Even though Max OOP loves case studies, he struggles when the study is left incomplete. I suppose I should understand. After all, healthcare is extremely complex and since I am just an Average Joe Max, even I still miss things from time to time. Here at Max Out of Pocket, I am going to do my best not to point fingers too strongly since the problem has several layers. But I do feel the need to add some clarity and context when I can. I might even poke a little fun along the way, but ultimately I think we all want the same thing.
An NPR article hit Max OOP’s radar this past weekend. Lauren Weber with Kaiser Health News reported on a medical bill a patient received from Hudson Hospital in Hudson, Wisconsin. In short, the article outlined the exorbitant bill that included a $4,836 line-item charge for nitrous oxide. The hospital ended up reducing the charge to $496, according to the invoice dated 1/9/2019. The article suggests this correction put the price within the normal market rate of $100-$500. In comparison, this is about $1,000 cheaper than Hudson Hospital’s communications area quoted for a normal epidural.
This case clearly has Max OOP written all over it.
Before we get Max OOP’s take, I want to make it clear I completely agree that a $4,836 charge for nitrous oxide during childbirth is outrageous and would normally need to be called out. There is work that needs to be done on hospital pricing across the country and now that consumers are taking on more and more of the bill through cost-sharing, they are taking a much closer look at those prices. But I also think this article missed a few opportunities to provide some additional education to healthcare consumers.
Bill Of The Month
Believe it or not, this is actually the first I have heard of this “Bill Of The Month” series and Max OOP really likes the idea. It will be a great way to hold healthcare providers accountable for some pricing issues we are seeing for healthcare services. It may even add some market pricing pressure to an industry that really isn’t a normal market.
Here is the goal of the series and a way to submit your own medical bill if interested.
This crowdsourced investigation by Kaiser Health News and NPR dissects and explains your medical bills every month in order to shed light on U.S. health care prices and to help patients learn how to be more active in managing costs. Do you have a medical bill that you’d like us to see and scrutinize? Submit it here and tell us the story behind it.https://khn.org/news/tag/bill-of-the-month/
Let’s Finish The Case Study
Since this is a crowdsourced investigation, I am taking that as a green light to add to the conversation. First of all, nitrous oxide sounds like a great way to ease the pain of delivery while also avoiding a more invasive form of anesthesia such as an epidural. From the article, it sounds like we have seen exponential growth since 2011 (when only two hospitals offered it) in the use of this alternative way to manage pain. Leave it to the United States to let a TV show called “Call the Midwife” drive healthcare trends. But I do think that it’s great that a small 25-bed Critical Access Hospital (CAH) like Hudson is already offering such a helpful service. It is nice to hear that smaller communities have access to new methods of providing care and can provide those services at the request of the patient. After all, with a population less than 15,000 it can be hard to sustain specialized services like nitrous oxide and a bathtub delivery. I suppose Minneapolis would be too far to go for a service like this if Hudson didn’t have it available?
Setting The Stage
I think the fact that this particular patient was a healthcare professional herself (midwife) in the very specialty of service she was receiving set some authenticity to this scenario. I mean, seriously, if people who work in the field are getting ripped off, there’s no telling what hospitals are doing to your Average Jill Maxine.
I am actually really surprised someone in the field with a decent understanding of healthcare processes wasn’t able to get this issue resolved directly with the hospital before escalating it to a news correspondent. That said, administrative and support departments, particularly in Critical Access Hospitals, do struggle having adequate resources to address technical issues timely and correctly. So this particular patient very well could have had a difficult time getting an explanation.
When Kerrschneider saw she had been billed for anesthesia, she called the hospital repeatedly about the coding, wondering if the hospital had accidentally charged her for an epidural. She protested further when she discovered the high charge was simply for nitrous. She knew that the hospital where she works charges a flat fee of about $100 for the same thing.Bill Of The Month: $4,836 Charge For Laughing Gas During Childbirth Is No Joke
I think there was an opportunity here to elaborate more on the specific path the patient took to resolve the issue. That could be a good thing to know if other patients are interested in learning how to be more active in managing costs.
For instance, if she was calling the “coding” department and not the “billing” department, perhaps she wasn’t talking to the right people? How many times did she call? Did she talk to the quality or compliance department? Did she attempt to escalate this to the hospital’s administration? Was the hospital really being unresponsive and not offering an explanation?
