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Comment by wyldfire | Hacker News Reader

I've always wondered about US health insurance -- why can't the physician give me quotes about my personal obligation for various treatment options? It's frustrating that as soon as it's time to come up with a bill, poof there it is but prior to the bill being generated all I get is shrugs?

Is it because the insurance coverage algorithms are too complicated? Because the different entities involved in a single treatment plan is too complicated to navigate? Because physicians feel that cost is orthogonal to medicine and they prefer not to be involved/prefer to recommend the ideal treatment based on a predicted outcome? All of the above?

It feels like if there were a particular hospital group / physician group that had this feature, they would attract a lot of attention. Just imagine, "Your initial differential diagnosis will not exceed $150 and we'll discuss treatment options or more conclusive diagnostic tests afterwards."

All I've heard so far are physicians who don't accept insurance but instead have a straightforward "menu" for common items, which is interesting but not what I think most people want.

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Nobody can tell you because nobody knows. And nobody can know.

Here is a simple example that my sister (a nurse) gave me yesterday. Suppose that you go in for an operation at the hospital, spend a week recovering, and develop diarrhea on day 2 while you are there. That diarrhea is a "hospital acquired infection" and insurance won't pay a dime for your operation. Therefore until you've been through the hospital, nobody knows whether you'll get paid.

Oh right, and the possibility of this happening is a reason for the hospital to kick you out of the hospital as quickly as possible. Average patient outcomes may be better if you stay a week, but their odds of getting paid are better if you're kicked out within 48 hours.

This is just the tip of the iceberg. She went on about how broken health care is for an hour...

> Nobody can tell you because nobody knows. And nobody can know.

That's definitely not the case, because they have to know in order to bill you. To get us back on the same page, let's rescope and consider only elective procedures and primary care.

Your example is extraordinary and could be specifically excluded. Even if I got a treatment plan with equivocating language about "risk of procedures / changes / infections / etc" and all that noise at least I could make an informed decision about which treatment plan I think is appropriate.

The guff I was sold when we were shoved to high deductible plans a ~decade or so ago was that we could make decisions about our healthcare. They come up with BS estimates or treatment calculators that are from the insurer and not the provider.

If you read the very next paragraph, you'll note that they meant that nobody can now know the total costs beforehand. I.e., the total costs often include events that they are unable to reliable predict in advance, so they are unable to give you a reliable or accurate estimate of costs until its all done (which is when billing occurs)

They could provide mean, median and min/max.

Nobody can know your restaurant bill beforehand, since who knows what you will order for dessert, right? The hospital should still be able to give estimates for individual items beforehand. If they are not flying completely blind, someone must already know these numbers, it would just be a matter of making them public.

To me, the actual problem seems to be that they would like to make up the price after the fact, when they have a better idea how much they can charge and get away with. This gives them the unfair advantage of setting their own prices unchecked by market forces, and is frankly a reprehensible business practice.

That's definitely not the case, because they have to know in order to bill you.

They bill you after the fact, after they know what they did and what insurance paid for. At that point it is easy. But before the operation, nobody knows what they will find or what insurance will decide.

Your example is extraordinary and could be specifically excluded.

On what evidence do you conclude that it is extraordinary?

All evidence that I have, including my conversation last night with a retired head nurse, is that confusion and uncertainty about what will be covered by insurance and what negotiated limits there might be on what can be charged are more the rule than the exception. And if my impression is correct, then what you want is impossible. Because before the fact, nobody really knows.

But this weirdness still happens when you have a combined entity like Kaiser.

I went for a routine visit, and paid the $30 copay before the visit.

After the visit, I get a bill for Ridiculous_Number_X - Ridiculous_Number_Y = $30.

The "actual cost" of the visit and the "negotiated discount" are numbers that are obviously pulled out of someone's ass because they magically align so that I have to pay $30.

And since everything was handled by Kaiser, how the hell could they not know before my visit that they would want $30 extra and just charge me $60 beforehand and be done with it?

So the predictable checkups are predictably priced, and the unpredictable treatments are unpredictably priced.

Here's a great video that I think is related to this topic about the near-impossibility of finding out the cost of giving birth: https://www.youtube.com/watch?v=Tct38KwROdw

I'd imagine the reasons for the complexity are the same as an injury.

Edit: Just a thought...

What if enough consumers went line-by-line AFTER the fact and shared what the specific breakdown of every item cost? So then you'd be able to say, okay, at this hospital them giving us an Advil cost $X and them doing this procedure cost $Y.

Some way of making the master price list for how much individual items cost public and grouping together ones that generally appear together...

Hey, the hospitals could even hire actuaries to statistically analyze costs and charge everybody the expected average.

