an “employee and spouse only” option. In other words, I pay the same amount as an employee who has a spouse and four children.

Most of my previous employers had three separate premium rates depending on the employee’s situation.

• Employee Only
• Employee and Spouse Only
• Family

Health Savings Account Match

It is important to note here that my employer gives $600 of my premiums right back to me to start the year. This $600 is deposited directly into my health savings account and I can use it to pay down out-of-pocket costs throughout the year. Access to an HSA is one of the perks of having a high-deductible health plan.

This deposit hits my health savings account the first pay period of the calendar year.

Here is where it hit my Health Equity account back in January.

Max Out-Of-Pocket

The very next thing I look at is the “out-of-pocket maximum”. Believe it or not, I prefer to call this the max out-of-pocket. That’s what Michiganders call it at least.

In theory, this is the maximum we would have to pay for covered medical services in 2020. I like to think of it as a bucket. Once the bucket is filled up, I no longer need to pay for medical services and my insurance will pick up the full tab for the rest of the year. This, of course, assumes we follow the sometimes-confusing policies and procedures of my plan, including staying in-network.

My plan sets both Mrs. Max OOP and I up with our own individual max out-of-pocket. In other words, we both get our own bucket to fill up. This helps us mitigate risk and is much like the individual deductible concept.

In 2020, our individual max out-of-pocket bucket is $3,300, for a total of $6,600.

The nice thing about having separate buckets is it helps us further mitigate risk. Although our family max out-of-pocket is $6,600, if one of us has a bad accident, the most we would pay is $3,300.

The max out-of-pocket is an accumulation of out-of-pocket costs like deductibles, coinsurances, and co-payments. In other words, you can generally use ANY of your out-of-pocket costs to fill the max out-of-pocket bucket. So, a $100 co-payment here and a $1,000 deductible there can both be dumped into this.  

I tend to consider this the fully weighted “risk” associated with my medical insurance plan. So, between my spouse and I, the most we should have to pay out-of-pocket for medical services in 2020 is $6,600. This is our “health risk”, and it is relatively easy for us to plan for.

Deductible

The deductible is just another bucket. Aside from preventive care, we need to fill this one up before my health insurance starts helping us pay for medical services. In 2020, our family deductible is $3,300.

So, as a family, we are expected to pay the first $3,300 for medical services before our insurance starts paying.

Just like the max out-of-pocket, we each get individual deductible buckets of $1,650. This means if either of us has an issue, our insurance will start paying for our individual services after we pay the first $1,650.

And again, at the risk of being redundant, these deductible buckets are dumped right into our max out-of-pocket bucket.

Coinsurance

Coinsurance is a little more complicated. Once we fill up the deductible bucket, our insurance will start helping us pay for medical services. But there is a catch. They still expect us to pay a portion of the bill until we reach our max out-of-pocket.

In my case, our coinsurance for an in-network provider is 10%.   

The coinsurance is generally the portion of the bill I am expected to pay after I reach my deductible. This is usually based on the rate the insurance company will pay the medical provider for the services provided. We often do not know this rate because these prices are negotiated behind the scenes. If I go to an in-network hospital for a diagnostic lipid panel, they might negotiate that bill to $100. Since my coinsurance is 10%, I would have to pay $10.00 of the $100 negotiated rate. Since I already met my deductible, my insurance will pick up the other $90.00.

$100 negotiated rate X 10% coinsurance = $10.00

Along with my $1,650 deductible, that $10.00 will be dropped into my max out-of-pocket bucket.

Co-Payments

My plan does not have any co-payments for medical services, but it does have them for prescriptions. Co-payments typically go hand in hand with office visits in the clinic or visits to the emergency room.

Co-payments are generally “fixed amounts” that are incurred with each visit regardless of what occurs at the visit. I often see $25 co-payments for office visits and $100 co-payments for visits to the emergency room. Once we meet the max out-of-pocket, we no longer need to worry about co-payments.

We are going to stay out of the prescription realm today, but it is important to note that my plan does cover prescriptions and there are co-payments tied to those transactions.

Final Thoughts

This stuff matters. It is part of your compensation package. Taking a few minutes to understand it makes a difference. You can even throw it all into a nicely organized Excel spreadsheet as I did for your viewing pleasure.

Last year I complained a bit about the cost of this plan. This year, I tried to stick to the specs. I still think the fact that these total premiums cost almost double what it cost for us to put a roof over our heads for the entire year is a bit obnoxious. This also represents 44% of our entire 2019 spending on regular life. There are people out there that make less than this for an entire year of work. But I digress. Ultimately, I am thankful to have health insurance.

The specs of my plan are relatively simple to understand, but unfortunately, that is not always the case. Some plans are extremely confusing, so I tend to focus on my premium liability and total max out-of-pocket for the entire year. This gives me a good feel for my worst-case out-of-pocket risk for the calendar year.