The invoice with the reduced charge (from $4,836 to $496) is dated 1/9/2019 and the actual services were provided between 12/19/2018 and 12/21/2018. Seems to me the hospital was able to correct the issue and bill the insurance company correctly and relatively quickly. I almost have to question if insurance was ever billed the incorrect amount for the $4,836 since they already showed payment on the 1/9/2019 invoice along with the corrected charge. There is even a handwritten note on the bill that said “billed insurance $7,550” which was the corrected total charge amount. So should the $4,896 charge really be the highlight of this article or should we be looking at the reduced charge of $496?
Kerrschneider eventually gave up and accepted the reduced nitrous charge since she didn’t want to further antagonize people in the region where she also works as a nurse midwife.Bill Of The Month: $4,836 Charge For Laughing Gas During Childbirth Is No Joke
Okay, reporting the issue to the NPR/Kaiser Health News “Bill Of The Month” series might not be the best play if you don’t want to further antagonize people in the region. As I said, I have to poke fun where I can.
On To The Billing Issue
I think it is unfortunate that in addition to the itemized bill from the hospital, the patient didn’t provide the Explanation of Benefits (EOB) from her insurance. I think that the document would likely provide some additional clarity to the situation and also be a great tool to educate the readers. I will cover this document in depth later this year.
The author suggests the insurance company (Medica) “refused” to pay the $4,836 fee for anesthesia services citing “provider responsibility”. It is unclear to me if the correspondent actually spoke to someone at Medica or is making a reference to the Explanation of Benefits (EOB). In Max OOP’s experience, when something is flagged as “provider responsibility”, the provider (in this case the hospital) writes that amount off and the consumer is held harmless. Without the EOB, we really don’t know if the insurance company received the incorrect bill since the 1/9/2019 invoice clearly shows the charge correction down to $496. The author also references an agreed-upon rate between Medica (Insurance) and Hudson Hospital (Provider) for childbirth and total charges cannot exceed that amount. Max OOP will assume we are referring to a “per day” or “per case” rate here.
We haven’t touched on it here yet at Max Out of Pocket, but it is pretty common for your insurance to pay for your inpatient services (such as a normal vaginal delivery) on a set “per day” or “per case” rate. In other words, the payment is already set regardless of the charges on the bill. This is often referred to as the “allowed amount”. The concept is similar to how you might buy a car or a house in a ‘packaged’ deal. You don’t pay for the windshield wipers or faucets individually in those situations. It works the same way between the insurance company and the hospital. Unfortunately, the patient is stuck in the middle of this unusual “per widget” transaction. So in this case, even though there was clearly a charging mistake on the bill, it likely had absolutely no impact on this particular consumer since it was considered “provider responsibility”. Most patients aren’t aware of these contracts since they happen behind the scenes and there is certainly room for improvement here to make things more competitive.
In this case, total charges for the mother’s case came to $7,550 after the billing correction. The allowed (agreed-upon) amount between Medica and Hudson for the services is presumed to be the sum of the patient cost share (deductible + copayment) and insurance payment, or $5,616.89.
$1,500 Deductible + $823.38 Copayment + $3293.51 Insurance Payment
= $5,616.89 Allowed Amount Per Baby Delivery
So when Hudson Hospital acknowledged the error and decreased their fee to $496, the insurance still has a fixed pricing agreement with the hospital for baby deliveries ($5,616.89 per delivery) regardless of the charges. The price per delivery is the price we should be looking at here, not the nitrous. Are we comfortable with $5,616.89 for the delivery and mother’s stay? Could we create a cash-only baby delivery factory that might be able to compete with this?
Now, if the insurance company’s agreement with the hospital was a “percent of the total charge”, we would definitely have a problem here. Without the Explanation of Benefits, I can’t be 100% sure from the information we have. $5,616.89 seems like an odd global fee; I am surprised it isn’t an even dollar amount, but it could be an older contract.
Understanding Your Benefits
Altogether for the care she and her son received for his birth, she was on the hook for deductibles and copayments that totaled $3,635. She paid it.Bill Of The Month: $4,836 Charge For Laughing Gas During Childbirth Is No Joke
If this particular consumer was surprised by the $3,635 in deductible and copayments for her piece of the service, she probably didn’t have a great understanding of her benefits from the start. That is really between her and her insurance since Hudson does not control who she signs up with. Maybe she should consider becoming a Max Out of Pocket reader since we are going to cover patient cost-share in depth later this year. All in good time. I noticed her ‘copayment’ is exactly 25% of what the insurance company paid. That sounds more like a coinsurance to Max OOP, but I can let it slide. It could be a regional thing.