We could call that...oh wait. Nevermind.

Insurance!

I assume you didn't watch the video and therefore didn't understand the point.

Me and a friend were talking that idea a few weeks ago. You'd need to further include what insurance plan that consumer was on as well, so know what the hospital would charge knowing that information.

Crowdsourcing it would make it significantly more transparent, but the problem (to me, at least) is more that submitting that information somewhere is more of a privacy/HIPAA thing than most consumers and companies are willing to handle.

I could definitely envision a government system, like medicare, would hire people to do this, and make the prices more transparent to consumers, but this is the same medicare whose part D cannot negotiate drug prices due to lobbying efforts.

> Your example is extraordinary and could be specifically excluded.

Complications and hospital related infections are not extraordinary. For most of the history of healthcare they were the norm.

The problem is there is a bunch of hidden complexity in medical coding and billing. There's 5 Evaluation & Maintenance (E&M) codes that may apply to an office visit, another 5 for ER visits, 4 for tele-medicine consults - which one is used depends on multiple factors that you can only know after the fact, and which one is applicable to the visit determines the expense. This doesn't factor in other procedures such as labs, and whether such charges are required to be bundled into the E&M fee by a specific payer or not - plus differing allowables from each payer. Add in the fact that nearly nobody bothers doing pre-authorizations except surgery centers and other outpatient services that payers require prior authorization for anyway and the whole situation turns into a giant clusterfuck.

Is it POSSIBLE to do all of this and give you a proper quote before a visit? Sure, but it requires some fairly complex software to do so and manual input of tons of different data specific to your insurance contract that almost nobody wants to do it (ironically, the billing company I work for DOES this - but since we aren't involved in patient care it's only utilized to ensure we get paid properly by insurance companies).

Even with a line item precoded estimate, it would require some negotiation between what the doctor/lab thinks it costs versus what the insurance thinks.

Doctors/Labs are often surprised after the fact by what the insurance company allows, thinks is miscoded, will pay, etc.

However, most hospitals don't enforce any requirements of "codes" or there are bunch of inter-changeable codes.

If you get a bill from hospital, you can call billing department, ask them if they can try a different code to bill insurance company. And it is possible new code will lower your out of pocket cost. On few occasions I did this, I end up owing nothing out of pocket.

>Sure, but it requires some fairly complex software to do so and manual input of tons of different data specific to your insurance contract that almost nobody wants to do it

Can someone quantify the value added by having this complexity baked into the system? Is there any advantage besides the "confusopoly" aspect?

https://en.wikipedia.org/wiki/Confusopoly

Who is the main benefactor (in $$$) behind the drive for complication of medical billing? Doctors? Medical Office Receptionists? Insurance companies? Other third parties that doctors hire to handle paperwork?

What are the benefits supposed to be over whatever we were using in 1975? If you were founding a clinic on Mars for the first colony, would anyone duplicate our current system of medical billing?

Theres no main benefactor. It was Medicare/Medicaid that initiated code based payment and because they are the largest payor, everyone else was forced to go along.

What they get out of it now are public health statistics. Doctors dont get anything out of this.

Ultimately treating medical coding as the price determination mechanism is the cancer behind all our problems.

> What they get out of it now are public health statistics.

We actually don't really get those out of the medical billing situation either. ICD codes are what's used for public health statistics, whereas CPT codes are used for billing. I mean, we could use that data for public health statistics, but we don't really. And we could still have gotten it without the rest of the sacrifices that have come along with the code-based payment systems that have turned practices into offices for billing, with a marginal medical practice on the side.

Unfortunately, as you said, because Medicare is 40% of the payer market, once they switched to this model, it created the vicious cycle we're now in.

> ICD codes are what's used for public health statistics, whereas CPT codes are used for billing.

Very roughly (it's more complex, but not worth more detail here) ICD-10-CM diagnosis codes are used for billing, and ICD-10-PCS procedure codes are used for institutional billing, as well. HCPCS (which include CPT) procedure codes are used for professional services billing.

> Very roughly (it's more complex, but not worth more detail here) ICD-10-CM diagnosis codes are used for billing, and ICD-10-PCS procedure codes are used for institutional billing, as well. HCPCS (which include CPT) procedure codes are used for professional services billing.

Yeah, this is the rabbit hole I was hoping not to have to go down. :)

All I wanted to illustrate was that the desire for public health statistics could be satisfied without requiring a move to the flaws of the current billing model - they're different systems.

(And historically, the move to the current billing model came about primarily for reasons other than a desire for public health statistics).

The complexity in reimbursement policies is always in favor of the insurance companies, the complexity isn't necessarily in coding the charts - that's pretty straightforward, it's all in insurance contracts and the individually contracted rates.

