Bill of the Month: A $48k Allergy Test
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I am convinced, although I have no evidence, that there is a kickback somewhere along the line back to the insurance company for approving the inflated bill, knowing that they can kick 20% of it over to the customer as co-insurance.
I had my own Stanford bill for a child's ER visit which included a basic blood chemistry and a single shot of insulin that turned into a 5-figure bill of which they wanted me to pay 20%. They "coded" the visit as intensive care, even though my child never left a basic exam room, and the only treatment was a subcutaneous injection. The good news is that after a year of fighting they wrote it off and I paid nothing. But it took about 100 hours of calls, letters, and threats. Patients should not have to go through this.
I blame the regulators. I blame the insurance company. But most of all, I blame Stanford Hospital. They should have their non-profit status revoked, because in fact, they are one of the most profitable hospitals in the country.
At least in my case it never went to collections or hit my credit report. This was 5 years ago, I guess it's never too late for them to try. Makes me wish I recorded the call when I finally was told they were crediting the bill.
I'm also on dialysis so use them a lot. However they set it up to exclude copay for 1 visit and blood draw per month. So my OOP costs are pretty low despite my health situation.
It's like the prisoners strategy game ... except they are not prisoners - the are the wardens and we are the prisoners.
All they have to do is 'not compete against each other' and just play the 'price game'.
People love Musk and Bezos for their little boy rocket experiments, sure I'm glad they're doing it, but that's easy, it's so aspirational anyone would want to do it. They're doing what NASA can't seem to do - great.
You know who'd have actual big balls?
A billionaire that took on Healthcare and started putting insurance companies out of business, started scaring the crap out of fraudulent hospitals etc..
Who started class-action lawsuits against hospitals for lack of clarity in billing etc..
I would actually respect Wallmart or Amazon if they got into the healthcare business - both of them exist to wipe out costs in the value chain as a natural modus operandi, they might have the power to do it.
Doctors, nurses - even if they are removed from it - they are essentially corrupt and responsible - they cannot wash their hands of it.
This is a deep, deep social problem in the US - far bigger than many of stupid things they talk about in the press.
It's probably bigger than prison reform, policing issues, privacy etc..
It might be the #1 social problem in the US given how many people it affects (basically everyone), and the vast sums in involved.
50% of bankruptcies are due to medical bills.
In 100 years I think they will look upon this period as Dickensian.
I think free markets are important but I'm not sure if any of this is free market at all ...
For reference, I worked in a large medical billing office for years.
It's not a free market, it's the opposite. Completely socialized, just in a very round about way.
Medicare pays roughly 10% of any bill that's charged. It's a flat rate now (but remains about 10% of what insured people pay). Essentially anyone with insurance is "taxed" by having to pay 100% (then negotiated down by the insurance companies). You legally cannot not have insurance, if you make over a threshold (in part due to Obamacare), which has made the issue worse.
The above combined with the inability to see prices beforehand and the way the U.S. foots the bill for the worlds medical research has made it pretty insane.
IMO the ideal solution is to make insurance illegal. Hospitals then need to manage the cost and risk of running procedures. Yes, this means some people get worse treatment, however -- they also only get paid if you live and are happy. The incentives are then aligned, and the hospital manages the risk so better hospitals stay in business longer.
There may be some middle ground there, but having worked in the industry, it's the only "good" solution I see.
No, unless words lost all meaning the US health system is far from socialized, it would be if the cost structure was under government control, it's quite the opposite, for-profit insurers and healthcare providers set their rates as they please. Medicare maybe makes it subsidized, not socialized.
> having worked in the industry, it's the only "good" solution I see
Well, that's quite surprising for a professional to not know that there is a whole bunch of countries that do things quite differently (actual socialized healthcare) and that don't have anywhere close to this sort of problems (See: Europe).
So we still want insurance.
But we need a way to make it more competitive.
Ultimately - even with insurance - the 'price comes home' - and most of us are very price sensitive.
If we had to pay for plans out of pocket ... and they were different prices with transparent points ... we'd see competition.
Also as you say hospitals have to be fully transparent about stuff.
If someone working on your car can bill you for labour and materials, so can doctors. This 'billing problem' is BS.
For example - hospitals should just provide many things as complementary, i.e. just part of the stay in the 'grand hotel'.
