Recently, a young, healthy guy went to the ER because he had a fever, a cough, and he felt terrible. He paid his $150 co-pay. A few weeks later, he got a bill for $36,000. He was responsible for ~$2,000 of that and his employer paid ~$10,000. The other $24,000 disappeared.
This is completely normal and happens thousands and thousands of times every day in America. Confused? Here’s what happened:
He showed up at the ER. They brought him back and knew there was something going on his chest. They did the following tests:
- Routine blood work looking for signs that there was some sort of viral or bacterial infection in his body and/or his blood, a blood clot in his lungs
- Tests for viruses like flu, adenovirus, and other common flu-like viruses
- Lyme test (just because?)
- Chest X-Ray
The chest x-ray showed a mild pneumonia. He was given two common (inexpensive) IV antibiotics (Zithromax and Ceftriaxone) and normal IV saline for hydration (also inexpensive). He was watched for ~5 hours in the ER and then sent home on a course of oral antibiotics. Four ER doctors and 3 physician assistants are on record for being involved in his visit.
Two weeks later, he got the bill and sent it to me for my opinion. He’s a professional with a family and has a health insurance plan through his employer with a $1,500 deductible. Here’s the breakdown:
$36,935.27 = the total the ER billed his insurance company
$24,802.53 = the total that “wasn’t covered” by his insurance company
The “wasn’t covered” amount is the insurance company laughing at the ER for trying to bill them $24,802.53 over their contracted agreed upon reimbursement for this particular visit. However, this $36,935.27 is also the amount that the ER would charge an uninsured person to pay them for this one episode of care.
$12,132.74 = the amount that was deemed “covered” by his insurance company. This amount is what the insurance company has determined the actual bill to be shared between them and my friend.
Considering his $150 co-pay and his $1,500 contribution toward his deductible (which he blew through by stepping foot in the ER), he was responsible for his 10% co-insurance which turned out to be $1,270. So his personal final cost out of his own pocket for this treatment episode in the ER was $2,879.45. His insurance company paid $9,253.29 for this visit.
Many people have no idea how much receiving care will actually cost them out of their own pocket. They often mistake the cost of care for the co-pay amount without considering the total eventual cost of care from all the bills that will eventually come out of their bank account for that one episode.
But here’s the breakdown of the actual fair price for all the tests and medications found in this particular ER visit:
Basic Metabolic Panel: $17
Blood culture: $21
Complete Blood Count: $21
Chest X-Ray: $62
Urine Culture: $21
Respiratory Pathogen Panel by PCR: $121
D-Dimer, Qualitative: $48
Liver Function Panel: $17
Lyme Antibody Total: $177
Ceftriaxone 1g: $8
IV Saline: $20
Total cost of these line items from this ER visit = $643
So what about the other $11,489.74? What are those costs? They are the “facility fees” and doctor fees. As you can see, these are highly marked up. For this 5 hour stay in the ER, it was considered $2,298 per hour.
Here’s how Sherpaa would have handled this
The employee fired up Sherpaa’s app and explained the situation. We would have asked questions that led us to suspect a potential pneumonia. Based on our suspicion, we would have sent the employee to get a chest X-ray at a local imaging center, gotten the results, and prescribed an antibiotic through the app. His out-of-pocket spend would be $100 for the x-ray and then $20 for the oral antibiotics. We follow up on a daily basis with the employee to see that everything is resolving as expected.
Total cost for this episode: $270 ($150 paid for by the employer + $120 for the X-ray and medication paid for by the employee)
A $150 Sherpaa visit paid for by the employer saved the employer $10,050 and the employee $1,950.