Can someone quantify the value added by having this complexity baked into the system?

The value added is relatively little, and past comparisons of the cost of healthcare between the US and Canada have identified paperwork as being most of the difference.

But the cost to the one insurer or hospital which DOESN'T participate in adding to the mess is very high. So everyone puts in a lot of energy to wind up in approximately the same place, only with more paperwork. After a few decades of this, well...

Sometimes when working with legacy software you just start wrapping legacy crap in added layers of complication, hoping to to create a sane interface to the underlying insanity. I think the same thing might be happening with auxiliary healthcare companies. I say this because I've worked at a couple such companies, and I see some mentioned on Hacker News from time to time.

A new company will look at healthcare in America and say, "I'll start a company, and we'll fix part of this." And to some extend they succeed, they deal with some of the underlying insanity, and stick a nice API in front of it. But ultimately what they really do is bring in a bunch of people to sap more money out of the healthcare industry. I used to be one of them when I worked for such companies as a developer. Ultimately a small part of your high medical bill ended up in my pocket. One of the companies I worked for had hundreds of employees and could have been entirely replaced with a 50 line Python script and a cron job if only the government would pick a standard CSV format and require states to use it. (There was no patient data we were dealing with.)

It seems to me, that to make healthcare affordable in America a lot of these auxiliary workers are going to have to lose their jobs. They system must be made much smaller.

I think what's happening is that your doctor will attempt to get as much money from the insurance company as he/she can.

My wife has experience of the doctor's office asking insurance company for $X, and the insurance company comes back and say "no, max $Y". So then the final "cost" all of a sudden becomes $Y. Pay attention to the claims that your doctors send to insurance company and you might be able to see that.

So instead of telling you, yes, whatever procedure is definitely just going to cost $Y. They can't tell you how much things are. It depends on maneuvers with other players in the industry.

This is very different than say in Canada. If I want to get a teeth filling in Canada, my dentist straight up tells me how much before the procedure. If I want to price shop that, I can. In the US, nobody is willing to say how much, because "it depends".

It's not because intrinsically there can't be price transparency. It's because of all the messed up incentives that the industry has that causes US health care to be as such.

That's actually a response to the insurance company performing a type of information arbitrage with multiple other parties.

You could have health insurance with transparency, but there is too much profit potential in forcing information asymmetry between all of the parties involved in the system.

Every time that you think...doctors...hospitals...nurses...are up to something, most of the time it can be tracked back to insurance companies and the sway that they hold over congress with their money. I'm not saying that there aren't doctors, nurses, hospitals trying to gouge people. I'm just saying that insurance companies are worse. (With some very rare and egregious exceptions.)

Even with that I still don't give doctors an excuse. There are a bunch messed up incentives there too. Such as doctors recommending more expensive drugs, or giving me coupons to buy said drug. I'm assuming there's money exchanging hands there too. Not sure if it's with doctors directly.

But the end result is that I simply cannot 100% trust any advice I'm given.

These days there's not going to be money - but there might be steak dinners. But there are lots and lots of doctors who's ethics say that steak dinners with drug reps are off limits.

But no steak dinners still doesn't mean you won't get this happening, because some docs look at your insurance and figure that for you, your out of pocket will be lower with a coupon than with a generic. Sure the insurance company might pay an arm and a leg - but by and large docs don't care about insurance company profits, and do care about the person in front of them. And thus waste.

Other docs think all generics all the time -- even if the cost to the patient is massively higher. On the opposite side sometimes the expensive drugs just are better (even if just marginally) and most docs don't think about costs at all - as it's very very complex and their lives are busy enough.

It's messed up for a thousand reasons, not for one reason.

>But there are lots and lots of doctors who's ethics say that steak dinners with drug reps are off limits.

There are a lot more that think it's not their job to care about those things. They think they are only responsible for curing the sick regardless of time or money constraints or conflicts of interest.

They say they don't do this, especially in regards to money, but talk to all sorts of docs about how much of their patients' time they waste every day and they get real defensive. They think they are owed anything and everything and fuck running an efficient practice, fuck your time because they're a doctor and they are over in a different room performing miracles.

The egos in medicine do WAY more harm than good.

I personally know a bunch of doctors and you are right, they are pretty arrogant. Each one of them is also brilliant. I'm actually pretty close to some of them so in one or two cases I'm biased.

They actually have a hard time being "efficient" in the sense that you use the word, because if they don't run every possible test when they miss something and get sued they will have to answer for it.

Why are there so many lawsuits? Because the first thing that insurance companies do is lawyer up.