Regular doctors + nurses time should just be part of the deal, you only pay extra for surgery time.
Inexpensive things like x-rays should be part of the daily rate, not a specific charge.
Can you imagine if the hotel charged you for every coffee creamer? My god.
"Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss"
Insurance should never be used for something CERTAIN and inelastic such as healthcare. For specific health risks, sure, but for standard care? It makes absolutely no sense.
I don't know how the U.S. can fix its healthcare crisis, but it's an absolute disaster. Other countries don't have 48k allergy tests.
Huh?
I wonder what percentage of those are people who could have negotiated their medical bills down further, but either were unaware of that fact, or had too high a Conscientiousness trait to think of "imposing" on the hospital that way.
That's apprehension, fear, excessive humility.
It's actually conscientious to negotiate a fair price.
In any event, it was beyond their means - and there's no reason for it in most cases.
I meant to refer to the Big-5 trait of "Agreeableness." Emphasis mine:
> [Agreeableness is the] tendency to be compassionate and cooperative rather than suspicious and antagonistic towards others. It is also a measure of one's trusting and helpful nature, and whether a person is generally well-tempered or not. High agreeableness is often seen as naive or submissive. Low agreeableness personalities are often competitive or challenging people, which can be seen as argumentative or untrustworthy.
Physicians, Pharmacists, pharma companies, hospitals, insurance companies, and pharmacies are the corrupt ones. Source:
https://www.opensecrets.org/lobby/top.php?indexType=s
These groups are lobbying the government to establish monoplies.
The previously mentioned practices are not paid anywhere similar to the ones lobbying/bribing.
If Doctors guild's wanted this changed, they could. They have immense power.
The problem might be that nobody knows what the answer should be: it may not be socialized medicine.
But some basic things like price transparency, 'one price for all' (i.e. have to charge everyone the same price), requiring people to be informed ahead of time of the costs etc. might help.
48329.00 nominal bill
14480.20 R == ~30% of nominal bill
11376.47 ~80% of R - negotiated rate Anthem paid
3103.73 ~20% of R - billed to patient
1561.86 patient paid, negotiated
So, the patient paid 3.23% - or about 50% of 20% of 30%.
Imagine if other businesses charged like this.
Imagine going into a restaurant, or a furniture store, or an auto mechanic, and being told "It's not expensive" without a specific price, and then finding out that the bill is supposedly 30x your typical expected monthly cost. Whoops, no, 10x. Oh, really 2x. Okay, 1x.
If a billing process like this happened to a character in a movie viewers would describe it as farcical or unrealistic. But many people in the US accept it as normal.
How did we get here? More importantly, how to we get to something better?
All the rest is a hand-wavy misdirection. Is it even possible to know if, after all the shells stop moving, the insurance company really "paid" anything like they said they did? Or was the real cost of service the 1500 and everything else just expensive theater funded by the insurance "premium"?
1. Spend 80-85% of premiums on medical spending (with a loophole that "quality improvement" initiatives count). That leaves 15-20% for overhead and profit.
2. Rebate you any excess they collect if they don't meet that medical spending requirement[2].
3. Justify large rate increases.
The insurance company really does pay those costs, rather than playing theater. They have absolutely no incentive whatsoever to limit inflated passthrough costs, and every incentive to justify as high of passthrough to providers as possible. Any attempt at cost control above the bare minimum will result in cannibalizing their own profit potential, because they're not allowed to keep that improvement. And the more inflated the passthrough costs, the more they can justify large rate increases (which then increases the absolute size of the 20% they're allowed for non-medical spending).
But wait. Only their health insurance arm is subject to such profit capping. Now that "market rate" for various intermediate services has been established at such an excessive level within the environment of payers having no incentive to reign in costs, they can gobble up some of those middlemen and reap the benefit of those crazy profit margins. Because their insurance arm is complying with their 20% overhead mandate, but their newly acquired PBM has no such mandate on profit[3]. That way the profit transfer from one internal entity with a statutory profit limit to another without one is seen as kosher and not a run-around.
So it is theater, in a sense. But it only works because it didn't start out as theater. They had to truly passthrough costs and get acceptable and normal market rates established, then start gobbling up the intermediaries in the value chain that they fattened up. If they hadn't done that, it would have looked like self-dealing from the outset and never would have been successful. Whereas now they're able to hand-wave it through regulatory approval with vague promises of efficiencies.