$6,600 (max out-of-pocket) + $4,950 (employee premiums) – $600 H.S.A. match = $10,950

Fortunately, we have not had any medical expenses so far in 2020. Hopefully, we can keep it that way.

What’s the total ticket price for your medical insurance premiums?

*I very lightly rounded my total premium figures in an effort to stay anonymous.

The post 2020 Insurance Premiums – My $22,450 Health Insurance Plan appeared first on Max Out of Pocket.

If you are missing out on these appointments, you are missing out on one of life’s natural clocks. You only get about 150 of these cleaning experiences per lifetime. Make them count.

If you have dental insurance, skipping out on these visits is likely leaving some serious money on the table. That’s because a lot of dental plans cover cleanings at 100%.

It is easy to let our busy lives get in the way of these preventative preventive cleanings. Even I got behind on my dental visits in 2017 and part of 2018. After regularly seeing the same dentist for 8 years down South, I used our move to a new state and a new job as my excuse to skip out on hundreds of dollars of free services.

Here we are, back at yet another interaction of healthcare and personal finance.

Preventive Cleanings

Traditionally, the recommendation has been to visit your dentist every six months for a teeth cleaning. This cleaning procedure is sometimes called prophylaxis. I always thought a six-month interval was the standard. The Delta Dental website takes a more tailored approach to establishing an interval.

Those at higher risk for cavities or gum disease, or are in active dental treatment, may require recall intervals as short as three months.

Those at lower risk may just go once a year, or even less frequently depending on their individual oral conditions and health history.  

How often should I visit the dentist?

Although the source of this information is an insurance company, the thought process seems reasonable to me. My dentist has outlined on numerous occasions that a lot of this stuff is just plain genetics.

So, for someone like Mrs. Max OOP who has solid dental genes, fewer trips to the dentist might make more sense. It might even be worth booting her off the dental insurance completely to save over $300 each year. Don’t worry, we let her back on the insurance in 2020.

But for someone like Max who has a long family history of dental issues, it is prudent to stay up on things. Thankfully, I still have all 28 of my original teeth and no major issues. But my 2017 ‘gap year’ from the dentist most definitely caused some money to be pulled out of my pocket.

Max Heads To The Dentist Again

I finally established a dentist here in New England back in December. This first visit was a comprehensive oral evaluation followed by a cleaning. A few issues came up at that December appointment that I needed to get taken care of. I had a few cavities filled shortly after that visit.

Overall, I have been blown away by both the customer service and clinical care provided by my new dentist’s office. In fact, after this blog post, I think I will go out of my way to write them a review.

This week, I had my first six-month checkup since establishing care here. It was essentially just a cleaning.

I always take the first appointment of the day for these types of things to prevent unnecessary delays. So it was scheduled for 8:30 am. Since the office is right down the street from my work, I rode my bike down at about 8:25 am. After a few COVID-19 screening questions and a quick temperature check, my body was in the chair by about 8:38 am. I was required to wear a mask until the cleaning started, which is kind of odd if you ask me.

My (extremely) thorough cleaning included the following:

• Removing tartar/plaque with a scaler
• Polishing my teeth with “gritty” toothpaste called pumice
• Professional flossing
• A few rinses

I had X-rays back in December so I didn’t need those. I also got an additional service approved ahead of time by my dental insurance:

• Fluoride treatment – I think this was approved since I am considered a ‘high risk’ patient

I was back at my office by 9:30 am for a meeting.

How Much Did All This Cost?

The retail price for my prophylaxis cleaning was $108. Much cheaper than our cat’s dental cleaning, but they didn’t need to knock me out with anesthesia either. This is generally represented by CDT code D1110 (prophylaxis – adult).

The special fluoride treatment ran another $44. This service is represented by CDT code D1206 (topical application of fluoride varnish).

So my total out the door price for both services came in at $152.

$108 (teeth cleaning) + $44 (fluoride application) = $152

I decided to check in and see how the market price looks for this type of thing. Googling several estimates for this same service suggests the average price is anywhere from $75 – $200. One problem I was noticing during this exercise was many of these estimates do not seem to have a source or survey. They don’t spell out exactly what this price represents and if it includes other services. The best study I could find in a reasonable amount of time was where the Academy of Dental CPAs partnered with the trade publication Dental Economics to create the 2016 annual fee survey.

They surveyed over 600 dental practitioners and found the average cleaning cost (D1110) was between $90 and $120. In my market/region, the average fee at the 50th percentile is $110. The 90^th percentile comes in at $122. Inflation has been in check for the last several years, so I think these numbers are still a great baseline. At $108, my dentist appears to be right in line with market pricing.

