Financial Toxicity - What Is It & How To Avoid It
The cost of medical care in the US is asinine. It is estimated that healthcare in 2023 is a 4.53 trillion dollar industry and when personal spending for healthcare has grown by 6.3%, it’s the patient that has to absorb this tremendous financial burden. Medical debt is more common than people might realize. KFF reported that 1 in 10 US adults have medical debt and millions owe more than $10,000. That’s a rather sobering statistic. We have great healthcare if you can afford it, but what happens when you can’t? What happens when the expense of healthcare has a negative impact on a patient's quality of life as well as mental well-being? This situation is called financial toxicity and it’s something that Tikkun Patient Advocates can help you out of and avoid in the first place.
Financial toxicity is a multifaceted problem for patients and there's several clinical trials that study it but for the sake of this post I’m focusing on financial toxicity from the patient’s perspective and what you can do to avoid it. If you are currently facing a situation of financial toxicity or your prescription drug costs are unaffordable, I recommend checking out my previous blog post about what to do if you have medical debt and my post on drug prices. Regardless of where you get your health insurance from, it’s important to understand what your options are, how your health insurance works, and what you will be billed for so you can make informed decisions not just about your healthcare, but your financial wellbeing as well.
Avoiding financial toxicity begins with understanding how health insurance plans work (and if you’re unsure about that, it’s ok. I wrote a previous post about that here) and selecting the appropriate plan for you and your family’s needs. The first thing you need to consider is how much insurance coverage you think you’ll need this year. The greater the coverage, the more you’ll pay monthly in your premium but you’ll pay less out of pocket when you receive medical care. With less comprehensive coverage the opposite is true but it’s critical to keep in mind that being hospitalized or receiving a diagnosis of a chronic condition can be a fortune. To understand a medical bill, it’s important to know a few key words:
Deductible (what you have to pay before insurance pays anything), copay (what you pay before even seeing a provider or picking up a prescription), coinsurance (a set percentage of a bill you’re responsible for) and maximum out of pocket (the total amount you can be financially responsible for in a calendar year). This is a very high level view of health insurance benefits but when it comes to avoiding excessive costs, selecting the appropriate provider is equally as important.
There are three categories of healthcare providers: in-network, out-of-network and out of pocket. Receiving care from an in-network facility or clinician will always cost less for you because your insurance company has a contract with that provider for the amount they can bill and be reimbursed for. Though you’ll still have a portion of the bill to pay, it is significantly less than if you saw an out-of-network provider where there’s no agreement. With Medicaid, there aren’t out-of-network benefits and patients must see an in-network provider. The only exception to this rule is emergency services. All hospitals must provide care to patients regardless if they have insurance or not. Out of pocket providers do not accept any insurance and the patient needs to pay the entire cost on their own.
It's not uncommon for a provider or facility to end its contract with an insurance company, and what you find online may not always be up to date. That's why, before visiting a new provider, it's important to call their office and your insurance provider to confirm if they are part of your plan's network.
A few years ago, one of our clients received a surprising medical bill from a provider they visited every 3 months. The bill suddenly increased by more than $400, and they couldn't understand why. It turned out that the provider's new clinic where they received care was out-of-network, while the original clinic where the doctor saw patients was in-network. After this incident, the client only visited the in-network clinic and saved themselves a significant amount of money. So, the lesson here is to always check beforehand!
When it's estimated that 80% of medical bills contain errors, it's crucial for patients to review the explanation of benefits (EOB) they receive from their insurance company after visiting a provider. An EOB provides details such as the procedure code and amount billed to your insurance, the reimbursement from your insurance company, your copay, deductible, and coinsurance. Think of it as a line item receipt you'd receive at a restaurant. Just as you would carefully read the check before paying, it's important to do the same for your medical bill. I once discovered a patient's bill where the provider accidentally used the out-of-network facility code instead of the in-network code. It was a simple but expensive typo that could have cost the patient over $1,000. Thankfully, it was caught, and the provider rectified the claim.
Being a patient is already challenging, and it's unfortunate that in addition to focusing on your well-being, you also need to consider the cost of treatment. These are just a few ways you can avoid financial toxicity and become a more informed patient. If you have any questions or need assistance with your specific situation, please don't hesitate to reach out to us. We're here to provide support and discuss your options if you're feeling overwhelmed.