I'm not saying that doctors aren't also bastards sometimes, but Americans also think that doctors should deliver healthcare like a retail service and that's just stupid.

Your whole "in a different room performing miracles" might actually be running late because they are double booked and behind schedule due to trying to be thorough with an old woman who has compounded issues related to multiple diseases. That woman is also a person, just like you and the doctor might be trying to spend some time trying to help them even though insurance and the shitty clinic they work in only want them to spend 10 minutes with any one patient. That may sound efficient until you need to spend 20 minutes to do something right. Then the schedule is effed the rest of the day and people will act like you are trying to do something to them by being late.

Its hard for me to say this, because generally I hate people, but not everything is intended as a slight against you.

Its not with doctors directly in almost all situations. Not saying that they aren't also cocks sometimes but there's a lot of the iceberg that you can't see. I'm telling you, the more you look the more you will see its middle men like insurance companies that are screwing every party in a multiparty transaction.

Never trust anyone 100%. This is America.

Dental insurance in the US is a bad example, because they generally pay for (in a year) 2 routine cleanings, silver fillings, and a percent of anything else, up to some ridiculously small maximum of $2k or something. You very much can get price quotes for dentistry.

And really, they should NOT be paying for 2 routine cleanings, because those costs are both modest and predictable and that's not the point of insurance.

The reason they do pay for the cleanings is that it's probably cheaper than paying for the increased fillings and root canals that they would incur if people skipped the routine cleanings. So they want to incentivize that, even though it's not really the sort of unexpected ruinous expense risk that insurance is really meant to assume.

They could achieve the same goal by providing a discounted premium with proof of routine cleanings, but that's probably more complicated for both them and their customers.

> The reason they do pay for the cleanings is that it's probably cheaper than paying for the increased fillings and root canals that they would incur if people skipped the routine cleanings.

Actually, no, they reason they do is because they're usually subsidized by employers providing the plans. In other words, it'd be equivalent to the employer reimbursing a portion of your regular dental care that you pay for out-of-pocket. The expected reduction in cost for the insurer due to routine cleanings is negligible from their perspective.

If you purchase dental insurance individually, these treatments are very rarely covered, or if they are, the price under insurance is usually about the same as the price without insurance. Which makes sense from a risk model - when there is literally no risk at hand, the price under insurance should actually be higher than the uninsured price, by a tiny amount.

This is a great example of why most "health insurance" (or dental or vision "insurance") isn't really insurance.

It's a bundled prepayment model, similar to selling gift certificates/cards or the like. Basically making money on breakage / float.

Real casualty insurance wants to reduce the number/magnitude of casualty losses. So the theft insurer wants you to get good locks and an alarm, the fire insurer wants you to get sprinklers, and they all want nice orderly public services with good response times and suitable building codes. Win-win-win.

Nobody would ever be unhappy if they paid their whole life for fire insurance and their house never burned down.

But health "insurance" can't really reduce the amount they pay out (the "medical losses") because the customer is expecting to consume healthcare. It's also more complicated because one of the best ways to reduce medium term healthcare costs is to spend more on short term healthcare costs.

Can you imagine if the best way to prevent a house fire was to have a little house fire every year? (Well, that's not so crazy in terms of wildfires, perhaps.)

Then, there's the fact that in the very long term, everyone will die and many will get really sick just before that. And the private health "insurance" companies do their damnedest to avoid that group entirely, having effectively shunted them all off onto the commonwealth (Medicare).

Health insurance is not like other insurance and we need a new word for what it really is.

It's a bundled prepayment model, similar to selling gift certificates/cards or the like. Basically making money on breakage / float.

It's not just prepayment, but also a negotiated price that's lower than the average person can negotiate themselves.

Actually, dental care is like that in the US - your dentist can tell you the price, and you can price shop it. If you happen to have dental insurance, they may not know how much of that bill will be covered, but you can absolutely get costs from them.

Other healthcare on the other hand is often a mess, although it is getting better. I've found recently (an MRI in this instance) that I was able to get costs beforehand, and even compare prices. I think the prevalence of HDHP (high deductible health plans) has steered people towards expecting to pay out-of-pocket for care, which has led to a positive change in this area.

Got it. I only used dental as an example in Canada because majority of everything else is already covered by universal health care, so I don't have experience dealing with pricing for other things in Canada.

Vets are like this too. Vets and Dental are very simple.

My root canal is $325? Cool. I can shop it around or go with it. Same with a pet procedure.

Medical is the crazy town.

Is this because dentists can tell patients who forgot their wallets to take a hike, hospitals can't, and for the most part hospitals don't do emergency dentistry? [0] That is, if dentists were more "ethical", we might see the same problems with cost and payment in dentistry that we see in health care in general?