Max Will Pay $0.00 Out-Of-Pocket

A lot of employer-subsidized dental insurance plans pay teeth cleanings in full since they are preventive in nature. I am lucky enough to work for one of those employers. My dental insurance will cover this visit in full with no out-of-pocket cost to me. It doesn’t even hit my $50.00 deductible.

Here is a summary of how my preventive benefits look:

Here is a look at my actual claim; check out that turn around time on payment!

Final Thoughts

After taking a gap year in 2017, Max is back on schedule with dental cleanings. I probably have about 90 visits to the dentist left in my lifetime. I plan to make them count. Not adjusting for inflation, about $9,700 will be exchanged in an effort to keep my teeth clean for the next 45 years.

$108 (per cleaning visit) X 90 (remaining life-time visits) = $9,720

I happen to think the pricing above is very reasonable considering the service being provided. Someone is reaching into your mouth for 20-30 minutes (or more) to clean the areas you can’t get to. This is “real work”, as I like to call it. I know people that would spend more than this shoving a single meal into their mouth. Insurance aside, I would be willing to pay for this in cash for the level of service received here.

If you are paying for dental insurance and these free preventive cleanings come as part of the package, I don’t know why you wouldn’t take advantage of them. Don’t make the same mistake Max did in 2017.

Have you had your teeth cleaned yet in 2020? How much did you pay?

The post Are You Passing Up On Free Dental Cleanings? appeared first on Max Out of Pocket.

If you remember, some of those billing codes are used interchangeably between telehealth and regular office visits. Other codes, like maybe a telephone visit, could be considered telehealth by definition. But how does my insurance know the difference? How does our doctor let our insurance company know the visit was telehealth?

They use a special coding language that only they know.

Until now, that is. Thankfully, Max has decided to decode it. I am risking my life in the name of Max Out of Pocket.

Unfortunately, medical providers and insurance companies do not always speak the same language. This can end up impacting our out-of-pocket costs. To understand how the billing should look on these visit types, we are going to need to brush up on two brief medical billing concepts.

• Place Of Service Codes
• Modifiers

Stay with me here. In just a few short paragraphs of training, we are going to be running circles around billing departments all across the United States. I even have visual aids.

We, as consumers, can correct the system where it needs correction. If you master some of this lingo you will have what you need to go to battle with your clinic or health insurance over incorrect out-of-pocket costs related to telehealth.* Who knows, maybe we have a few doctors reading this that need to go to battle with their own in house coding and billing departments.

Place of Service Codes

The place of service is just what it sounds like. It is where our medical services physically took place. It is a numeric code on your medical claim form that the medical provider puts on there to tell your insurance where the services occurred. In my mind, this is one of the easiest ways for a doctor’s office and insurance company to make sure they have the same understanding of where the services happened.

The place of service has its very own spot on the claim form sent to your insurance company. If you really want to show your billing office you know what you are talking about, tell them it is located on form locator 24b of the 1500 medical claim form. Here is an example of a hypothetical simple ‘evaluation and management’ service that took place in a jail. Yes, jails have their own place of service code, it’s 09.

There is a whole list of possible places of services here.

In general, I would say most medical clinics and commercial insurance use a “place of service” code to represent where the services are happening. For example, if you were physically in the clinic with your doctor and you can reach out and touch them, they will likely use a “place of service” code 11. This represents an office setting. There are, of course, exceptions**, but this is the norm.

Telehealth Place of Service

With telehealth, we are not physically in an office. So ultimately, we are going to want our insurance company to know that. We need a way to let them know the visit was done through telehealth. One way to tell them is by reporting a place of service code 02 on our claim form.

02 Telehealth: The location where health services and health-related services are provided or received, through a telecommunication system.

Fortunately, if our doctor’s office can get this on the claim form correctly, our medical insurance has been officially notified that the services were provided through telehealth. This “02 code” is one way they might know that our out-of-pocket costs should be handled in a certain way. But some payers, like Medicare, want it reported a bit differently.

Modifiers

Billing modifiers are a little harder concept, but I have faith you will understand it. A modifier is a way for your doctor to tell your insurance company that they did a medical service, but there is something weird that the insurance company should know about the service. It is added to the end of your billing code. Here is where it is located on most medical claims.

Telehealth Modifiers

So if your doctor does a simple “evaluation and management” of a problem you are having through telehealth, you are going to want them to flag it accordingly. Some insurance companies will use this modifier when they process your claim so they know to treat out-of-pocket costs differently. It seems to me that the modifier most insurance companies are requesting is “modifier 95”.

Modifier 95: Synchronous Telemedicine Service Rendered via Real-Time Interactive Audio and Video Telecommunications System

For those who do not already know, “synchronous” basically means the interaction is happening in real-time. Don’t worry, I had to look it up for context. 

Of course, why not have one modifier when you can have two that make things twice as confusing? Some payers will require modifier GT on the billing code. It basically means the same thing.

