Image of a rip-off

A dubious billing practice drives up charges for diagnostic images. Blue Cross is right to object.

July 19, 2012 

So you take your car in for an oil change. The listed price is $29.95. But when the bill is presented, you’re charged four times that amount.

“What gives?” you ask. Well, the service manager explains, we charged you to drain your old oil. Then we charged you to take your old filter off. Then we charged you to put a new filter on. Then we charged you to add the new oil. So – that’ll be $119.80. Debit or credit?

Your next stop is the Better Business Bureau. Too bad there’s no easy recourse when hospitals and clinics use a similarly abusive billing technique to jack up the charges for diagnostic imaging.

Blue Cross and Blue Shield of N.C. has its own motives for wanting to keep health care costs down, but here’s an instance where it is fighting a good fight. Ideally, when it wins such a fight, that helps keep customers’ premiums down as well. As reported in Sunday’s N&O, the insurance company objects to a billing practice that health care financing experts call “unbundling” – pretty much the same trick we encountered at the oil change place.

When a patient undergoes a radiologic imaging procedure such as an MRI or CAT scan, the hospital or clinic must prepare the patient and the equipment for the prescribed tests. Part of the bill covers that so-called technical component, including the charge to use the facility and machinery. In addition, there’s a charge to have the image interpreted by a radiologist.

What BCBS objects to is multiple billing for the technical component when multiple images are taken. Providers of imaging services typically will apply the component charge for each separate image – no matter that the set-up work has to be done only once, no matter the economies of scale that should come into play when several images are required.

BCBS says its average allowed cost for an outpatient MRI image is $1,746. The radiologist gets $235 of that – and the rest is for the technical component. So the patient needs four images? Multiply the bill by four.

BCBS, which is trying to make a buck itself, told providers that it was setting the amount it would reimburse for the technical component at 50 percent of the charge. While it may be fair for providers to charge more for multiple images – the equipment is expensive, after all, and its costs must be covered – the set-up work for a procedure doesn’t have to be repeated over and over. A multi-image discount seems reasonable.

The providers like things the way they are. They accuse BCBS of unilaterally changing the terms of contracts that spell out how diagnostic imaging will be billed.

While BCBS says it’s on solid ground, this could be a case where the hospitals and clinics are legally correct. Still, in terms of honorable business practices, the providers fall short. In trying to force BCBS to stick to long-term contracts that provide no discount for multiple images, it’s obvious they want to just keep on gouging patients.

The N.C. Hospital Association and N.C. Medical Society have tried, with some success, to convince the state Department of Insurance to see things their way. But here’s a chance for insurance commissioner Wayne Goodwin to get in a good lick for lower health care costs.

In any case, Goodwin should make sure that as the dispute plays out and BCBS tries to lower its own costs, patients don’t end up holding the bag, with high charges that the insurer won’t cover.

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