[0] Sure, there are extreme exceptions, since most hospitals have a dentist they can call when an emergency patient is admitted because an abscessed tooth has destroyed their entire body... It takes commitment and/or great misfortune to get to that point.

To be fair to doctors offices, this is in part because some insurance plans (Medicare's the biggest offender, but then again Medicare's the biggest everything) pay doctors below cost for certain procedures. Doctors cope with this by systematically overcharging other patients' insurance companies when they're reasonably sure the patient has already hit their copay for the procedure.

Essentially, health insurance for the poor isn't formally subsidized well enough to make it actually workable, but doctors have professional ethics that disincentivize them from refusing care. So the system has evolved a clumsy, ad-hoc mechanism for wealthy patients to cross-subsidize poorer ones.

American health insurance sucks.

Below what cost?

Below the marginal costs of care.

In other words, if a practice can purchase a vaccine or supplies for a lab test at $100/unit wholesale, Medicare pays the doctor (in the aggregate) $93 for it. That doesn't take into account any overhead or costs of running a practice, of course, such as wages for nurses and administrative staff.

Providers typically make a loss on Medicare patients and then make up the difference by charging private insurers (who are, by law, required to pay more than Medicare does).

Medicare's rates are so notoriously low that for doctors who can't do this - doctors who treat a disproportionate number of Medicare patients - they actually have a separate stipend program to pay them enough to stay in business.

Does anyone know how to look up what Medicare/Medicaid pays for particular procedures, and how to look up codes in the first place?

Somehow I came across that G8709 was for prescribing antibiotics. I figure I should be able to plug that into something like:

https://www.cms.gov/apps/physician-fee-schedule/search/searc...

...but I apparently don't know the proper incantation to get that to work. It would also be interesting is someone had concrete side-by-side examples of what Medicare/Medicaid pay vs. what everyone else pays for several different "common" items.

> It would also be interesting is someone had concrete side-by-side examples of what Medicare/Medicaid pay vs. what everyone else pays for several different "common" items

No payer (including Medicare) pays a single price across the board - even Medicare pays different amounts to different providers in different regions, etc. So there is no one single price for each payer that we could compare, and it'd be hard to find true apples-to-apples comparisons between them, short of polling individual practices and asking them what they received last month (which is hardly rigorous).

Remember that these are often treated as closely guarded secrets - if they were truly public, the AMA couldn't charge for access to CPT codes, and it would be harder for Medicare and private payers to negotiate the minimum rate for each provider. It's the same reason you'd be hard-pressed to ask most companies to make all of their individual salary data public.

The reason we know that Medicare pays so little, though, is that (a) it's no secret - even Medicare doesn't really try to hide it, (b) Medicare has to publish aggregate data, and we know from the aggregate data that they reimburse 7% less than COGS on average, and (c) it's statutorily mandated.

Are you saying that Medicare/Medicaid reimbursement rates aren't public information?

> Are you saying that Medicare/Medicaid reimbursement rates aren't public information?

Private insurer rates are definitely not public information, for any definition of "public".

Medicare reimbursement rates are sort of public, but not at the level of granularity you want. And a portion of that is because the question is not easily defined. For a given CPT code, Medicare might pay one of many different rates, depending on factors such as the geographic region, whether the provider operates in a CAH, whether the provider qualifies as a DSH, etc. That level of granularity is not easily accessible, and without it, there's no way to give meaningful example individual comparisons without running the risk of cherry-picking non-representative examples simply due to availability bias.

(Also, Medicare and Medicaid can't be lumped together. Medicare is a single, federal program that is administrated in four parts. Medicaid is a set of 50 different programs run at the state level, each of which can be administrated in more ways than I can count. The one thing that they all have in common here is that, like Medicare, they pay abysmal rates to providers, but the relationships that they have are even more complex - even in a single state, like New York, there are literally hundreds of different ways that Medicaid services can be provided, depending on the type of plan chosen.

Source: founded a company that had to abstract all of this complexity for patients, who were disproportionately on Medicare or Medicaid)

Yes, I'm willing to give up on the comparison to private insurance/transactions. So now I'm just wondering how to get a hold of Medicare reimbursement rates. We know that they vary by location, and other factors. But it must boil down somewhere, to a lookup table or a formula or the guy processing the forms who rolls a dice and multiplies by the last 3 digits of the medical code to come up with the reimbursement, etc.. Or is it all based on trust, and Medicare just pays 70% of any invoice that gets submitted to them? (And they send auditors out every once in a while in order to keep up appearances)

By contrast, you can see the entire GOÄ (Gebuhrenordnung für Ärzte) for Germany online: http://www.e-bis.de/goae/defaultFrame.htm

The first column are the number of points a given service is assessed for, the second is what the publicly-mandated insurances that most Germans are covered by will pay, and the third is the private rate: private insurance or straight-up cash. Doctors and other providers can choose to charge higher than the usual 2.3 multiplier for private patients, and they can choose to only accept private patients, but most accept the public insurances, too.

