Getting Lost in the Labyrinth of Medical Bills
‘It’s a broken system,’ is the last sentence; but when was it not broken? Presumably back in the good old days when people knew how to shop around for health care in a true free market system, while having a stroke./
Ask Jean Poole, a medical billing advocate, about her work helping people navigate the bewildering world of medical bills and insurance claims, and the stories pour out. There’s the client who was billed almost $11,000 for an 11-minute hand surgery. The cancer patient who was charged $9,550.40 for a round of chemotherapy he never received.
Hospital care tends to be the most confounding, and experts say the charges you see on your bill are usually completely unrelated to the cost of providing the services (at hospitals, these list prices are called the ‘charge master file’). ‘The charges have no rhyme or reason at all,’ Gerard Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins Bloomberg School of Public Health. ‘Why is 30 minutes in the operating room $2,000 and not $1,500? There is absolutely no basis for setting that charge. It is not based upon the cost, and it’s not based upon the market forces, other than the whim of the C.F.O. of the hospital.’
And those charges don’t really have any connection to what a hospital or medical provider will accept for payment, either. ‘If you line up five patients in their beds and they all have gall bladders removed and they get the same exact medication and services, if they have insurance or if they don’t have insurance, the hospital will get five different reimbursements, and none of it is based on cost,’ said Holly Wallack, a medical billing advocate in Miami Beach. ‘The insurers negotiate a different rate, and if you are uninsured, underinsured or out of network, you are asked to pay full fare.’
With the exception of Medicare and Medicaid, experts say, the amount paid for services — or the price your insurers pay — is based on the market power of the insurance company on the one side and the hospitals and providers on the other, and the reimbursement agreements they ultimately reach. So large insurers that command a lot of market power may be able to negotiate lower rates than smaller companies with less influence. Or, insurers can place hospitals or providers on a preferred list, which may help bolster their business, in exchange for a lower reimbursement rate. On the other hand, well-regarded hospitals may command higher prices from insurers.
So let’s say you have coverage through a high-deductible plan, where you’re responsible for, say, the first $5,000 or $10,000. It’s possible that you may have to pay more out of pocket for your medical services than your friend, also in a high-deductible plan, but one with an insurer that has greater negotiating power. ‘The ones that are affiliated with the larger insurers do best,’ Mr. Anderson said, adding that the uninsured have virtually no bargaining power, which is why they are expected to pay much more.
With so little pricing information available, expecting people to shop around for quality care at the lowest cost — something that’s not always possible in emergency situations — is also asking a lot of consumers. ‘I have always found a bit cruel the much-mouthed suggestion that patients should have ‘more skin in the game’ and ‘shop around for cost-effective health care’ in the health care market,’ said Uwe E. Reinhardt, a health policy expert and professor at Princeton University, ‘when patients have so little information easily available on prices and quality to those things.’
President Obama’s Affordable Care Act, the health care overhaul law passed in 2010, tries to make some improvements (though the Supreme Court is expected to rule whether all or some of the law is constitutional this month). But while the law’s changes help you shop around for insurance policies — specifically through its new HealthCare.gov Web site, a one-stop shop that lists all of your insurance options in one place — it’s still unclear how effective the law will be for anyone comparing medical services.