Modifier GT: Via interactive audio and video telecommunication systems. Use only when directed by your payer in lieu of modifier 95

These two modifiers are another way your insurance company gets told the services were done through telehealth. They should tell their system to recognize your services were provided through telehealth.

Other Telehealth Scenarios

Modifier GQ: Via asynchronous telecommunications system.

No, I’m not talking about the magazine.

Remember, sometimes we can send photos and recorded videos to our doctor and have them check something out? If you remember, the billing code for this is G2010.

• G2010 represents the remote evaluation of a recorded video and/or images submitted by an established patient

Here is how the claim might look:

Now that you know what “synchronous” means, we get to learn what “asynchronous” means. This refers to two or more events not happening at the same time. Since my doctor is not reviewing my boil in real-time, my insurance company may need to know that. Modifier GQ can make that happen if the code itself isn’t enough for them to understand.

Here’s The Problem

Place of service and modifiers are the primary language medical clinics and insurance companies talk to each other when it comes to telehealth. Unfortunately, it is not necessarily standardized across all payers. United Healthcare may want it one way where Anthem wants it another way. Some just want the modifier, some just want the place of service, and some want both. This is where billing errors occur. Finding someone on either side who can accurately speak this language can be hard.

Do “telephone” visits need the modifier codes? They are technically not “video” so I would not think so. But then again, I know some payers will want it anyway. They likely meet the definition for the place of service 02. There is a lot of room for incorrect interpretation here.

Additionally, if the clinic has a special “designation” from Medicare, like maybe a “Rural Health Center”, there are additional codes we are supposed to use for just Medicare.

Final Thoughts

My goal here is to create an army of informed consumers who can help the system get this right.

With that, we now have a pretty solid understanding of how telehealth billing should look. We understand the place of service, billing codes, and even how those codes can be modified. We can use these tools to talk through potential billing errors that might come up with our insurance claim. With an army of educated consumers, we can start putting pressure on the system where we need to.

Hopefully, your insurance company committed to paying telehealth services for 90 days with no out-of-pocket costs during the 2020 pandemic. It is likely going to be these codes that tell them to make that happen. In some cases, their systems will not be set up quickly enough to keep up with policy changes. In other words, they won’t recognize these codes even with the place of service and modifiers. They may forget to initially waive out-of-pocket costs. Understandable. But here at Max Out of Pocket, we like to follow things through and make sure they are done right.

Have you had any billing errors related to telehealth?

*When Max Out of Pocket readers “battle” with insurance companies and doctor’s offices, we are always firm, but respectful. These people are just doing their jobs. I don’t believe anyone is going out of their way to make our lives difficult. There are worse things in this world than a couple of inconvenient phone calls, so let’s not make more of it than there is. 

**If you are a Medicare patient seeking services from a clinic on a hospital campus, things may be slightly different. If you happen to fit into that scenario, email me and I will walk you through it. The modifiers still come into play, but the place of service isn’t always a thing.

Again, Max is not a “certified coder”, but these concepts are not rocket science if you know where to look. I purposely left a few examples out of this, but if you have one you want me to review, please reach out!

The post Telehealth Billing: Exposed! appeared first on Max Out of Pocket.

But what if there is no need for the doctor to poke around? What if I just need a prescription refilled or five minutes of medical advice? Is there another way?

So today we are here to study up on telehealth. Like many things in healthcare, we have overcomplicated this. There are too many acronyms, technical definitions, and codes. I’m not proud of how complicated this has gotten. But today, we put some of that aside and stick to the basics.

I will even give you the billing codes used most often so you can check in on things.

These alternatives may help keep us out of the doctor’s office while still getting the services we need. Depending on the insurance, it may also help us keep some extra money in our pocket.

Telehealth

The COVID-19 pandemic opened a whole array of options for us to get medical services remotely. Typically, these are usually only available when care from a distance makes sense. In 2020, it makes a lot of sense. So much sense that even Medicare has opened up telehealth. Obviously, if we have a hernia or a broken elbow, we will likely need to be evaluated in person. But in some cases, our doctor or provider doesn’t need to touch us to help us evaluate and manage a problem.

So, what are our options for telehealth?

I am going to attempt to simplify this down to three main visit types. From a “digital” standpoint, we get farther and farther from our doctor as I move down the list.

• Video Visits
• Telephone Visits
• Email/Patient Portal Visits

There are also two more unique scenarios I think are worth calling out.

• Photos and Recorded Videos (sent to our doctor)
• Short Virtual Check-ins

Medicare and several payers have come right out and said they will now cover various forms of telehealth. Unfortunately, that doesn’t mean your insurance covers it. You will want to do your research and make sure you understand what your insurance covers. Then, find out how it will hit your out-of-pocket. Max is only here to guide, I never guarantee.

