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Controlling Medical Care Costs in the USA


Martin Turner

Published: May 01, 2016

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In the USA there are no government controls over what medical care providers can charge for their services. It is left to “the market” to create such controls. This, however, relies on the buyer of those services being sophisticated and knowledgeable, and there is recognition of the need to have such bills audited before any payment is made which can often result in substantially reduced costs.

The US domestic medical health insurers are well versed in such procedures and have in place pre-arranged “network rates” with medical care providers. Shipowners on the other hand are only very occasional users of such medical services and, unless they take precautions, can find themselves over-paying.

In simple terms the provision of medical services in the USA operates on a three tier system; a “rack rate” that is billed to see if the payer will just pay without question, a discounted rate that will follow from the bill being audited before it is paid, and “network rates” which are pre-arranged discounts locked in at the time that the patient is admitted.

Shipowners are often the victims of the “rack rate”. However, they can get the benefit of a discounted rate even if specialist help is brought in late in the process, and can sometimes obtain “network rates” if such help is involved at the earliest opportunity, even if that is after a seafarer is hospitalised.

It can be a mistake to leave such matters in the hands of the local general agent. This is an area in which they may not have expertise and it could be viewed as an unwelcome burden especially if it’s a charterer’s agent dealing with a problem involving an owner’s seafarer. Historically in the US Gulf Ports, and of late spreading to the US West Coast, agents have sometimes been inclined to pass this responsibility to medical consolidating companies, or “port clinic co-ordinators”. These facilities take contractual control of the seafarer’s care and make referrals to hospitals and other facilities, but the subsequent billing from those facilities is done behind a veil with the ultimate bill payer (the shipowner) denied an opportunity to scrutinise bills and/or at risk of having to pay summary bills from the clinic co-ordinator that may be excessive. Such companies purport to be ensuring the best possible care for the seafarer, but that is equally achievable by other means that allow the shipowner to exercise control over the costs.

To achieve this Steamship Mutual’s local correspondent should be contacted as soon as possible, either directly or through the Club, after a seafarer requires significant medical care ashore. Depending on the circumstances, it may also be suitable to retain the services of a specialist medical management company to facilitate the admission of that seafarer to a suitable hospital, monitor the medical care being provided to them and to control the associated charges. The costs associated with employing such companies are transparent, and are often based on a percentage of the saving achieved in the bill audit process, or on the basis of time expended by medical staff in handling the matter.

Of course the seafarer’s medical needs are the top priority, but such correspondent services are available 24 hours a day, as are the services of the medical care management companies. Such medical care companies can often facilitate hospital admission on the basis of “network rates” and thus provide the occasional user such as a shipowner, with access to advantageous billing rates approaching that available to the US bulk buyers of the domestic insurance market. Their medically qualified oversight on a case can help in the flow of information as regards a seafarers progress and ensure over–provision of medical services can be controlled along with costs.

In the USA the health care providers often work on the principle that, unless pre-arranged rates are agreed, they will present a “full value” bill and simply wait to see if it is paid in full. They will expect that bill to be audited by a professional bill auditor and will almost certainly be prepared to accept payment at a significant discount.

Unfortunately, that same methodology is increasingly being used worldwide as health care providers in other jurisdictions often utilise that US model. This underlines the need to contact Steamship’s correspondent or the Club direct whenever significant medical care ashore might be needed.

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