A front page story in many newspapers this week was about a government report showing outrageous hospital charges across the country. We are supposed to be shocked that getting medical care in a hospital is a lot like buying a used car. If you have insurance, you get a pretty good price. If you have Medicare, you get a better price. If you don’t have insurance, or if you have lousy health insurance, you get an outrageous bill.

To me this is old news, since I wrote about a Tucson man and his $126,000 hospital bill back in 2011. I thought I’d share the story again.

MEDICARE STORY: 24-HOUR HOSPITAL STAY, $126,241 BILL

When you spend the night in the hospital, you would assume you had been “admitted” to the hospital – but you could be wrong.  And this definition of your status could cost you thousands of dollars if your Medicare Advantage plan has a 20% co-pay for “outpatient surgery”.

I met last week with a man who went to Northwest Hospital to have stents put in his coronary arteries. Ralph spent about 24 hours in the hospital and he was  in a bed, in a room, overnight. So you would think he had been “admitted” to the hospital.

Ralph gave me copies of his bill from Northwest Hospital that showed his 24-hour stay cost $126,241.67!!!!

The biggest charge was $13,148 for “cardiology” services – and this charge was repeated 5 times on the bill.  I’m figuring he got five stents. The bill included a $3,049.01 charge for an “observation room”. And this “observation room” charge is why Ralph got burned.

Don’t have a heart attack,  Ralph didn’t have to pay that much.

The good news for Ralph, who is 86 years old, is that his Medicare Advantage plan had to pay only $14,093.04 of the $126,241.67 hospital bill. This is because Medicare sets the price for each service, and $14,093.04 was the total of “approved” charges associated with Ralph’s 24-hour hospital stay – or rather, his observation stay.

The $126,241 bill is a made up number – unless you don’t have insurance. Then this outrageous number is your starting point for negotiating how much you will pay for the medical care you received. This story is really about Ralph’s Medicare Advantage plan.

The bad news for Ralph is that his Medicare Advantage plan requires him to pay 20% for “outpatient surgery”, so he had to pay $2,814.48.

Medicare Advantage plans have a set co-pay for in-patient hospital care, which is $295 per day (days 1-5) in Ralph’s plan. So I would have thought his bill would be $590. But because the bill says he was in an “observation room”, Ralph had to pay a lot more.

Something to consider with Medicare Advantage:

What is the charge for “outpatient surgery” in your plan, or the plan you are considering joining? Most plans have a set fee of $150, $175, or $275 dollars for outpatient surgery or services. But Ralph’s plan says he must pay 20% for any outpatient surgery or diagnostic tests.  So he is stuck with a big bill because of how his Medicare Advantage plan is designed – and because Northwest Hospital never admitted him.

Hospitals are routinely “not admitting” patients so they can charge more money to Medicare and patients.

According to an email I recently received:

The Center for Medicare Advocacy has heard increasingly about beneficiaries throughout the country whose entire stays in a hospital, including stays as long as 14 days, are classified by the hospital as outpatient observation.  In some instances, the beneficiaries’ physicians order their admission, but the hospital retroactively reverses the decision.  As a consequence of the classification of a hospital stay as outpatient observation (or of the reclassification of a hospital stay from inpatient care, covered by Medicare Part A, to outpatient care, covered by Medicare Part B), beneficiaries are charged for various services they received in the acute care hospital, including their prescription medications.

Preventive screenings are covered by Medicare at no cost to the patient, but sometimes there will be a bill to pay.  A colonoscopy is the example I use with my clients to explain how “free” tests and procedures sometimes turn out not to be free.

Last month, a client called me to complain about a bill she received for her colonoscopy. “Should I pay this bill?” she asked. “I thought this test was supposed to be free!”

My quick reply to her question was, “Yes, you must pay that bill”. Then I said, “They found polyps and removed them, didn’t they?”  She wondered how I could know the results of her colonoscopy, so I told her how a free screening can turn into a billable procedure.

A preventive screening colonoscopy is “free” to the patient – but when the doctor finds polyps and removes them, that preventive screening procedure turns into “outpatient surgery”. This client told me her bill was $250, and sure enough, her Medicare Advantage plan has a $250 co-pay for outpatient surgery. This is how I deduced that polyps had been found and removed during her colonoscopy.

Here is the list of preventive screenings covered by Medicare at no cost to the patient. I’ve highlighted the most common ones.

Abdominal Aortic Aneurysm Screening

Alcohol Misuse Screening and Counseling

Bone Mass Measurement (Bone Density Test)

Cardiovascular Disease (Behavorial Therapy)

Cardiovascular Screenings (cholesterol, lipids, triglycerides)

Colorectal Cancer Screenings

Depression Screening

Diabetes Screening

Flu Shot

Glaucoma Test

HIV Screening

Mammogram (screening for breast cancer)

Obesity Screening and Counseling

Pap Test and Pelvic Exam (includes a breast exam)

Prostate Cancer Screenings

Medicare now covers an annual “Wellness” visit to a primary care physician at  no cost to the patient. But, as with the “Welcome to Medicare” visit, the list of what is covered “for free” is very limited. Anything beyond the list (provided below) will result in a bill.

Medicare.gov provides the following information:

• Yearly “Wellness” visits: If you’ve had Part B for longer than 12 months, you can get this visit to develop or update a personalized prevention help plan to prevent disease and disability based on your current health and risk factors. Your provider will ask you to fill out a questionnaire, called a “Health Risk Assessment,” as part of this visit. Answering these questions can help you and your provider develop a personalized prevention plan to help you stay healthy and get the most out of your visit. It also includes:
  • A review of your medical and family history
  • Developing or updating a list of current providers and prescriptions
  • Height, weight, blood pressure, and other routine measurements
  • Detection of any cognitive impairment
  • Personalized health advice
  • A list of risk factors and treatment options for you
  • A screening schedule (like a checklist) for appropriate preventive services. Get details about coverage for screenings, shots, and other preventive services.

This visit is covered once every 12 months (11 full months must have passed since the last visit).

Your costs in Original Medicare

You pay nothing for the “Welcome to Medicare” preventive visit or the yearly “Wellness” visit if your doctor or other qualified health care provider accepts assignment. The Part B deductible doesn’t apply.

However, if your doctor or other health care provider performs additional tests or services during the same visit that aren’t covered under these preventive benefits, you may have to pay coinsurance, and the Part B deductible may apply.

******

Wellness visit vs Sickness visit

If a person has a health issue, whether major or minor, Medicare will cover the doctor visit – but deductibles, 20% co-insurance, and Medicare Advantage co-pays will be charged to the patient.

In this situation, the patient must have a new health issue, or be seeing the doctor to assess an ongoing health problem.

Medicare will pay for the three parts of a standard office visit:  taking a HISTORY; performing a PHYSICAL EXAM, and developing an ASSESSMENT/PLAN.

As I wrote yesterday regarding the Welcome to Medicare Visit, the patient might expect to get a “free exam”, but he could end up with a bill.  The bill will depend on the patient’s Medicare coverage.  Does he have only Medicare?  Does he have a Medicare supplement, and which one?  Is he enrolled in a Medicare Advantage plan?

For a quick overview of your Medicare choices, take a look at this short video: Intro to your Medicare Choices