Video Visits

Video visits are generally two-way communication using an interactive audio and video telecommunications system permitting real-time communication between the provider and patient. That’s a fancy way of describing a secure Skype or Zoom call with your doctor. This is what most people think of when they think of telehealth. It is considered a substitute for an in-person visit. Video visits offer the ability to do an evaluation and management of an issue remotely over video and audio.

Normally, these video services could only be provided to “established” patients. Being an established patient just means we already have a relationship with our medical provider. The government waivers tied to the pandemic have opened these services up to new patients as well.

From a billing standpoint, the regular ‘evaluation and management’ billing codes are used for billing these services. So, on paper, these visits have a similar look (and price) to visits you have with your doctor when you physically set foot in their clinic.

Here are the codes that represent this kind of service.

• 99201 – 99205 for new patients
• 99211 – 99215 for established patients

Generally, as the visit gets more complex and time-consuming, the higher the code used. There are definitely some other codes that might be used for telehealth services, but these are the codes we will most often see.  

Here is where I will try not to overcomplicate things. Your doctor’s office should put a special ‘place of service code’ or ‘modifier’ on the claim to tell your insurance company the services took place through a telehealth visit. That will become important for your insurance company to correctly waive out-of-pocket costs on these visits should they choose to do so. I will give you those tools in another post.

Telephone Visits

Alternatively, non-face-to-face telephone visits are handled a bit differently. These are services provided by your doctor or provider of care over the phone. Normally, they wouldn’t be as thorough of an exam as what you would experience with video evaluation.

These phone calls also generally cannot be billed if they are provided seven days after a formal evaluation and management with a provider. In other words, if you had a 99201 – 99205 or a 99211 – 99215 charged to you in the previous seven days and you speak to your provider over the phone, they should probably not be charging you for the telephone call.

The following billing codes can be used to represent a telephone call with your provider.

• 99441 – five to ten-minute evaluation and management service provided over the phone
• 99442 – eleven to twenty-minute evaluation and management service provided over the phone
• 99443 – twenty-one to thirty-minute evaluation and management service provided over the phone

Any time spent on the call over 30 minutes must be on the house because there isn’t a code for that. Oh, and if they happen to call you into the office as a result of the phone call, they probably can’t charge you for the phone call. This would generally be if the appointment occurred within 24 hours of the call.

Email/Patient Portal Visits

Another option is a non-face-to-face encounter with a medical provider through virtual communication. These are often referred to as “E-Visits”. They would normally be reserved for a patient who has already established care with a medical provider. In this case, there is no video, audio, or telephone conversation. It is all handled through an online patient portal or secure email. It is a patient-initiated, non-face-to-face, digital communication.

These are the billing codes I would expect to see for this scenario. As I mentioned, these are for “established” patients.

• 99421 – five to ten-minute online digital evaluation and management service
• 99422 – eleven to twenty-minute online digital evaluation and management service
• 99423 – twenty-one (or more) minute online digital evaluation and management service

Your provider office should only charge one of these over a 7-day period no matter how many times they communicate with you (it’s cumulative). That said, my understanding is that, unlike the phone visits, our doctor can still charge this even if we saw him or her in the last seven days.

The time on these codes represents the time it takes your doctor or provider of care to review your initial inquiry, review medical records, develop a plan for you, write prescriptions, and respond to you.

Photos and Recorded Videos (sent to our doctor)

Have you ever considered just sending a picture or a video of something to your doctor? They can evaluate the image/video and tell you what is wrong? They have a code for that too. This is sometimes called Virtual Care Communication (store and forward).

• G2010 represents the remote evaluation of a recorded video and/or images submitted by an established patient

There are some rules around this one as well. This code includes the follow-up call with the patient that occurs within 24 hours.

Just like the phone calls, your clinic should not be billing it if you had a formal evaluation and management service with your doctor in the previous 7 days of sending the files. They also cannot bill it if you have a formal evaluation and management service with them within 24 hours after submitting the images. In other words, if they call me in after looking at my boil photo, they shouldn’t charge me for looking at the image.

Virtual Check-In

Virtual check-ins are very much like the short 5-10 minute telephone evaluation and management code above, it just goes beyond the phone call. It represents a brief technology-based communication with your provider that spans 5-10 minutes of medical discussion. Although it is similar to the 99441 telephone service, the code definition technically doesn’t define it as a “telephone only” code. The code represents any technology-based communication. My interpretation is that could include the telephone.

• G2012 represents this type of “virtual check-in” depending on your insurance

Just like the phone calls, your clinic should not be billing it if you had a formal evaluation and management service with your doctor in the previous 7 days. They also cannot bill it if you have a formal evaluation and management service with them within 24 hours of the check-in.

