Claire Dawson
Surgery costs can be extremely high, with prices soaring even higher when surgery is involved in a hospital stay. With the average cost of a one-day hospital stay in the US estimated at $3,025 in 2022, the price of surgery can easily pass $1 million, especially when it comes to organ transplants. With medical costs spiralling out of control, it's important to consider ways to reduce surgery costs. This can be done through obtaining health insurance, shopping around for the most cost-effective surgeon, taking advantage of packaged pricing plans, and negotiating surgery costs.
| Characteristics | Values |
|---|---|
| Carry health insurance | One of the best ways to reduce hospital expenses |
| Type of insurance | Plays a big role in how much you’ll pay out-of-pocket |
| Medicaid | Hospital expenses may depend on your state, your income and other details |
| Medicare | Inpatient hospital visits are covered by Part A if you visit a hospital that accepts Medicare |
| Marketplace insurance through the Affordable Care Act | 60% to 90% of your covered expenses will be covered by your plan after you meet your deductible |
| Request an upfront quote | Federal No Surprises Act makes it illegal for hospitals to charge more than the in-price network cost for medical services |
| Understand what's covered | Explore funding sources and educate yourself about your healthcare plan |
| Understand hospital pricing | There is no standard system that determines what hospitals charge for a particular service or procedure |
| Understand billing errors | Claim reviews can mitigate expensive billing errors and add significant savings to post-surgery price negotiations |
| Reference-based pricing | Data-driven approach that identifies benchmarks for medical costs and empowers experts to negotiate reasonable prices |
| Understand hospital quality | Hospitals with higher complication rates tend to have higher payments |
| Improve hospital quality | Payers, policymakers, and professional organizations have launched initiatives aimed at improving patient outcomes with inpatient surgery |
| Improve surgical quality | Local, regional, and national efforts aimed at improving surgical quality may ultimately reduce costs as well as improve outcomes |
| Understand episode-based bundling programs | CMS could extend inpatient episode-based bundling programs to outpatient surgical procedures to reduce spending on inpatient surgery |
| Understand surgical homes | Perioperative surgical homes have been shown to lower surgical costs while increasing patient satisfaction |
| Understand surgical specialty | The price of a single procedure depends on the precision and expertise needed, medical equipment, administrative costs, and required post-operative and follow-up care |
| Understand employer benefits | Employers can help employees manage their medical costs by offering a health reimbursement arrangement (HRA) |
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What You'll Learn
Negotiate prices and review claims to mitigate billing errors
Negotiating prices and reviewing claims are important steps in mitigating billing errors and reducing surgery costs. While it can be challenging to negotiate medical bills, especially when they are due, there are strategies that can help. Firstly, it is crucial to start the negotiation process early. Contact the hospital's billing department, your healthcare provider's billing agency, and your health insurance company as soon as you receive a bill or an explanation of benefits (EOB). The EOB outlines the charges for the care you received and can help you identify any errors or discrepancies.
Before negotiating, it is important to understand what your insurance covers and what you will be paying out-of-pocket. Research the typical costs of the services you received and determine what price an insurance company might negotiate. Tools like FAIR Health Consumer can provide estimates for medical procedures in your area. When reviewing your bill, look for any errors or charges that seem out of line. Billing errors are common, and disputing these can be a valid reason to negotiate a lower cost.
When negotiating, it is helpful to be polite and persistent. Ask the hospital to honor the price that an insurance company would typically pay for the same service. Many hospitals may be willing to offer a lower cost if you agree to pay the discounted amount immediately. Alternatively, they may offer a more affordable payment plan, allowing you to pay off the bill in installments over time. Non-profit hospitals, in particular, may provide free or reduced care for patients within a certain income range, so it is worth inquiring about financial assistance programs.
