Medical pricing makes the head spin

I woke up about a month ago with my bedroom feeling like the Mad Hatter's teacup ride at Disneyland. The sensation left me sick to my stomach and basically useless for hours.

My endocrinologist at UCLA's Gonda (Goldschmied) Diabetes Center advised me to speak with an ear, nose and throat specialist, and I booked an appointment with a physician whose office was down the hall.

The consultation went like this: We chatted for a few minutes, then he held me at awkward angles several times and promptly diagnosed me with benign positional vertigo -- a tendency to get dizzy if my head is in a certain position.

This took 20 minutes. The doctor performed no fancy tests or procedures. He prescribed no medication.

Last week I received a statement from my insurer, Blue Cross of Illinois, informing me that the doctor had billed $975 for the visit. The statement also said Blue Cross was paying just $243.64.

I contacted Anthem Blue Cross, which handles its Illinois counterpart's business in California, and asked if I was responsible for the outstanding $731.36.

"Oh, don't worry about that," a service rep cheerfully replied. "Because of our contract with them, the provider is writing that off."

So, was the treatment I received worth nearly $1,000, as the doctor apparently believed, or just a quarter of that amount, as Blue Cross had concluded? How can the provider and the insurer be so far apart in pricing a fairly routine medical service?

"It's a Byzantine system," said Jim Lott, executive vice president of the Hospital Assn. of Southern California. "There's no question about that."

Peggy Hinz, a spokeswoman for Anthem Blue Cross, said the insurer "relies on the latest medical pricing data and experts in the field" to determine how much it will pay for specific services.

"We always strive to reimburse a fair amount based on a provider's cost and based on what is reimbursed to other providers for like services," she said.

The ear, nose and throat specialist declined to discuss specifics of his billing. He said only that he had nothing to do with setting prices for his practice or negotiating contract terms with insurers.