Final Thoughts

So there you have it – telehealth in a nutshell. It is what it is, and I am not proud of how complicated the billing on this has become. But now you have a high-level overview should you ever need it.

The video/audio visits try and substitute an in-person face-to-face visit. Virtual communication (phone/online portal), on the other hand, is a brief discussion to determine if a face-to-face visit is necessary.

In times of pandemic, these are great options to get help with an issue. In theory, it should even work in times of non-pandemic. I personally think this little nudge will push us further into the telehealth model, at least, where that model makes sense.

But how much should these services cost me? How should they be billed? More on that next time, here at Max Out of Pocket.

*Max is not a medical professional and none of this is medical advice. I am not promoting the use of telehealth. Talk over your telehealth options with your provider.

*I am not a “certified coder”. But then again, this stuff isn’t rocket science either once you know where to look. That said, it is not advisable to use Max as formal “regulatory support” for making an argument with your doctor’s billing office. If you are having a billing problem, feel free to contact me by email and I am always happy to try and help or point you in the right direction.

*If you happen to live in a rural community and seek services from a designated ‘rural health center’, as of 4/29/2020 it is still questionable if Medicare will pay the telephone codes 99441-99443. I don’t see any reason a commercial payer wouldn’t pay them, though.

The post Telehealth In A Nutshell: What Are My Options? appeared first on Max Out of Pocket.

But I am doing my best to stay on top of what’s going on with out-of-pocket costs related to COVID-19. I mentioned last week that Medicare and several large medical insurance commercial carriers had already stepped up to cover the COVID-19 lab test free of charge. If you were wondering, providers will receive about $51.31 from Medicare for the non-CDC lab test (U0002). Commercial insurance companies will likely pay much more. Yes, even in times like this, everything has a price tag. Then again, at least beneficiaries won’t foot any of the bill.

But last week, the president signed a new bill into law that, among many other things, specifically addresses out-of-pockets costs related to the test. It codifies what was already happening and makes it the law. To a certain degree, it went even further than just the lab test. But there is no doubt that this still falls short of mandating coverage for therapeutic services for COVID-19 (treatment). The bill mandates all payer sources (including government payers) to cover the COVID-19 lab test for free, and in some instances gets into some specifics on how this will be operationalized (particularly for Medicare). It even put in some protections for the uninsured. 

But today we are only going to look at the implications for commercial medical insurers. I suppose Max is being a little selfish by only looking out for himself in the event he needs a COVID-19 lab test. That, and I only have so much bandwidth.

With that, let’s drill down in this bill and see what’s in it. I am going to zero in on one section of it; the part where it talks about commercial insurance (including grandfathered plans) offering individual and group insurance.

Division F – Health Provisions

It all goes down in Division F. They title it “Health Provisions”. I would have probably called it “Max Out of Pocket Provisions,” but that’s me. This division directs all payers how to handle out-of-pocket costs for COVID-19 testing.

The first section, Section 6001, talks about coverage of testing for COVID-19. This speaks specifically for group and individual health insurance plans and even includes those grandfathered in by the Affordable Care Act.

The “Who” and the “What We Want Them To Do”

“In General.—A group health plan and a health insurance issuer offering group or individual health insurance coverage (including a grandfathered health plan (as defined in section 1251(e) of the Patient Protection and Affordable Care Act)) shall provide coverage, and shall not impose any cost sharing (including deductibles, copayments, and coinsurance) requirements or prior authorization or other medical management requirements, for the following items and services furnished during any portion of the emergency period defined in paragraph (1)(B) of section 1135(g) of the Social Security Act (42 U.S.C. 1320b–5(g)) beginning on or after the date of the enactment of this Act:

H.R.6201 – Families First Coronavirus Response Act

This paragraph is setting up the “who” and the “what we want them to do”. I usually take out several of the words and narrow it down so the Average Joe Max like myself can actually understand it. Max’s simplified interpretation goes something like this:

A specific group of payers shall provide coverage with no out-of-pocket costs for the following services:

I have personally seen the government get in trouble before in other areas of healthcare for using “shall” and not “must”, but that’s a story for another day.

Okay, What Services?

So I understand who we are talking about and what we want them to do. But what services are they mandating coverage for? In this part, they call out two specific things. First, it touches on the COVID-19 lab test itself. Then, it looks at items and services furnished in conjunction with the test.

In vitro diagnostic products (as defined in section 809.3(a) of title 21, Code of Federal Regulations) for the detection of SARS–CoV–2 or the diagnosis of the virus that causes COVID–19 that are approved, cleared, or authorized under section 510(k), 513, 515 or 564 of the Federal Food, Drug, and Cosmetic Act, and the administration of such in vitro diagnostic products.

H.R.6201 – Families First Coronavirus Response Act

Max’s interpretation:

Both the administration of a legit COVID-19 lab test and the lab test itself is free when used to see if an individual has COVID-19.

