Outrageous prices

Each of the different DME's in the previous example have negotiated different contracts with the insurance company. The allowed amounts are set for Medicare I believe by state, but individual insurance companies are negotiated by individual company. One company may have had more bargining power.

From Medicare Publications:
"How the Medicare Program Works
The Medicare program is administered by the Centers for Medicare and Medicaid Services (CMS), previously the Health Care Financing Administration (HCFA). CMS is a federal government agency. The Social Security Administration (SSA) cooperates with CMS by enrolling people in Medicare and collecting the premiums. CMS has entered into contracts with private insurance companies to process and pay Medicare claims." Underlining is mine.

SO PRIVATE INSURANCE COMPANIES ARE INVOLVED.

Mattman (or anyone eles) can you tell me what the extent of their involvement is.

Frankly, I'm operating on the only template that I know, namely my company medical insurance plan. My employer has hired Blue Cross & Blue Shield to "process and pay medical claims". My employer reimburses BCBS for claims paid plus a management fee. BCBS sets the allowables, BCBS hears the appeals, BCBS uses their criteria. My employer simply foots the bill.

The terminology, process and pay medical claims, used in the quote above from medicare....... Exactly how are private insurance companies being employed by CMS (aka Medicare)?

KansasRT,
Do you think it would be safe to say that a DME would not agree to an allowable that was less than his cost?

It would make no business sense to agree to be bound to sell at less than cost, UNLESS the same agreement provides for extraordinary profits on other products.

Matt, If the "providers charges" bogus, an essentially meanless number, why would providers not just use the MSRP, or better yet, because the DME knows the allowance, just claim that amount. It would sure make the DME look good, like he's not trying to get anything more than he has already agreed to accept.

I hope that we can agree on this:
Providers can claim anything they want. The 285.23 price that Arizona Willie referred to in the original post was LIKELY this.... the claimed amount.

The provider will be paid whatever their contract (with an insurance co, or with Medicare) provides. PRESUMABLY this should cover the providers cost for the product.

IF the client has no insurance, or is out-of network, or chooses to pay cash,
the DME is entitled to demand the full claimed amount. Consequently the PRICE or "provider's charge" has great significance.

With regards to Tomjax's comments about amount billed vs. amount actually paid by insurance, I can only speak to my specific insurance company and plan; but for me, the amount BC/BS actually pays for a machine and for the Breeze mask (the only two items I have specific figures for) is 82% and 65% above what they cost on line at cpap.com. I doubt that the cost to the supplier is very different for the DME (part of a national chain) than it is for on line retailers. Given that the DME's price and cpap.com's price include their respective profits, it really DOES seem that BC/BS is not interested in running a tight economic ship. I believe that, in part, this explains the exceedingly high cost of medical insurance.

Although I got my initial equipment out of pocket on line, I have gotten mask, filters, and pillows from the DME I am required to use by BC/BS. Yes, the insurance company does pay a lower price than what the DME billed, but its still significantly above the on line price. And I received NO 'aftercare', no instruction, no follow-up; and it took three phone calls and two faxes of the doctor's order to get the mask.

Mattman is correct. Companies have different prices for cash customers and insurance coverages. I remember when I was a flight RN years ago doing fixed wing medical flights. My company charged different. The cash and insurance prices would sometimes differ by as much as $6,000!!! I'm not saying that's right but I just know for a fact that's what was done.

dataq1 wrote:KansasRT,
Do you think it would be safe to say that a DME would not agree to an allowable that was less than his cost?

This is EXACTLY what we are forced into and if you ever had a chance to read any of my other posts on this, you'll see that this is my biggest gripe with insurance. We are forced into these contracts where the reuimbursement is 200% of cost for 1 item and then 50% of cost for another. It's ridiculous. And since we get forced into charging the same price to a cash customer as an insurance customer we have no choice but to sit by and watch the uninsured get the screws put to them.

Right now CPAPs are the darling child of the business because you CAN make a profit with them. It's why you see a great many companies springing up both Brick & Mortar and online - because there is money to be made. It's no mistake that they don't carry the same things a DME provider carries - the hospital beds, the oxygen, the crutches, etc. These are the things that you don't make much - if any - money on.

dataq1 wrote: Matt, If the "providers charges" bogus, an essentially meanless number, why would providers not just use the MSRP, or better yet, because the DME knows the allowance, just claim that amount. It would sure make the DME look good, like he's not trying to get anything more than he has already agreed to accept.

I skipped over this before cause I didn't want to put anyone to sleep with all this crap.

There is a certain significance to the 'submitted' amount in some cases. SOME insurance companies will only pay say 40,60 or 80% of any claim submitted to them. So there are companies that aren't able for whatever reason to individually set pricing for each contract to ensure the correct amount is paid so they will set all submitted amounts to that percentage above expected payment to make sure they don't screw one up. I've known places to get it wrong and submit an allowable on a 40% plan and only get paid 200 bucks for a CPAP!

