Health Insurance Costs: Two-Tiered Medical Billing For Insured and Uninsured Frustrates Hospital Patients

It is the paradox of medical billing: Medical insurance means you might actually have to pay more in some cases.

Take the story of one frustrated patient in Southern California who needed a CT scan of her abdomen and pelvis after colon surgery. Her visit for the scan at Long Beach Memorial Medical Center cost $6,707 total. With her Blue Shield of California insurance, her out-of-pocket cost was $2,336.

But what if she had not used her insurance and paid straight cash instead? Then her cost would have been halved -- only costing $1,054 according to a story in Los Angeles Times.

“I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal,” Long Beach patient, Jo Ann Snyder, 57, said in the LAT.

Her story reveals the murky underworld of medical billing: There is the price that hospitals and doctors charge insurance companies and the price they charge if patients pay in cash. The lack of price transparency is just another piece of the ever-more complicated landscape of medical billing.

Budget gaps at hospitals have forced many institutions to raise prices, even as new government rules have placed some limits on what they can charge the patients without insurance, according to the LAT. Ultimately the cost to underwrite the uninsured is passed on to insurance companies and insured patients -- who can end up paying up to 10 times as much as cash-pay patients do for the same procedure.

Many hospitals and physicians offer big discounts for cash-paying patients regardless of income or insurance coverage -- but that fact is largely obscured from patients. "The last thing the insurance companies want you to know is how inexpensive this stuff really is, David Belk, an internist in Alameda, Calif. and creator of the True Cost of Healthcare website to educate the public about medical cost markups, told the LAT.

And as these higher costs being passed on to patients, billing services and companies are getting more aggressive about collections, going as far as badgering patients in the emergency room for payment.

And it's not just price transparency at the hospital. It's with doctors as well. A New York couple, who was profiled in the New York Times, is trying to unspool a billing and debt collection nightmare after getting his and hers colonscopies with two different in-network doctors. But both also included full anesthesia, which was not covered by their insurance company.

Colonoscopies are recommended for people over the age of 50 -- but extra services associated with it, such as full anesthesia, are not always covered by insurance. The procedure can also be done under a lighter, sedative anesthesia.

The couple's billing issues underscore how some doctors are opting for more expensive routes to complete a procedure, even when it's unclear to the patient what will -- and will not -- be covered by insurance. For patients. the best course of action is to talk to the doctor to find out exactly what is involved in a procedure and check with the insurance company to make sure it is covered.