You wouldn't overpay for your groceries. So why are insurance companies overpaying for your health care?
Just ask Raymond McKay of East Granby. "I just woke up and this piece of hardware that I'm being billed for is attached to me," McKay said.
McKay dislocated his knee and ruptured his patellar tendon after he slipped on an icy driveway earlier this year. He's slowly recovering from knee surgery.
McKay has a high insurance deductible, which means it's his responsibility to pay for the knee brace. But the bill for $503 definitely caught his attention.
He said he found the same, new brace online for hundreds of dollars cheaper. So he called the knee brace supplier who billed him.
"And I said, 'can you explain to my why this $199 brace cost, you know, $503?' They couldn't give me an explanation," McKay recalled. "They're like, 'well, that's what the insurance company says we're allowed to charge.'"
McKay's questions shine light on one of the hidden costs of healthcare: the negotiation of rates between health insurance plans and suppliers of durable medical equipment.
"Durable medical equipment, in my experience and understanding, is an area that can be a significant cost driver," said Keith Stover of the Connecticut Association of Health Plans.
The New England Medical Equipment Dealers Association (NEMED) explained that the costs and reimbursement rates factor in additional services, including the fitting of the device.
"There's a lot of service and experience that goes behind it," said NEMED executive director Karyn Estrella. "A supplier will back up that product."
But health insurance subscribers pay for it in the form of higher premiums and co-payments.
"They're wasting their money on insurance that's overpaying for something that they should be paying considerably less for," McKay said.
McKay's health plan, Aetna, said it negotiates discounts with suppliers on behalf of its members. However, McKay wasn't just going to cut a check without investigating.
"I'm kind of hoping to come to a better agreement with them," McKay said.
McKay filed a complaint with the Connecticut Department of Insurance. The state investigated and discovered a billing error made by the knee brace supplier.
Aetna then reprocessed McKay's claim and had the bill lowered to $367, which is the negotiated rate for the specific brace and service. That amount is still higher than what McKay found online. But Aetna said the price factors in fittings and adjustments made to the brace.
Aetna pointed out other health plans' negotiated rates can be much higher. For example, Medicare would reimburse $693 for the same brace and service.
America's Health Insurance Plans (AHIP) is a leading industry group that said carriers are making their Explanations of Benefits easier to understand and more
transparent to reduce unintended errors.
But there could be a reason why consumers may not be paying attention to what's adding to their health care costs.
"Information doesn't exist and a third party is paying the bill so we as the patient, or the consumer, spend more time on our Walmart purchases than we do on scrutinizing our health care purchases," said Angela Mattie of Quinnipiac University.
Aetna said it appreciates McKay's concern about containing healthcare costs and said it, too, shares that goal.
McKay said he's speaking out because most people with more traditional insurance may be overlooking their bills.