I can only speak from my past but I've never been anywhere that didn't use the allowable amount when determining a private pay price. I've never known anyone to use the submitted. Yuck!

mattman

lvwildcat wrote:Mattman is correct. Companies have different prices for cash customers and insurance coverages.

mattman wrote: And since we get forced into charging the same price to a cash customer as an insurance customer we have no choice but to sit by and watch the uninsured get the screws put to them.

Ok, so now you’ve really got me confused.

Or is it that SOME companies balance bill the difference between the "providers charge" and the "plan allowance" and others don't.

Just yesterday I asked a local DME if they would charge me the same amount if I paid cash or had them bill my insurance. The answer was yes, the charge would be the same.
The next question, I felt was the more important, and what I think mattman alluded to..."we get forced" - The question is: Does your contract with your insurance companies (that you are networked with) REQUIRE your company attempt to collect the difference between the allowable and the providers charge? In other words, are you prohibited to extend the same write-off to both insured and uninsured?
The answer I got was interesting. The manager told me that she is prohibited to discuss that provision of their contract.
Could have been that she hadn't the foggest idea of what I was talking about, or she'd been down that road before and was told.

The answer I got was interesting. The manager told me that she is prohibited to discuss that provision of their contract.

The manager knew what you were asking and was trying to be nice when she told you that the negotiated price and other terms of the contracts, to which you are not a party, are none of your business.

The only time I see a problem with this is when patients have a co-pay that is a percentage of the billed amount. Luckily my insurance pays 100% for DME, so I don't have to care at all about the fictitious numbers.

If you don't like your DME's practices, find another DME or go to an online CPAP dealer.

Arizona-Willie wrote:My DME sent me the usual postcard to remind me it was time to get new gear.

So I called and ordered a new cushion ( or so I thought ).

Instead I get a whole new mask and headgear and hose.

They included a price list that they charged. I suppose it was by accident because they didn't include that before.

Highway robbery!!!

These prices are for Resmed Activa mask and headgear and filters and hose.

Mask - Standard $152.88 ( not too bad )

Headgear - $65.00 ( for those flimsy little straps !! )

Filters (2)- $14.02 ( wow for two little pieces of filter material )

Hose - $53.33 ( Medicare got hosed all right )

Total of $285.23 Great Googledeemooogledee

Instead of a $30 cushion they gouge Medicare and my secondary insurance for this.

Ay caramba!!!

Here is the tally for my things:

Hose--$43.13

Mask (ComfortClassic nasal)--$129.40

CPAP Headgear (yes, the flimsy straps lol)--$38.96

CPAP Disposable Filter (those little paper ones)--$10.08

CPAP Resuable Filter (the little foam ones)--$16.86

Heated Humidifier--$33.12

CPAP Machine--$112.45

Total: $384.00

Yes, insurance got hosed big time.

_________________

CPAPopedia Keywords Contained In This Post (Click For Definition): cpap machine, resmed, humidifier, activa, hose, medicare, CPAP, DME

Bearded_One wrote:If you don't like your DME's practices, find another DME or go to an online CPAP dealer.

Ah yes, that's exactly what I'm trying to do. The problem is that you don't discover their practices until after you've placed an order.
Sure, maybe she was being polite. However I have a niece who works for a doctor's office in the insurance dept. She tells me that 1) by contract they are required to attempt to collect the difference between the providers charge and the allowable. 2) that the office manager tells her that the insurance companies have taken the position that the provision that requires this collection is to be maintained confidential.

So, I'm just trying to be an informed consumer, looking for the best deal for myself as well as my employer. In order to be informed, I ask!

However I have a niece who works for a doctor's office in the insurance dept. She tells me that 1) by contract they are required to attempt to collect the difference between the providers charge and the allowable. 2) that the office manager tells her that the insurance companies have taken the position that the provision that requires this collection is to be maintained confidential.

The reason for #1 is because in the past, doctors sometimes used to over state their charges and then just accept what insurance paid. If an office visit normally cost $35 and a patient's insurance paid 80%, the doctor would charge $44, collect $35.20 from the patient's insurance, and call it even. The insurance companies didn't like this practice, so they started insisting that the doctor collect the difference between the billed fee and what was paid by insurance from the patient. This sort of billing has pretty much gone by the wayside because of the rise of contracted preferred provider and participating provider systems. Patients generally now pay a fixed co-pay, which insurance companies insist that doctors collect from patients.

