How attempting to schedule a surgery for my son illustrated the need for transparent estimates in the healthcare process (Part 1 in a series)

It’s been two years since the dermatology experience that set me back a few hundred bucks and left me frustrated with a system that doesn’t work with patients’ best interests in mind. It wasn’t frustration with the care-delivery side, but with the financial burdens we bear as patients — oftentimes burdens that aren’t disclosed to us until it’s too late.

This time, I’m experiencing a different level of frustration. It’s for my 3-year-old and his tonsillectomy.

Last time my lesson was, “100 percent preventative covered” doesn’t always mean what we think it means. This time, the lesson is that an in-network physician doesn’t necessarily mean that the facility is in-network. These are entirely different things, which carry vastly different costs, and most patients simply have no idea what can happen if they don’t ask the right questions.

Last October, our son was struggling to breathe easily at night, and our family was struggling with his incredibly loud snoring. We took him to see an in-network specialist, and the doctor agreed that he needed a tonsillectomy. (“Whoa, those have got to go!”)

At the time, we’d just switched health insurance coverage from my wife’s plan to mine. This wasn’t a big issue, but it did mean that our deductible effectively reset for the year, and that deductible was $3,000.

We decided to defer the surgery until January, when deductibles reset. We expected the procedure to be expensive, but we had time because his condition wasn’t emergent. If we could hit our deductible in January, we’d see a whole year of healthcare covered at the 80/20 coinsurance rate — jackpot! This would be the year to get injured, fix knees, get back into skiing, repair a shoulder tear, to really maximize that paid deductible. To anyone outside of the United States, this train of thought should seem bizarre!

So we’re thinking all is great. We schedule the surgery for January.

When the new year arrives, I go to the pre-op appointment, get a handful of papers, and are asked to go online and pre-register. It’s then that I ask the question I should have asked months prior:

“What’s this going to cost?”

“I can put in a request and we can get it to you in seven days, but that’s after the surgery date. Do you still want the estimate?”

“Yes, please.”

A couple of days go by, and I haven’t gone online to pre-register yet. I get a call from the doctor’s office, and they walk me through the questions. Near the end of the call, I ask again about the estimate, and the woman I’m speaking with whispers something away from the phone and then says:

“Sure, let me transfer you to Susan. She’s sitting right next to me; she can help you.”

Susan from billing has my insurance information already. She knows the procedure and says she’ll get back to me after she calls our insurance company.

Five minutes later Susan calls back.

“So, it turns out that, while the doctor is in-network, the facility the procedure is to be performed at is out-of-network. The negotiated rate for this procedure is $9,340.22, and after your deductible and the 50 percent/50 percent coinsurance for out-of-network facilities, this is going to cost $7,670.11, out-of-pocket. Also, this figure does not include the anesthesiologist or physician fees.“

“Oh…and you weren’t going to tell me this!?”

By asking the right questions, we avoided what would have otherwise been a surprise billing experience. Thankfully, we’re fortunate enough to know what questions to ask. Most patients don’t. This happens all the time, especially in emergency care.

Even more interesting was the reaction to my surprise at the price. Susan paused, then offered a prompt payment discount of 30 percent! Because the facility in question was out of network for me, they could offer to discount the bill by almost a third if I paid the out-of-pocket liability within 30 days of the procedure. That’s $2,300, simply for paying early.

Prompt payment discounts aren’t unusual in healthcare, but they’re often not offered until the patient expresses concern with the price (when given an estimate) or with the bill that arrives in the mail. And the size of the discount suggests the magnitude of the problem that health systems face today with rising patient liabilities.

The problem is only getting worse, as patient liabilities increase in the US with high-deductible health plans. Care is moving to lower-acuity settings — specifically because of cost. As patients bear more of the financial burden, the incentive to find lower-cost options becomes increasingly urgent.

So we cancelled our son’s surgery and are now in the next phase of the journey — evaluating alternative options that minimize out-of-pocket costs while maintaining care quality. Specifically, we’re looking for an in-network Ear, Nose, and Throat (ENT) specialist who performs tonsillectomies at an in-network outpatient facility that’s not attached to a hospital, so we can avoid the exorbitant facility fee. Not an easy task, especially considering the doctor doesn’t know the in-network answer without consulting his billing department to run a covered benefits check.

We’re lucky that this isn’t an emergent procedure for our child, so we have the time to shop around. This isn’t how Americans are primed to engage with healthcare, though. We don’t have sufficient knowledge of how the system works to even know which questions to ask. Even if we do ask the right questions, we get an estimate for out-of-pocket costs. And as I learned first-hand, sometimes only an estimate for a subset of the total costs! Across the country, surprise bills are becoming commonplace.

Today, we’re still far from the consumer experiences in healthcare that we expect everywhere else in daily life. Patients too often don’t have an advocate, and too often end up footing a bill that’s much larger than necessary.

The experience with my son’s care helps validate an active area of development for Lumedic. This year we’re working on a patient financial engagement product line, which includes accurate estimates for patients. Our data science team is building the model that drives these estimates, and we look forward to the day that they’ll no longer be just estimates.

More to come!