[1] https://www.healthcare.gov/health-care-law-protections/rate-...
[2] Individual plans rebate to the individual. Group/Employer plans rebate to the employer, and don't have to pass it through to the employee if they can think of a way to "apply the rebate in a way that benefits employees".
[3] https://www.hallrender.com/2018/03/16/the-wave-of-pbm-and-in...
I think having a common healthcare system where individuals are not soley responsible for their own healthcare is a good system, as it shows solidarity to all and prevents "us vs them" arguments.
I pay about $10 per month for a national health insurance for my whole family (I pay much more, but most of that is deductible from income tax - so when I calculated how much money would I have if I wouldn't pay this, it was $10).
As my wife is sick, she needed some special treatment. For the first days in hospital she got antibiotics, 4 times a day, $300 per injection. I payed nothing. Then she got some more drugs, sometimes a box for 5 days was worth about $3k - I payed nothing.
When our kids were born and spent the first 6 weeks in hospital on an ICU, the cost was about $150 - I payed nothing. When they had to get a special medicine for $4k - I payed nothing.
And yes, my taxes are a little bit higher than in US, but come on, I'd go bankrupt if I had to pay for all that. Or rather: I wouldn't pay, I'd live on street, and we would be dead now.
At my previous job, I paid $1100(!!!) per month for health insurance out of pocket.
Note that these numbers are family rates, not individual.
It seems doubtful this family man would move to the US and immediately become a homeless, mentally ill victim of police violence.
Everyone agrees the US has plenty of issues (and there's plenty of homeless in Europe too), but you're replying to someone mentioning his personal reasons and telling him a laundry list of other issues that America has.
And I've been to middle-of-nowhere, USA and have family there so I know it's not a bed of roses, but you also don't fully realize how good you have it in many other ways.
Hospitals are terrible at it. Even if you asked the hospital, how much does it cost to take an x-ray? Personnel, capital costs, material costs, everything. Most hospitals couldn’t tell you.
They tend to measure based on service lines. “Our stroke unit is profitable”.
Beyond that, they are pretty hopeless from what I’ve seen.
the healthcare system in the US seems like total chaos to me.
If you asked a Vision Correction clinic or cost metic surgery clinic the same question, I’m sure they could give you an exact answer.
Simpler business model albeit.
Well, yes; in countries with public healthcare, there's still stuff that your coverage doesn't pay for (e.g. voluntary stuff like removing a mole.)
But that uncovered stuff, in those other countries, still tends to be far less expensive than the equivalent service costs at even private "cash only" clinics in the US.
Which is the more reasonable explanation?
A hospital does not tell a patient the cost of an x-ray upfront because:
a) the hospital is terrible at accounting OR
b) the hospital makes a higher profit by withholding or obscuring that information until after the procedure.
Getting estimates of cost for medical procedures is surprisingly difficult and expensive. It takes many people many hours of work to figure out how much a specific set of procedures costs. Bureaucracy also makes the job far harder than it should be, but "moving fast and breaking things" can lead to people dying, so it's understandable why hospitals don't tend to be innovative enterprises. There is value in it, but at the same time hospitals don't have much incentive to lower costs. My job probably only exists because medicare/medicaid bundled payment schemes are finally forcing hospitals to look at costs.
Basically, it's both A and B.
Those guys are typically salaried, and that's likely one unknown.
Another one is the legislatively imposed obligation that they provide [expensive] ER services to anyone who walks in regardless of insurance coverage requiring the hospital to potentially eat up the cost.
Being on the hook for 5000 worth of care would have been a tremendous burden where as whatever I was on the hook for (maybe a fifth of that? Maybe less?) was not so much.
There's also differences in fee scheduling which makes a huge difference. For instance if you're on a medicaid fee schedule they tend to charge less for a lot of things making it a lot more difficult to ever hit your deductible putting you on the hook for more charges over time. If you're on a standard fee schedule you'll hit your deductible faster.
It's all incredibly confusing in the end and very hard to figure out and most people don't until something happens and then it's "oh shit I'm getting fucked aren't I?".