$823.38 / $3,293.51 = 25% copayment
I would point readers to their Summary of Benefits and Coverage document provided by most insurance companies. Mine shows me an estimate of what it might actually cost to have a baby. So no surprises for Mr. and Mrs. Max OOP. Here it is!
We will reference this document in depth later this year as we continue Max OOP’s complete dissection of the healthcare system. I think insurance companies also have some work to do to make this document more useful to the patient.
So, the author also offers this takeaway.
The takeaway: Nitrous oxide used during labor and delivery does not have a standardized charge or code, which is surprising considering that there are medical charge codes for just about everything — including being pecked by a chicken or getting sucked into a jet engine.Bill Of The Month: $4,836 Charge For Laughing Gas During Childbirth Is No Joke
We all know Max OOP can be pretty nitpicky, but this statement is confusing two concepts and could potentially be confusing healthcare consumers. Charge codes and diagnosis codes are two very different things. Even though Max OOP will also poke fun at some of the interesting diagnosis codes out there, we really shouldn’t be confusing them with charge codes.
I also wanted to point out that since this is an inpatient case, it isn’t industry standard to assign CPT charge codes to the hospital claim line item charges that are submitted to insurance.
Not Funny: Midwife Slapped With $4,836 Bill For Laughing Gas During Her LaborBill Of The Month: $4,836 Charge For Laughing Gas During Childbirth Is No Joke
Seems like this title is a bit of a stretch. The “itemization” provided in the article showing the error specifically says “this is not a bill”. The bill dated 1/9/2019 showed the correct charge amount of $496 which was more than 4 months ago. Also, it seems unlikely the midwife was actually slapped with the bill. Paper cuts hurt and that seems like it would be a valid complaint. Don’t worry, we have an ICD-10 diagnosis code for that; “Paper entering through skin, initial encounter”. Ouch.
The nitrous oxide charge was clearly an error and needed to be corrected. I am not sure how many other patients received this service at this particular hospital, but it would be ideal to audit those cases and correct them if necessary. It is possible a simple clerical mistake may have caused the initial issue. My guess is one of the nurses or staff members inadvertently charged the facility rate for regular anesthesia (a timed charge every 15 minutes) or was using it as a placeholder if they didn’t know how to charge the nitrous oxide correctly. Max OOP is speculating here.
Hospital pricing should always be a function of cost. The article references the cost of the tank and refill cost, but fails to mention the resources needed to train staff, maintain equipment, and meet regulatory requirements. I have seen this service priced between $60 – $750 depending on the hospital. Is that fair? Not sure, but I am more concerned about the price per delivery. When we split items out of a large transaction like this, things can look weird and even flat out wrong. I think that is why insurance companies and hospitals try to set an average price for a normal baby delivery and then apply that price to everyone with that same insurance.
If there was truly a set price for inpatient delivery in this case then the charge error actually had no impact on this particular consumer and would just be considered “provider liability” and likely written off. If the pricing was set at “percent of total charge”, Max OOP may have a different take assuming the incorrect charge was actually sent to the insurance.
We need to continue to monitor hospital pricing across the country without being hypersensitive. We also need to dig deep into the details of those cases to make sure we are maximizing engagement from all parties. Getting everyone to the table (insurance, provider, patient, media, government) and working together to tackle healthcare costs would be the ideal situation. Heck, maybe Max OOP could be the moderator of the summit. But then again, I would probably quickly turn it into a beer summit and it wouldn’t be very productive. Putting a small hospital in Wisconsin in the spotlight who is providing access to a great service and appears to have corrected the issue timely may not be the best approach to fix pricing. Even though the patient spoke positively about the care received, I would just hate for this charge issue to overshadow some of the impressive accomplishments this birthing center has seen over the years. This would include a nursing staff that ranks in the top 90 percent nationwide according to Press Ganey patient survey data referenced on Hudson’s website. It is not easy to put up those kinds of numbers.
I suppose it will get patients to look at their bill, though, which is likely the intent of this series and needs to continue to happen. I am looking forward to more “Bill Of The Month” articles so we can continue to learn through this process.
Most of these concepts are more complex than I would normally cover in a single post. The intent is to slowly release these ideas in bite-sized chunks. But Max OOP just couldn’t resist this one.
*Max OOP has absolutely no affiliation with the hospital or insurance carrier referenced in this article. In fact, I live over 1,000 miles away and never have been to Hudson, Wisconsin. Therefore, the content in this article is the opinion of this blog and does not represent the views of any other party. I just happen to find this stuff interesting and this is an opportunity to educate others.
Any charging issues Max OOP can help you with?