Oh, but wait, there’s more. I bolded a few things for emphasis.

(2) Items and services furnished to an individual during health care provider office visits (which term in this paragraph includes in-person visits and telehealth visits), urgent care center visits, and emergency room visits that result in an order for or administration of an in vitro diagnostic product described in paragraph (1), but only to the extent such items and services relate to the furnishing or administration of such product or to the evaluation of such individual for purposes of determining the need of such individual for such product.

H.R.6201 – Families First Coronavirus Response Act

So this is where things get a bit confusing but I think we can handle it.

Max’s interpretation:

You only have to cover these “other” services if a free COVID-19 lab test is ordered during the encounter and those services are related to the giving of the free COVID-19 lab test or evaluating the patient to see if the free COVID-19 test was warranted in the first place.

So What Does This Mean?

My interpretation is a COVID-19 lab has to be ordered to trigger out-of-pocket costs to be waived. In other words, if we show up to the emergency room and don’t meet the guidelines to warrant a COVID-19 lab test (maybe we have the regular flu), we are still on the hook for out-of-pocket costs.

I think the government is trying to direct payers to only cover the lab test, services related to the lab test, and evaluation and management costs that come along with seeing if an individual needed the test in the first place. But a provider must order a test to trigger the out-of-pocket costs waived. They are clearly not requiring payers to cover anything else outside lab test and services that come with it. Therapeutic services are not on the table here.

It also seems like if other services provided are unrelated to the COVID-19 lab test, they will hit deductibles and co-payments as usual. So if I get another issue addressed (let’s say a broken leg) during the same encounter I get tested for COVID-19, the broken leg services will be carved out and hit my deductible and other out-of-pocket costs accordingly.

Final Thoughts

Just like Colonel Jessep ordered the code red in A Few Good Men, we need an order to waive COIVID-19 out-of-pocket costs.

But Max is not a lawyer. But I sometimes like to pretend I am Lt. Kaffee. Through this little analysis of the H.R.6201 – Families First Coronavirus Response Act, I think we have some clarity on where we sit with COVID-19 out-of-pocket costs as they relate to the medical insurance industry. We need an order for the COVID-19 lab test to waive out-of-pocket costs.

Frankly, I have not fully developed my opinion on how out-of-pocket costs should be handled for COVID-19 services. I know, it is hard to believe the mind behind a blog called “Max Out of Pocket” isn’t clear on the best course of action here. But this stuff is complicated. Ultimately, part of the idea of this blog was to help me get some clarity on my healthcare views.

I like the idea of covering the tests and the evaluation and management of an individual to see if they need the test even if it is not ordered. It removes a barrier for a patient who may be infected from getting checked out. The other side may argue it has the potential to flood emergency rooms with a bunch of Americans demanding their “free test” when they really don’t need to be there.

Trust, I am concerned about the potential tsunami of out-of-pocket costs that might be coming, particularly for our seniors. But as for a blanket waiver for all out-of-pocket costs, I don’t think I am there yet. We likely need a funding source to help people who are out of work and can’t afford their out-of-pocket commitments, but not everyone is in that boat.

What are your thoughts on this first step in mandating coverage of the COVID-19 lab test with no out-of-pocket costs to the patient? Where should we go from here?

Also, just another reminder Max is not an attorney. I am bound to get things wrong from time to time. If you are an attorney and want to correct anything here, feel free to call me out in the comments.

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But I have to ask. If these projections are correct, what about the tsunami of out-of-pocket costs that might come with an influx of inpatient hospital stays?

I have to believe the COVID-19 pandemic has the potential to leave buckets of out-of-pocket costs in its wake. The government has already dealt with out-of-pocket costs associated with diagnostic lab testing for a patient with COVID-19. Those tests will be free for everyone according to the now signed version of H.R. 6201, FAMILIES FIRST CORONAVIRUS RESPONSE ACT. Frankly, several large commercial payers in addition to Medicare already stepped up to pay for those tests. This bill simply codifies it into law for all payers and builds in some protection for the uninsured.

But what about the costs of treating a patient for COVID-19? Therapeutic services, if you will. It’s a pretty big distinction and one we need to start talking about. Particularly for Medicare patients, a high-risk demographic where Medicare Part A will likely foot some of the bill.

Now, I am going to try and carefully draw this up. My goal here certainly isn’t to add to the concerns we all already have about this pandemic. But with the government taking unprecedented action against the virus, I thought drawing some attention to this might help us get a proactive fix in place for potential out-of-pocket costs on cases related to COVID-19. While we’re at it, maybe we could go ahead and fix a longer-term issue that leads to exploding out-of-pocket costs to Medicare beneficiaries who experience extended hospital stays. So, let’s go ahead and take a look at the out-of-pocket costs that have the potential to come along with an extended inpatient Medicare Part A stay.