Additionally, consider using online tools to compare the cost of your healthcare services with industry standards. Websites like Healthcare Bluebook can help you determine if you have been overcharged for a service. If you have health insurance, understand your policy and what it covers. Different types of insurance will result in varying out-of-pocket expenses. For example, with Medicaid, your hospital expenses may depend on your state, income, and other factors. Medicare, on the other hand, covers inpatient hospital visits, but you may still have a deductible to meet. Understanding your coverage can help you effectively negotiate and reduce surgery costs.
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Improve surgical quality and patient outcomes to reduce costs
Surgical care is a prime target for hospitals aiming to improve clinical outcomes, enhance patient satisfaction, and increase efficiency. Improving surgical quality and patient outcomes can reduce costs by minimizing complications and speeding up recovery.
One approach to achieving this is through the Perioperative Surgical Home (PSH) model, which brings together multidisciplinary teams of clinicians to implement standardized care pathways for surgical patients. This model standardizes all routine processes and procedures, reducing variation and improving resource allocation. By coordinating care and standardizing processes, the PSH model can reduce costs and improve patient outcomes.
Another strategy is to focus on individual surgeon variance in patient care. Critical examination of clinical, financial, and patient-reported outcomes, along with peer group comparison, can help surgeons identify areas for improvement and reduce unnecessary variation. This can be facilitated by interactive software platforms that provide real-time data on patient outcomes.
Additionally, hospitals can implement Enhanced Recovery After Surgery (ERAS) programs, which are designed to help surgical patients recover faster and shorten hospital stays. These programs have been shown to reduce postoperative surgical site infections, lower the risk of postoperative infection, and decrease the likelihood of skilled nursing facility stays, all of which contribute to reduced costs and improved patient outcomes.
Furthermore, hospitals can improve cost containment by identifying and mitigating expensive billing errors through claim reviews. This process can add significant savings to post-surgery price negotiations, helping to control healthcare costs.
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Encourage patients to choose lower-cost hospitals
Encouraging patients to opt for lower-cost hospitals and outpatient clinics can significantly reduce surgery costs. Here are some strategies to achieve this:
Research and Compare Prices
Patients should be advised to research and compare prices from different healthcare facilities. Prices can vary significantly, and patients can save thousands of dollars by choosing a lower-cost option. Websites and state government sites can provide information on healthcare costs in specific regions. This allows patients to make informed decisions about their care without compromising on quality.
Choosing Outpatient Surgeries
Outpatient surgeries are typically performed in specialized clinics or surgical centers, which are often more affordable than traditional inpatient procedures in hospitals. Since patients do not stay overnight, they avoid additional charges such as room fees and extra nursing care, reducing their overall medical expenses. Outpatient surgeries are also more convenient, minimizing disruptions to daily routines and offering shorter wait times.
Selecting Cost-Effective Procedures
Certain procedures, such as hernia repair, sinus surgery, and outpatient knee arthroscopy, tend to be more cost-effective. These surgeries are often minimally invasive, resulting in faster recovery times and lower overall costs. Patients should be informed about these options to make budget-friendly choices.
Utilizing Insurance Networks
Patients should be encouraged to choose surgeons and hospitals that participate in their insurance network. In-network providers have contracted rates with insurance companies, resulting in lower charges for the patient. By staying within their network, patients can benefit from higher coverage percentages and lower out-of-pocket expenses.
Exploring Financial Assistance
Patients from low-income backgrounds may qualify for financial assistance programs offered by hospitals, NGOs, or government agencies. Some hospitals provide reduced rates or fee waivers for uninsured or low-income patients. Additionally, patients can consider payment plans, medical loans, or crowdfunding sources to manage their financial obligations.
By implementing these strategies, patients can actively choose lower-cost hospitals and outpatient clinics, ultimately reducing their surgery costs and alleviating the financial burden associated with medical care.
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Implement episode-based bundled payments for inpatient surgery
Traditionally, Medicare has made separate payments to providers for each of the individual services they furnish to beneficiaries for a certain illness or course of treatment. However, this approach can result in fragmented care with minimal coordination across providers and healthcare settings. As a solution, bundled payment programs provide a single, comprehensive payment that covers all of the services involved in a patient's episode of care.