DMEs have all sorts of contracts with insurance companies. Most insurance pays a percentage of the charges billed by the DME and the patient is responsible for the difference. Now comes the unknown part, it is obvious that insurance companies do not actually pay the full amount for their part of the bill,. Just like the old doctor insurance, patients are expected to pay the full amount of the difference between what the DME charges and what the insurance company supposedly would pay. Some insurance turns things around a bit and require that the patient pay a co-pay that is a percentage of the charged amount. Some patients end up paying a very real percentage of a very high, very fictitious bill.

I am pretty well insulated from this because my insurance pays 100% of DME if I use one of the DMEs on their list. If I get equipment from somebody who is not on their list I get no coverage at all.

I thought this was interesting:

CPAP-Supply.com wrote:Why do CPAP machines cost so much at my local supplier, and why do insurance companies reimburse for these outrageously expensive local purchases?

Great question. You've discovered why so many people in America cannot afford adequate health insurance! Your local supplier charges way too much because he can. All CPAP machines have the same value in the eyes of insurance companies. This means that your local supplier will give you a bottom of the line machine - likely a used one - and charge your insurance company a top of the line price. The only description the insurance company sees for a CPAP machine is E0601 - the insurance code. Unethical local suppliers - which seem to be all too commonplace based on our conversations with customers - will contact the insurance company before billing to see how much they'll pay for a particular policy holder and then charge the maximum amount. Nearly every day we hear from customers whose local suppliers sell the same equipment for three to four times our prices.

In our experience it appears that insurance companies generally take the path of least resistance when it comes to contracting with DME suppliers. If an insurance company has 3 or 4 DME suppliers with which it has contracted then the insurance company is very unlikely to be interested in contracting with any other suppliers, even when the result could be significant savings for the insurance company and the policy holder.

CPAP-Supply.com encourages customers to contact their insurance companies to let them know they're paying too much.

http://www.cpap-supply.com/faq.asp

See, I find things like that deplorable and I'm amazed that anyone can get away with writing such a thing.

I imagine that was being lauded as a good thing but I find it inexcusable. I understand it's marketing and such but I've never been one to have to try to knock someone else down in order to try to make myself look better.

Imagine if I came here with a marketing statement reversing the derogatory statements and instead aimed them at online providers?

Most of the statements in that are inaccurate at best and bordering at downright lies at worst.

Interesting that all those awful things are said about our industry because of pricing - yet cpap com gets the same reimbursement we do and it's okay for them?

I've said it time and time again and I'll say it again - YES! LOWER THE REIMBURSEMENT ON CPAP PRODUCTS. But when you do, you damn well better raise the reimbursement on products that are set at cost or below.

I thought long and hard about not giving this the dignity of a response but I would hate to see someone who is not informed enough about the situation to take that as the truth.

To try and make the assertion that we all give out the cheapest machines possible in an effort to be greedy comes very close to libel in my book. Simply as a matter of example in my specific case it's not even remotely true (Our standard machines are RemStar PRO series)

To try and make the assertion that we will likely provide a used machine is a bald faced lie.

I really cannot express how amazingly disappointed I am that someone would even write a statement like that to begin with. I had never previously viewed the relationship between traditional providers and online vendors as an adversarial one. I'd always argued in favour of us both being a part of the system and working in tandem with one another.

I guess it's time I start rethinking that position.

mattman

Yes it is quite interesting Neversleeps.

My DME gave me a used machine and my insurance was charged for a new one. I have read many posts here by others with similar experiences.

mattman wrote:To try and make the assertion that we all give out the cheapest machines possible in an effort to be greedy comes very close to libel in my book. Simply as a matter of example in my specific case it's not even remotely true (Our standard machines are RemStar PRO series)

Mattman, I greatly value your input here on this forum, as do many other folks here. We all benefit from the continued discussion from different and frank viewpoints. Please don't take any of this personally, as your sincere concern has been apparent for most here to see.

Greed, however, is an accurate term for the way that many folks operate within the medical community. I'll refrain from mentioning anybody by name, but an egregious example is the former CEO of an extremely large HealthCare company, who racked up hundreds of millions of dollars personally. Greed is even the reason why many physicians go into the profession. Hopefully, in most cases that is also tempered by a sincere desire to help others.

A DME example of greed striking close to home for me was the day my mother-in-law's obituary hit the newspaper and the DME called my wife demanding that she return a wheelchair that very day. According to my wife, the DME offered no sympathy or condolences, just the immediate return of a five year old wheelchair. The wheelchair had already been paid for many times over by Medicare, but the DME apparently wanted every penny out of it they could get. It was all perfectly legal of course, but it did nothing to enhance the standing of the profession.

While many folks who work for DME's may not be motivated by greed, it sadly does seem to be the primary driver for those who set the operating practices for the DME companies (i.e., presumably the owners).

Regards,
Bill