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How Medical Bills are Killing Us

Long article, but really interesting.
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

* Tylenol pills costing $1.50 each
* "Non-profit" hospitals that charge 11x what labwork costs them.
* "Chargemaster" tables of service charges that vary arbitrarily between hospitals -- I'm reminded of parking requirement laws -- and that the hospitals try to deny have any importance, but which determine what individuals pay.
* $21,000 bill for finding that chest pains were just heartburn. "The bad news was the bill: $995 for the ambulance ride, $3,000 for the doctors and $17,000 for the hospital — in sum, $21,000 for a false alarm."
* Hospitals routinely charge 150% markup for some implantable devices. List price $19,000, patient billed $49,000
* As a quote says, hospitals claim their charity based on the amounts they bill, not the much lower amounts stuff costs them.
* It's not just pharm companies anymore: device companies pay off doctors, or are partially owned by them.
* Medicare costs are spiraling because of aging population, new treatmenets, and spiraling costs in general, but the bureaucracy does a fine job of determining actual costs and keeping payments in line with them -- payments which doctors and hospitals don't have to accept, but do. This despite Medicare's hands being tied in drug price negotiation or even determining which drugs are worth paying for; it's also forced to overpay for durable medical equipment. One the efficiency front, it's using electronic billing, bill checking, and payment.
* Author is enamored of co-pays and unduly skeptical of Medicare-for-all.


'Insurers with the most leverage, because they have the most customers to offer a hospital that needs patients, will try to negotiate prices 30% to 50% above the Medicare rates rather than discounts off the sky-high chargemaster rates. But insurers are increasingly losing leverage because hospitals are consolidating by buying doctors’ practices and even rival hospitals. In that situation — in which the insurer needs the hospital more than the hospital needs the insurer — the pricing negotiation will be over discounts that work down from the chargemaster prices rather than up from what Medicare would pay. Getting a 50% or even 60% discount off the chargemaster price of an item that costs $13 and lists for $199.50 is still no bargain. “We hate to negotiate off of the chargemaster, but we have to do it a lot now,” says Edward Wardell, a lawyer for the giant health-insurance provider Aetna Inc.'

' the pharmaceutical and health-care-product industries, combined with organizations representing doctors, hospitals, nursing homes, health services and HMOs, have spent $5.36 billion since 1998 on lobbying in Washington. That dwarfs the $1.53 billion spent by the defense and aerospace industries and the $1.3 billion spent by oil and gas interests over the same period.'

'In addition, the cardiologist in the emergency room gave Janice S. a separate bill for $600 to read the test results on top of the $342 he charged for examining her.'

'Its operating profit margin is about the same as the average for all nonprofit hospitals, 11.7%, even when those that lose money are included.'

'the American Hospital Association has run daily ads on Mike Allen’s Playbook, a popular Washington tip sheet, urging that Congress not be allowed to cut hospital payments because that would endanger the “$39.3 billion” in care for the poor that hospitals now provide. But that $39.3 billion figure is calculated on the basis of chargemaster prices. Judging from the difference I saw in the bills examined between a typical chargemaster price and what Medicare says the item cost, this would mean that this $39.3 billion in charity care cost the hospitals less than $3 billion to provide'

'According to a McKinsey survey, outpatient emergency-room care averages an operating profit margin of 15% and nonemergency outpatient care averages 35%. On the other hand, inpatient care has a margin of just 2%. Put simply, inpatient care at nonprofit hospitals is, in fact, almost nonprofit. Outpatient care is wildly profitable.'

'The family’s first bill — for $348,000 — which arrived when Steven got home from the Seton Medical Center in Daly City, Calif., was full of all the usual chargemaster profit grabs: $18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each. None of that was considered part of what was provided in return for Seton’s facility charge for the intensive-care unit for two days at $13,225 a day, 12 days in the critical unit at $7,315 a day and one day in a standard room (all of which totaled $120,116 over 15 days)'

(Of a woman whose husband died of cancer:)
'One lesson she has learned, she adds: “I’m never going to remarry. I can’t risk the liability.”'

'In fact, Palmer — echoing a constant and convincing refrain I heard from billing advocates across the country — alleged that the hospital triple-billed for some items used in Scott’s care in the intensive-care unit. “First they charge more than $2,000 a day for the ICU, because it’s an ICU and it has all this special equipment and personnel,” she says. “Then they charge $1,000 for some kit used in the ICU to give someone a transfusion or oxygen … And then they charge $50 or $100 for each tool or bandage or whatever that there is in the kit. That’s triple billing.”'

(Of Medicare) 'The average time to answer a call from a doctor or other provider is 57.6 seconds, according to Medicare’s records, and the average time to answer one of the millions of calls from patients is 2 minutes 41 seconds, down from more than eight minutes in 2007. These times might come as a surprise to people who have tried to call a private insurer.'

'Although my doctor is on Park Avenue, she, like 96% of all specialists, accepts Medicare patients despite the discounted rates it pays, because, she says, “they pay quickly.” However, she recalls getting bills from Medicare for 21¢ or 85¢ for supposed overpayments.'


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Damien Sullivan
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