How much will my surgery cost?
In December 2017 we read claims that “for privately insured patients, calculating and comparing the out-of-pocket costs for surgeries can be "perplexing and sometimes impossible"“. Consumer group Choice called on surgeons to increase transparency and publish the average prices for common surgeries.
Choice had conducted a “mystery shop” and asked medical receptionists to provide information about the cost of surgery. They were surprised to discover that information about the cost of surgery is not as readily available as the cost of other consumer goods. So why is there a lack of transparency around surgical fees?
The simple answer is that as a medical practice we cannot tell you precisely what your total out of pocket for a private surgery will be, as private health insurance rebates vary considerably between the many insurers. Although patients are frequently advised by their insurer that they are "fully covered", this statement has no specific meaning in dollar terms. If an individual says that they are "fully covered", what is their excess? What exclusions are on their policy? Do they have extras coverage for hand therapy - and if so, does this coverage apply only to a physiotherapist or also to an occupational therapist? If they require outpatient x-rays, CT scans or MRIs as part of their follow-up this won't be covered by private health insurance. In our experience patients aren't simply asking about the surgical fee when they ask how much surgery costs - they're asking what their overall out of pocket costs for the episode are likely to be.
A patient who believes that they are “fully covered” for carpal tunnel release surgery (for example) may receive a private health insurance rebate for the surgical fee of $760, or of $276.80, or anywhere in between. The amount paid by a specific private health insurer may also vary according to what out of pocket a surgeon charges (e.g. if your surgeon charges "a known gap of up to $500" the insurer may provide you with a higher rebate than if the surgeon charges the patient a gap of $501). With such variations in private health insurance rebates it is not possible for a medical receptionist to provide accurate surgical fee information to a mystery shopper, even if the mystery shopper has correctly diagnosed their health condition and determined what Medicare item codes apply to their treatment. And to complicate matters further, the out of pocket fee for surgery isn’t just about the surgeon’s fee.
Surgery for carpal tunnel release (as an example) may also incur additional costs including a private health insurance excess (which varies between policies but commonly ranges from $0 to $500), anaesthetic fees, and allied health fees (if a patient sees a hand therapist post operatively and the patient has extras coverage they may receive a rebate on the service). If the patient does not have private health insurance or they discover unexpectedly that they are not covered for the surgery then out of pocket costs for the hospital admission (payable to the hospital) are generally around $1000 and up. If a patient is not covered for the cost of a prosthesis (for example, the cost of the surgical plate and screws used to hold a broken bone together) this cost can be thousands of dollars, and the surgeon may not know until after the surgery how many screws or what type of plate was ultimately going to be used. There can be additional costs for private pathology and radiology, which can involve hundreds of dollars. At one time we looked at having our regular anaesthetists determine a set hourly fee rate for aesthetic or uninsured surgery, in order to simplify fee estimation, but this would be in breach of Australian Competition and Consumer Commission (ACCC) guidelines.
Incidentally, did you know that if you had surgery for carpal tunnel and you also had a trigger finger operation at the same time that the rebate for the surgical procedure is 50% of the amount that it would be if you had the surgery separately? And that if you had two trigger finger operations at the same time as the carpal tunnel release that the second trigger finger would be rebated at 25%?
Did you know that if you have your procedure performed in our rooms (for example, a needle fasciotomy) that your private health insurer does not provide any rebate or coverage for this? If you have the same procedure performed in a private hospital the insurer will pay the hospital for your admission and treatment. If we perform the procedure in our rooms then we receive no such contribution from your private health insurer for the cost of equipment, nursing staff or rooms rental. When we administer injectable collagenase in our rooms we pass the cost of the medication on to the patient. Some patients are able to obtain a rebate from their insurer on the cost of this medication. Many cannot.
The Australian Healthcare Practitioners Regulation Agency (AHPRA) guidelines state “any information about the price of procedures in advertising of regulated health services must be clear and not misleading”. Given this, our medical receptionists do not provide surgical fee estimates over the phone to prospective patients or mystery shoppers.
Our medical receptionists advise all callers that if they wish to schedule a consultation they will be medically assessed by Dr Tomlinson and that Dr Tomlinson will determine from that consultation the item codes that would be applicable to any surgery that is offered or recommended. In some circumstances, particularly emergency settings, the surgeon cannot be sure prior to the operation as to what item codes will be applicable to surgery, in which case we advise patients of a fixed surgical out of pocket fee, and advise that a) the amount that will be rebated by your insurer or Medicare is an estimate only, and b) that the total amount payable is an estimate only. We do not give "ballpark figures" to individuals who phone our practice, as we do not believe that we can provide accurate fee estimates to callers. Financial consent, like consent for an operation, is not something that a medical receptionist can provide over the phone.
Following the surgical consultation our administrative staff sit down with patients and provide them with a written financial quotation that details the expected surgical fees and financial consent information. We have ten different templates for our financial consent document (privately insured, uninsured, Workcover, hospital procedures, rooms procedures, cosmetic procedures), and we select the appropriate template for the patient's individual circumstances. We advise all insured patients to contact their private health insurer to determine if they are covered for the item codes in the fee estimate, and whether the expected private health insurance rebate that is listed in the fee estimate will be paid by the private health insurer. We provide a one page “Financial Consent for Surgery” document (see picture, below) and our administrative staff discuss this document with the patient, which outlines the out of pocket charges that may or will apply. If a patient is aware that they do not have private health insurance we will request third party fee estimates (hospital and anaesthetic fee estimates) from a hospital that Dr Tomlinson operates at, and an anaesthetist that Dr Tomlinson operates with. We then provide these fee estimates to the patient. We also explain that once the patient selects a date for surgery that we will request these third party fees again, as the hospitals that Dr Tomlinson regularly operates at charge different amounts, as do the anaesthetists that Dr Tomlinson operates with - so a fee estimate from one hospital or one anaesthetist may differ from the original fee estimate from an alternative hospital and anaesthetist. We also provide patients with the contact details for these third party providers (the anaesthetist and the hospital) so that the patient can contact the provider's administrative staff directly to discuss fees and payment. We also explain that if additional surgeries or treatments are required that additional fees may apply. In the setting of a Workcover or TAC claim we also provide you with the written letter that you need to submit to your claims manager to seek pre-approval for surgery.
While it would be ideal if surgeons (and medical receptionists) could provide patients with a single itemised bill with the total cost of a surgical episode prior to surgery, the reality is that the private health insurance system does not lend itself to that. We wish to be clear about the fees that our patients may incur, which means that we need to explain the many variables that may occur. This includes explaining the number of parties involved in a patient's care, and the steps that the individual patient needs to take to confirm coverage and expected rebates with their private health insurer prior to surgery. The insurance policy agreement is between the patient and their insurer, not between Melbourne Hand Surgery and the insurer, so even when a patient advises us which insurer they are with or what their membership number is, we do not know what that individual is covered for or what exclusions apply.
Generally speaking, we do not bulk bill or no-gap for surgery as the fees paid by Medicare and many private health insurers do not cover our expenses. It is also our experience that we incur significant payment delays and additional administrative costs if we bill private health insurers directly for payment. For this reason our office takes up front payment for surgery. Once the surgery is performed we can issue the receipts that contain the surgical item codes that were used, which patients can submit to their insurer or Medicare in order to receive any relevant rebate.
We recognise that the complexities in private health insurance billing are a turn off to many individuals, and we wish that providing a surgical fee estimate was as simple as telling you what the Recommended Retail Price is for moisturising cream. Unfortunately, it isn't. Hopefully the information above goes some way towards letting you understand why.