I can confirm that these are the current prices - I'm privately insured with the highest legal annual deductible (1200 EUR) and pay those bills out of pocket.

Result: Visits to my Hausärztin (primary care doctor) are somewhere in the 30-70 EUR range, full price. Just about everything in healthcare is startlingly cheap in Germany compared to the US (dentistry is only somewhat less expensive than in the US). About 10 years ago, I paid less for the same procedure without participation from my insurer than a friend did in the US after her insurance paid its portion - and I had a night in the hospital, while she was an outpatient!

A small correction: The second column is not what public insurance pays (usually it's more). They use an entirely different table, the EBM.

> Does anyone know how to look up what Medicare/Medicaid pays for particular procedures

Medicaid is separate state-run programs with different reimbursement policies in each state, and othe common federal rules governing the state programs include provider-specific (both cost and charges to the general public) limits, so, there is no simple “what rate Medicaid pays” for any service.

(And that's even before considering that in some states, a substantial portion of Medicaid is provided by private insurers who are paid capitated rates, not fee-for-sercice, by the states.)

I am familiar with NY medicaid. They do publish a way to calculate the Medicaid default rate. Insurers do not have to pay exactly this but it provides a decent base line. Here is a basic description of how inpatient pricing works.

Each year the state publishes the set of hospital rates and intensity weights for each DRG (Diagnosis-Related Group) and severity combo (currently using weights developed in 2014). So a DRG of 460 (Renal Failure) with a severity 2 has a weight of 0.7393. Now the actual cost will depend on which hospital you go to since each hospital has a different base rate. For example each Mount Sinai hospital has a base rate of $8,743.45 while Niagara Falls memorial hospital has a base rate of $5,558.99. Each hospital also has a per discharge rate. To calculate the default rate take the hospital base rate x DRG intensity weight + per discharge rate.

https://www.health.ny.gov/facilities/hospital/reimbursement/...

Forgive me, but I'm deeply skeptical of unsourced claims about any government program on forums where there are a lot of IT folks. Do you have references or suggestions for specific things to search for to support these statements?

Below operating costs. Rent plus utilities plus relevant salaries plus amortized cost of equipment.

This is confounded a bit because a lot of medicine involves lots of expensive equipment and staff with huge student loans to pay down but low day-to-day operating costs, but for a lot of specialties there exists no set of insurance-independent prices that allow a normal clinic following industry standard practices to operate without losing money.

> Below operating costs. Rent plus utilities plus relevant salaries plus amortized cost of equipment.

It's worse than that - it's below COGS (direct materials). So even before you account for rent/utilities/salaries/amortized costs, they're still making a loss, unless they operate in a CAH.

The bill shows they asked for $X, but the doctor already has a negotiated agreement with the insurance company that says they will accept $Y for the service.

Additionally, if you inform the office you are paying the bill yourself (without insurance) they usually give you a discounted price somewhere between $X and $Y.

In other words, almost nobody is paying the list price of $X. It's not really a meaningful number.

(And, as others have pointed out, the weak US dental insurance market means that actually dentists are pretty up-front about pricing in my experience.)

And in a number of situations, they'll give you a price significantly below $Y.

I agree, to me the second biggest industry acceptance that is counter intuitive is that insurers need to make money off of the float. Why can't an insurer come along who charges a fee for the service of ACTUALLY BEING ACCESSIBLE TO THE CUSTOMER. Intead of fax me this paper and wait two months. I am paying the insurer on the basis that they want to draw out any claim I have.

"All I've heard so far are physicians who don't accept insurance but instead have a straightforward "menu" for common items, which is interesting but not what I think most people want." - I think people want this but they are scared of going off of insurance in the event they need to see someone who doesn't offer this (chance occurance, expensive disease).

We are actually setting up an insurer in the UK which is doing exactly that by changing the business model to taking fees on settled insurance claims instead of betting on an underwriting/investment profit.

Have a look.

insureathing.com

For routine things, your responsibility is a flat amount, usually printed on your insurance card. So you know, for example, if you go to your general physician, you pay this much. Go to a specialist, pay this much. Go to emergency room, pay this much.

For more complex things, it's usually:

1. Not possible to know in advance everything that will need to be done. Many medical procedures are not things that just go identically every single time, and complications can occur during the procedure. Having to call it off, re-quote, re-schedule, etc. is not optimal.