Not a great system, and pretty pathetic for the richest country in the world to bring so much hardship (as noted, something like 50% of bankruptcies are due to healthcare costs) upon it's citizens in times when they're probably already in some of the most stressful situations of their lives.
...trying to get re-elected. Every action they take is with that singular goal in mind.
$201B last year, from one insurance company alone. That's how much money flows through just ONE healthcare insurance carrier in the US. JUST ONE.
For the technical crowd out here, Amazon did $177B last year in sales. Americans are spending more money on healthcare insurance on the largest healthcare insurer than they spend on retail from the largest retailer in the US.
The difference?
Amazon:
- I can freely decide to use them or not. I'm not penalized if I don't
- I know exactly how much something is going to cost and can shop around online (at competitors even)
UHC:
- If I chose a doctor out of network, I get penalized
- I have no idea what the pricing is and it can change at any moments notice
> Winston's health insurer, Anthem Blue Cross, paid Stanford a negotiated rate of $11,376.47.
> She made the argument that her doctor had told her the cost per allergen would be about $100
$48K is some phony list price that doesn't matter.
Maybe that's higher than it should be, based on the comparison to averages and medicare, but I don't see where the shock comes from, as she (+insurance) was billed 99% of what her doctor told her it would cost.
It does matter, though. These high list prices sacrifice the uninsured for larger chips at the insurance negotiation table. The uninsured don't have anyone negotiating rates for them so they end up paying the list price (or going bankrupt instead).
And here we have one of the biggest problems with the American health care system: a) no one knows the cost of anything (except insurers), b) customers feel no need to be cost-conscious.
They tested her for 119 allergens, but from her symptoms they could probably have cut that way down, and tried an iterative process (trial and error) that should have cost much much less. But the patient "wasn't too worried" because the insurer "always had been reliable".
If we went back to old-style insurance (think Blue Cross & Blue Shield), you know, you pay 100% until deductibles are met, then they pay 80% and you pay 20% up to some cut-off after which they cover 100% up to some large max... then patients would become cost-conscious. Doctors (or their assistants) would have to be able to quote prices on the spot. All the per-network variation in prices would be reduced or eliminated. Patients would be able to negotiate prices with doctors!!
Imagine that, people negotiating prices. In a world where no one feels the need to negotiate, no one knows how to negotiate, and no one bothers to negotiate, and so when costs mount all we know how to do is complain.
A free market needs pricing signals. The American health care market lacks pricing signals. The American health care market isn't functioning very well like a free market. Indeed, there's a ton of regulation too that, along with the HMO/PPO/everything-but-traditional-insurance system serves to increase costs and hide this from the consumer until it is too late.
The most sensible reforms at this point would be those that make the system more transparent to the consumer before they consume.
On top of all this we have tremendous protectionism:
- it's too hard to become a doctor
- it's too hard to build new hospitals (you need a
"certificate of need" -- did you know about that
bit of protectionism??)
- FDA regulation makes generics manufacturing really
difficult (my father tells me how he can't sell
chemicals to generics manufactures even at 25% of
what they pay someone else because the regulatory
cost of switching sources is so high)
EDIT: Let's not overlook, either, the conflict of interest that the doctor in this (and every case) had! The practitioner in this case ordered practically every test without quoting the customer a price, thus ensuring a bigger payday for themselves. Sure, they said it might be expensive, and sure, the customer acquiesced without inquiring further, but the practitioner almost certainly didn't care whether the customer could afford this, and they didn't know the final price either. This conflict is unavoidable, naturally, but that doesn't mean that we cannot deal with it reasonably. Doctors should absolutely be required to quote prices to their customers prior to performing procedures or ordering tests, and generics substitution should always be permitted.
Why do we do this? (I'm just as guilty as anyone, btw, not calling out you specifically.)
Why do we acknowledge that the system is totally broken, then shrug and say, "Medical prices sure are weird, nothing we can do."
It seems pretty rare to see the conversation turn towards, "It was only 3k after everything, but the original prices were way out of line with what they should have been. We should really try to fix that."
It continues because 1) Having absurd prices is not illegal. Of course absurd prices are usually self-correcting. 2) It's politically infeasible to fix this because it means "someone" (aka the government) has to mandate what the prices should be.
I hope it's clear that I'm not choosing a side here, I'm simply discussing your question - why do we do that?