Episode-based bundled payments are a type of bundled payment model that focuses on specific episodes of care, such as inpatient surgery. These models typically involve a fixed-price agreement for a predefined episode of care, which may include the procedure, hospitalization, and a set period post-discharge. For example, Model 2 of the Bundled Payments for Care Improvement (BPCI) initiative included the inpatient stay, post-acute care, and all related services up to 90 days post-discharge.
Implementing episode-based bundled payments for inpatient surgery can help reduce surgery costs by incentivizing providers to work together and improve the coordination of care. By assuming financial liability for the episode spending, providers are encouraged to coordinate care efficiently and effectively. This alignment of incentives can lead to better quality and lower costs.
To successfully implement episode-based bundled payments for inpatient surgery, it is essential to clearly define the scope of episode services. This involves identifying the procedures or medical conditions of interest and determining the related services and appropriate duration of the episode of care. For example, the cost of total knee replacement surgery will vary between inpatient and outpatient settings, and including services that reduce the need for surgery can help address concerns about potential overutilization of elective procedures.
Additionally, conveners can play a role in encouraging participation in bundled payment models by allowing providers to share financial risk with another entity. Software tools and reports can also enable providers to organize and finance delivery efficiencies, facilitating coordination among participants and helping to achieve savings.
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Offer health reimbursement arrangements (HRAs) to employees
One way for employers to reduce surgery costs for their employees is to offer health reimbursement arrangements (HRAs). HRAs are employer-funded plans that reimburse employees for qualified medical expenses, including surgery. There are different types of HRAs available, each with its own set of benefits.
The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is designed for small businesses with fewer than 50 full-time employees. This type of HRA can be used to offset health insurance coverage or pay for medical expenses that would otherwise be uncovered. For 2023, a company with a QSEHRA can reimburse individual employees for up to $5,850 per year and employees with families for up to $11,800 per year. These amounts will increase in 2024 to $6,150 per individual and $12,450 per family. The reimbursed money is tax-free for employees and tax-deductible for employers.
Another type of HRA is the Individual Coverage Health Reimbursement Arrangement (ICHRA), which has been available since 2020. This type of HRA allows employers to provide tax-free reimbursements to employees for qualified health insurance costs, including monthly premiums and out-of-pocket costs such as copayments and deductibles. It is important to note that employees must be enrolled in individual health insurance coverage to use the funds from an ICHRA. Additionally, HRAs are only available to employees and not to self-employed individuals.
Employers can also use reference-based pricing models to negotiate reasonable prices for medical services, including surgeries. This data-driven approach identifies benchmarks for medical costs and empowers employers to make informed decisions about price negotiations. By offering HRAs and utilizing innovative reimbursement approaches, employers can help reduce surgery costs for their employees.
Overall, HRAs offer a flexible and tax-advantaged way for employers to support their employees' medical expenses, including surgery costs. By providing defined reimbursements, employers can help reduce the financial burden of healthcare expenses on their employees while also benefiting from tax deductions associated with these arrangements. It is important for employers to carefully consider the different types of HRAs and seek expert advice to determine the most suitable option for their organization and workforce.
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Frequently asked questions
There are a few ways to reduce the cost of surgery. Firstly, carrying health insurance is one of the best ways to reduce hospital expenses. If you have insurance, you can work with your insurer to negotiate your bills and reduce costs. If you don't have insurance, you can look into getting an HRA (Health Reimbursement Arrangement) through your employer, which can help you cover your medical expenses.
If you don't have insurance, you can look into getting an interest-free payment plan from the billing department. You can also request a good-faith estimate of the total costs upfront, which will give you a sense of the total costs, although this is not guaranteed.
Employers can help employees manage their medical costs by offering an HRA, which allows employees to choose the health insurance plan with the best coverage for their personal needs. Employers can also take on the task of negotiating prices for their employees' medical services.