Before We Start

I need to go ahead and set this up here to make sure we are all on the same page. The last thing I want to do is alarm someone who is adequately covered. The scenario I describe below is specific to a Medicare beneficiary on traditional/original Medicare with no supplemental coverage.

Medicare Advantage plans that replace traditional/original Medicare generally have a max out-of-pocket built-in. In 2020, that max-out-of pocket limit comes in at $6,700. Not small change, but decent protection. For those who stay with original Medicare, supplement plans offer some protection to those beneficiaries by picking up out-of-pocket costs after traditional Medicare pays. As we learned in the comments below, about 80% of Medicare beneficiaries have some sort of supplemental coverage.

But what about those patients who only have traditional/original Medicare Part A coverage?

An Inpatient Medicare Part A Stay

I’m not clinical. I have no idea what the average length of stay would look like for a COVID-19 patient. At this point, I am not sure clinicians even know that. I have to assume it would be much less than 60 days. This study from China put the average at 11 days.

But I also think it is fair to assume there is potential for a patient with other conditions to see some extended stays in the hospital.

The out-of-pocket costs for the Medicare Part A program are not exactly simple. Let’s take an unexpected very serious hospital stay that is medically necessary and covered by Medicare Part A.  

In 2020, Medicare Part A comes with a deductible of $1,408 for days 1 through 60 in the hospital. Medicare Part A covers everything else. Now, considering we don’t even have to pay premiums to the Medicare Part A program, I happen to consider this small price to pay for spending up to 60 days in the hospital.

But to the average retired senior living on $18,036 in annual Social Security benefits, they just saw 7.8% of their 2020 income leave their pocket.

On day 61, things get interesting.  

When we go beyond day 60 we are on the hook for $352 each day in the hospital up through day 90. That’s $10,560 out-of-pocket for days 61-90. These are called coinsurance days. 

Now, when we hit day 91, we start tapping into our lifetime reserve days. These are non-renewable and we only get 60 of those for our entire life. In 2020, we have to pay a $704 coinsurance for each of our lifetime reserve days spent in the hospital. That’s another $42,240 and gets us through day 150.

On day 151 Medicare puts us out on the street holding us responsible for all costs of care with no max out-of-pocket protection.

To summarize, in 2020, a 150-day stay at a hospital in America will run a traditional Medicare Part A beneficiary about $54,208 out-of-pocket. I don’t have enough cash to flash a picture of $54,208, and I certainly can’t fit that much in my pocket. So you will have to use your imagination.

$1,408 (day 1 – 60) + $10,560 (day 61 – 90) + $42,240 (day 91 – 150) = $54,208

Here is the table directly from Medicare.

Don’t worry, though. It is extremely unlikely the hospital will literally roll your bed out to the street on day 151. But they will continue to charge a retail price for room and board which is generally well over $1,500 per day plus any ancillary services being provided. It will be even more than that in the ICU. The hospital is then tasked with trying to collect these balances when their focus should be on patient care.

The Part A Deductible Also Resets

The Medicare beneficiary is responsible for the Medicare Part A deductible for inpatient services for each benefit period. The “benefit period” resets when the patient has not been an inpatient of a hospital or skilled nursing facility for at least 60 days.

So if we can manage to stay out of the hospital for 60 days but land back in later in the year, everything resets except for our lifetime reserve days. In theory, we could pay the $1,408 deductible twice in one year. This is pretty backward compared to how most deductibles work in the commercial insurance market and could certainly happen to a COVID-19 patient who ends up back in the hospital later this year. That scenario could pull over 15% of their 2020 social security income out of their pocket.

Take-Home

This isn’t a new problem. At my old health system, I would pretty regularly see patients tapping into their coinsurance days and sometimes their lifetime reserve days. It wasn’t even an academic medical center where you would expect to see more complex cases. I also know the 150-day scenario isn’t actuarially likely, but I thought I would take the time to call it out.

Philosophically, I think I am technically on board with some form of out-of-pocket costs in the regular world. It keeps market pressures on the system. But that all goes out the window when we are in a crisis. In a national emergency, the government has unprecedented authority. Authority they could use to potentially flatten the out-of-pocket curve that comes with the Medicare Part A program.

Although they have already taken steps to protect patients from out-of-pocket costs from diagnostic testing to see if a patient has the virus, we still need to get measures in place to protect aging loved ones from a potential wave of out-of-pocket costs resulting from therapeutic inpatient services. While we’re at it, let’s fix this archaic $54,208 hospital stay problem. The Max Out of Pocket crew is here to try and make that happen, but I need your help to spread the word. If you know anyone we can get this information in front of, I would be much appreciative.

Max writes over at the intersection of healthcare and personal finance at a place called Max Out of Pocket. 

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