1. How are prices set and who sets them?
The price of healthcare services is achieved by calculating the total operating expenses of a provider and the cost of delivering a specific treatment to the patient / healthcare consumer. Hospitals use a Charge Master, which is a comprehensive list of all items that can be billed to either a patient or an insurance provider.
Charge Masters are extensive, often containing tens of thousands of items, or health care services, depending on the facility. While the full charges associated for each item are rarely paid due to the discounts negotiated by private insurers, hospitals use them as a starting point for billing purposes in order to avoid a violation of the Social Security Act, which requires hospitals to charge all patients at the same rate.
2. Why are there price differences between hospitals?
There can be variations, sometimes large ones, in the prices that hospitals set for the same procedure or service. This is due to the many factors that go into determining the cost of hospital services and that each facility has its own set of factors to manage which determines its cost structure.
Some organizations have higher cost structures due to the complexity of the service being provided, such as trauma, transplant, or neonatal intensive care, that are extremely expensive to maintain. Some organizations have mission-related costs, such as teaching, research, or providing care for low-income populations.
3. What do the following health insurance terms mean?
Deductible means the amount the patient needs to pay for health care services before the health plan begins to pay. The deductible may not apply to all services.
Copay means a fixed amount (for example, $20) the patient pays for a covered health care service, such as a physician office visit or prescription.
Coinsurance means the percentage the patient pays for a covered health service (for example, 20% of the bill). This is based on the allowed amount for the service. You pay coinsurance plus any deductibles you owe.
A patient’s specific health care plan coverage, including the deductible, copay and coinsurance, varies depending on the patient’s plan. Health plans also have contracts with differing networks of hospitals, physicians and other providers. Patients need to contact their health plan for this specific information.
4. What are some of the different facility types within SEARHC?
SEARCH has several different types of facilities within the consortium. Charges and reimbursement structure will be specific to the type of facility that you visit.
5. What is the difference between charges, cost and price?
Total charge is the amount set before any discounts. Hospitals are required by the federal government to utilize uniform charges as the starting point for all bills. The charges are based on what type of care was provided and can differ from patient to patient for similar services, depending on location, facility type, complications, or variances in treatment plan.
Cost – For a hospital, it is the total expense incurred to provide the health care. Hospitals have higher costs to provide care than freestanding or retail providers, even for the same type of service. This is because a hospital is open 24 hours a day, 7 days a week and needs to have everything necessary available to cover any and all emergencies. Non-hospital health care providers can choose when to be available and typically would not provide services that would result in a loss.
Total Price is the amount actually paid to a hospital. Hospitals are paid by health plans and/or patients, but the total amount paid is significantly less than the starting charges.
Medicare and Medicaid pay hospitals according to a set fee schedule depending on the service provided.
Indian Health Service organizations are the principal health care providers and health advocates for Indian people, and provides a comprehensive health service delivery system for American Indians and Alaska Natives. IHS organizations are paid under a unique methodology referred to as an all inclusive rate for outpatient services. Sometimes the all-inclusive rate is more than the total amount billed. This can be confusing because the patient’s responsibility amount is based on the allowed amount, which in this case is the all-inclusive rate.
Health insurance plans such as workers' compensation and commercial health insurance, do not pay total charges. Instead, they pay a set price that has been pre-determined or negotiated in advance. The patient only pays the out-of-pocket amounts set by the health plan.
6. How much will I actually have to pay out of my pocket?
A patient with health insurance needs to pay the deductible, copay, coinsurance, and/or non-covered charges as set by their health plan. The financial obligations could differ depending on whether the hospital or physicians are "out-of-network", meaning the health plan does not have a contract with them. Contact your insurance company to understand what your financial obligations will be.
If you are uninsured or underinsured, please contact SEARHC Patient Health Benefits to discuss insurance options that are available to you or to find out if you would qualify for our financial assistance program. To speak to someone about insurance options, please call 907-966-8662, 907-966-8920, 907-966-8405 or 907-364-4589.
To speak to someone about our Financial Assistance Program, please call 907-966-8621.
7. How can I use this hospital charge information for comparing prices?
Charge information is not necessarily useful for consumers who are "comparison shopping" between hospitals because the descriptions for a particular service could vary from hospital to hospital and what is included in that service.
It is difficult to try to independently compare the charges for a procedure at one facility versus another. An actual procedure is comprised of numerous components from several different departments, room and board, laboratory, other diagnostics, pharmaceuticals, therapies, etc.
8. What is the difference between a facility (technical) charge, a professional charge, and global billing?
The technical component of a charge addresses the use of equipment, facilities, non-physician medical staff, supplies, etc. Technical charges do not include the physician’s professional fees, but include the use of all other services associated with the visit.
The professional component of a charge covers the cost of the physician’s professional services only.
Global charges are when there is no division of the costs associated with a medical service because the service was provided by a single entity. The global charge includes both the professional services as well as all ancillary services (like use of equipment, facilities, non-physician medical staff, supplies, etc.) associated with a patient’s care.
9. What are the different types of healthcare costs?
There are three different types of cost depending on who is paying for the service:
Costs to Patients - The cost to patients often includes the total amount of premium payments, deductibles, and co-insurance paid to healthcare providers and health insurance companies for a patient’s healthcare coverage. The cost to patients also includes healthcare supplies and services received within the coverage period. Healthcare services not covered by insurance can be another type of cost, commonly referred to as out-of-pocket costs.
Cost to Providers - Providers are paid by insurers for the services they deliver to patients, but they also incur a considerable amount of operating costs which often get lost in the equation. These costs can include the amount paid for land, buildings, equipment, supplies, wages & benefits, laundry & housekeeping, electronic medical records, as well as services used when delivering care to patients. Providers also absorb the cost of delivering care to patients who are unable to pay for their own care.
Cost to Payors - Payors in the healthcare system include both private insurance companies and government insurance programs. The cost to healthcare payors is the total amount they distribute in patient claims. The second major cost to payors is operating costs such as wages & benefits, supplies, and administrative costs.
10. How can I get an estimate for a specific procedure?
If you need an estimate for a specific procedure or operation, please contact a Financial Counselor at 907-364-4465 (Juneau and all other locations not specifically mentioned), 907-966-8437 or 907-966-8457 (Sitka), 907-766-6322 (Haines and Klukwan) or ask at time of scheduling your appointment or at time of check-in.
When you call a Financial Counselor, please have the following information available, so that we can provide you with the most accurate estimate possible:
Such estimates will be an average charge for the procedure without complications. A physician or physicians make the determination regarding specific care needed based on considerations using the patient’s diagnosis, general health condition and many other factors.
For example, one individual may require only a one-day hospital stay for a particular procedure, while another may require a two-day stay for the same procedure due to a complication or underlying medical condition. Please allow 3-5 business days for estimate request to be completed.
The patient with health insurance will only pay the specified deductible, copay and coinsurance amounts established by their health plan. Please contact your insurance company to find out more information about how your financial responsibility amount is determined.
A patient without health insurance or sufficient financial resources may be eligible for financial assistance. Please contact a Financial Counselor or Health Benefit Specialist for more information.