Last week, I had the distinct “pleasure” of visiting the local emergency room. I managed to severely twist my leg at the end of a hockey game. My friend the orthopedist, who was with me, took a look and sent me off to get X-rays. Turns out, it was broken, and it will be many weeks before I start running or playing hockey again.
The interesting business part is the structure of reimbursement and incentives. On my way to the hospital, I called the ER to make sure they were open, since there were some local strikes. The kind lady at reception advised me to get a coverage commitment from my insurance before stepping into the hospital.
Apparently, if I go to the hospital, they X-ray it, and it is broken, then the insurance covers it in full. If it is not broken, I am responsible for the charges, or at least the deductible, unless I received a pre-commitment from my insurance. This is similar to many insurance plans that charge $50-75 for an ER visit, unless the patient is admitted, in which case the co-pay is waived.
At first blush, this surprised me. After all, if I twisted my ankle badly, wouldn’t the insurance company want me to get it checked out? If it really is broken, and I wait too long, the damage (and hence the cost of fixing it) can be much worse!
Nonetheless, I went through the process of calling my insurance company’s 24-hour line. The nurse walked me through a few questions, had me check a few things, and then immediately issued the waiver.
After I hung up, I realized that the process, although mildly inconvenient, makes a lot of sense when you look at incentives. ER visits can be expensive. On the one hand, an insurance company wants to eliminate unnecessary ER visits. On the other hand, they want to expedite necessary ER visits, so the patient doesn’t get any worse.
Eliminating automatic ER coverage while funneling patients through a nurse-driven qualification process – a form of triage – gives the insurance company the opportunity to weed out unnecessary visits and support necessary ones. The dual system – automatic coverage in case of a break of admittance, no coverage unless pre-approved otherwise – creates the best incentives for both the insurance company and the patient.
It may be an annoyance – after all, who wants to spend 10 minutes on the phone with a nurse when you are in pain and your leg may be broken – but it is a small price to pay to keep insurance costs down.