2. The doctor likely doesn't actually know how the procedure will be billed. Medical billing is done using standardized codes to describe procedures, and the doctor will have someone who knows how to do that, but that person may not even work in the same building as the doctor. And the sets of allowed codes and how to use them can change quarterly, and that's without getting into the arms race of doctors trying to "up-code" (rather than the most obvious code for a procedure, find a way to bill it as multiple procedures or as a plausible but higher-paying code, since doctors and insurance companies are locked in an eternal battle of doctors trying to make as much money as they'd like and insurance companies trying to pay as little money as they'd like).

On your first point, even if they know exactly what will be done, they can't answer. I can't look for it at the moment, but there was a Vox video maybe last year about a man who wanted to find out the cost to deliver his and his wife's baby. He called a bunch of hospitals in the area, gave them his insurance information, and he asked them the cost assuming everything goes to plan, just the cost of delivery. I don't remember exactly how long it took, but he got a number after hours on the phone. Then the bill came, and it was still a different number. The whole thing couldn't be more opaque.

It's worth noting that this isn't always a "don't know". Often it may literally be a "can't say". The problem is that even if you call them up and say "sure, I know it could be more complex, I just want to know what it would be for a perfectly normal delivery", and then you go there and get a bigger bill due to complications, what happens? Do you have a case against them for misleading you into thinking it would be cheap? Do they have written evidence that you understood their quote was only for a no-complications scenario?

The safest thing is to refuse to give an answer.

To elaborate on this, I work for a company that offers health insurance. One of the nice features of our plans is that although it's PPO with a network of contracted providers, the co-pay for someone on the plan is the same whether a doctor is in- or out-of-network. But how do you advertise that? Saying "see any doctor you want" is a non-starter, because someone might take it to mean "doctors are required to see you even if they don't want to" and then claim we misled them with the "any doctor" line. It ended up taking quite a while to work out a way to advertise that benefit without tripping over anything that might be claimed to confuse or mislead.

A lot of good answers here. A few straightforward ones:

- Because healthcare providers negotiate different rates with providers, so the "list price" differs by your provider and plan.

- Because your personal cost is unknown to the doctor, as it would depend on factors between you and your insurance company (like deductible met), coverage types, etc.

Now, these are both solvable problems. And I agree with the sentiment of other posters here that it's predatory that medicine is one of the few fields where you simply don't know how much something will cost until you get the invoice.

> - Because your personal cost is unknown to the doctor, as it would depend on factors between you and your insurance company (like deductible met), coverage types, etc.

This one CAN be known to the doctor, the full details of your coverage, current deductible met, copay amounts, etc are an X12 270 transaction away. Almost nobody does this though, unless you are planning on billing an expensive claim (outpatient surgery, post-acute care, etc) where non-payment can mean a significant monetary loss the time and money doing these checks isn't worth it for the provider. This is further exacerbated by most (all?) clearinghouse's charging to run these transactions, and a really slow adoption of CORE Phase II connectivity standards by payers (which would bypass the clearinghouses completely and allow providers to directly submit eligibility requests to payers over a standard interface).

Oh 100%. There's no technical excuse not to have that. As others have pointed out, there's a pessimistic line of reasoning as to why doctors and insurance companies don't want you to know what things are going to cost. The sad part is that we've allowed that to become an acceptable way of doing business.

But imagine if your mechanic did that. "Hi, thanks for bringing your car in. We investigated that noise, ran a bunch of tests, and everything looks fine to us. That will be $5,000."

(Fun story: many years ago, Jiffy Lube topped up my dad's transmission fluid without telling him there was an associated cost. When they tried to charge him the $25 or whatever it was, he told them to suck it back out.)

Because it's sort of like hotels. There's a "rack rate" which is a high price that nobody pays, and a price floor is whatever Medicare pays. (With Hotels, GSA is the "normal" price floor, and cheaper rates are usually wholesale) If you price cheaper than Medicare, you get sued for fraud unless you charge that low cost to Medicare.

Everyone else has a bewildering discount scheme. The doctor literally has no idea what you pay.

In other cases you have HMOs, where primary care doctors get a monthly nut to take care of you and don't get a fee for service in most cases.

> Because it's sort of like hotels.

Great example. Ever checkout without an idea of what your hotel bill is going to be?

> The doctor literally has no idea what you pay.

But if it matters to me, then it should matter to my physician. Most of them will come up with a reasonable response if I tell them "doc, I checked at the pharmacist but I couldn't afford those drugs you prescribed, what else can we do?" Most of them empathize with their patients and come up with an alternate treatment plan if one exists.

I don't think it's good enough to say "well gee discounts and providers and algorithms -- math is hard let's surprise you" because somehow they can figure it out at bill-generation time. At the very least, hospitals/physician's offices could produce a "given your insurance + the nature of your chief complaint, this visit will cost $x, these common diagnostics cost $y/z/w."

Health insurance is a very different business than P&C and one that I've spent a lot less time researching. Each customer interaction at least 3 participating actors (patient, provider, payer), each of which have different incentives, rules, and understanding of those rules.

I think there are great companies being built in the space (take a look at what Clover Health is doing https://www.cloverhealth.com/en/), but it's not an area I'm focusing on.

It's funny that I can take my car to a mechanic and get a free and pretty accurate diagnosis. But you go to a hospital, and you need pay for the diagnosis and it may not be accurate.

Even for a checkup, after the procedures are done, the office can't tell me the bill.

...yet we we call mechanics "wrench monkey" in a demeaning manor.

BTW, this is probably why services like Minute Clinic are getting popular...go in, get something done, pay a flat/low fee.

Well the diagnoses for your vehicle come from a 200 page Haynes manual, your body doesn't exactly have a Haynes manual for your make/model/year.

i think the many books on human anatomy disagree with you by their very existence...

How does the complexity of the human body come into play after they've done their procedure and still can't tell me how much I will be paying?

Do you take your car to the mechanic, get some work done, only to get a bill 3 months later?

You might consider looking into Direct Primary Care. It is growing in popularity in the US. Here is a quick and dirty overview:

http://micheleincalifornia.blogspot.com/2017/01/direct-prima...

Mostly due to all of the variables that go into pricing a claim. And that logic on lives in the insurer's claim processing system.

Pieces that can impact the price. Your insurer and what product you have. These will affect who is considered in-network and the fee schedule to use. Different insures will have different arrangements. Depending on the product if you have a narrow network product they may or may not be in-network. It could also depend on the location. A provider can be in-network in one location but not in another.

Also the procedure that is actually performed may be slightly different from what was planned due to unforeseen circumstances.

This is assuming the provider is aware of what the actual costs are. In many cases they don't even know the ballpark price since that is not the portion that they deal with.

Of course. We know it can be done since it happens with alacrity at bill time. Why not do it in advance? It could could save the insurers money as well as the patient if the patient chooses the less expensive option.

You might be interested in something like the Surgery Center of Oklahoma which has an upfront pricing page for their surgery procedures: https://surgerycenterok.com/pricing/

Even though the ycombinator blog post is discussing innovation etc with regard to insurance, I like the idea of innovation on the side of service providers. And it is somewhat sad that a list of prices is innovative.

Having it all in a list like that leads to some interesting comparisons.

I have Kaiser insurance which is an HMO with straightforward pricing for most things. One fixed copay for doctor visit, one for specialist visit, one for outpatient care, etc. The problem is you are stuck using only Kaiser facilities and doctors.

There are benefits to continuity of facilities, though.

Anecdotally, my wife went to her regular doctor for a nominal fee at her yearly checkup. They drew blood, then asked her what hospital she wanted a follow-up diagnostic procedure to be scheduled at. She gave the one closest to us. She showed up, did the procedure, then almost a month later, we get 2 bills. One is for the blood ($1800) which, surprise, didn't go to an in-network lab despite all of our previous years' work being covered. The other bill was for the procedure ($800 if I remember correctly). If you go to the insurance website, enter her plan, enter the hospital and the procedure, it will tell you it costs something like $40. The whole system is broken, but at least these issues wouldn't have happened in a system like Kaiser.

Also anecdotally, my sister is on Kaiser in Colorado, and she has a chronic disease along with her pregnancy. They are taking very good care of her, and nothing seems to be dropped despite her having 3 physicians whom she sees regularly. I have almost no faith that if my wife gets pregnant, we'd have the same continuity in our current setup.

If an HMO got stupid amounts of marketshare it would probably fix the system naturally. It would also improve stuff like allowing HMOs to be able to better take advantage of medical data and provide better care through understanding the patient. The problem is there is too many HMOs, which makes HMOs in general less convenient.

Even ignoring insurance, it can be impossible to get an accurate cash price depending upon the physician. And if they can't figure out the cash price, there is no way in hell they will figure out the insured price.

We recently went to a physician who works in an area that regularly isn't covered by insurance. For all procedures, the cash pricing was upfront and understandable.

In comparison, we tried to deal with another physician for a different procedure we knew our insurance didn't cover. Literally days worth of time was spent on the phone to try to figure it out and the day of the procedure we were told the prices were wrong and didn't account for some stuff.

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