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Comment by ericd | Hacker News Reader

We had a call with someone who works on the pricelist/chargemaster for a major metro hospital recently, they set their prices by taking the Medicare reimbursement rate, and multiplying by 8.

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If any other business tried billing people like hospitals and doctors do, people would go to prison.

That’s what i don’t get. A lot of the billing is clearly fraudulent. They routinely bill for treatments that never happened or for drugs that were never given.

At least if it was an inelastic good like health care.

Gas goes up a quarter and elected officials are thrown out of office. $600 for a drop of super glue? Okay then.

That $600 is just monopoly money to the majority of constituents, because they have insurance of some kind or they're on Medicare/Medicaid. So those people are usually, not always, but usually fine.

And that of course is part of the problem. Medical billing is like playing numberwang or who's line is it anyway. No two numbers on a bill seem to be correlated in any way to another except as upper or lower bounds.

When someone without coverage comes in then, they have to play that stupid game with all the numbers, and of course they either ignore it and go into debt, pay the cash price if they're able, or they manage to negotiate it down by orders of magnitude - proving the price didn't matter anyway.

Simple change to next year's Medicare plans: if you accept Medicare you cannot charge any patient more than you charge Medicare.

Simple way to put most hospitals out of business overnight.

Or, more likely, simple way to force hospitals to make drastic cuts to services.

Or Medicare prices rise to be closer to real costs, instead of forcing them to be subsidized by the uninsured.

That was tried during the Clinton administration. Result: many doctors dropped all their Medicare patients, making it impractical for Medicare patients to find a doctor to treat certain conditions.

Then Medicare needs to pay a little more for those specialists.

This is pretty common. Uninsured patients are such a small percentage of revenue (and many aren't going to pay anyway) that hospitals don't put much effort into setting prices. Negotiating with insurers and navigating billing them is a big operation as it is.

Yeah, and there’s the Lesser Of clause in their insurance contracts - they’ll be reimbursed at the lesser of their retail rate and their negotiated rate. So they make their retail rate ridiculously high to make sure it’s never the limiter for insurance payments.

" they set their prices by taking the Medicare reimbursement rate, and multiplying by 8."

lol. Seriously? Well it's a simple system.

I wonder what happens when it's Medicare-for-all. Do they make 1/8 as much all of a sudden?

Hospitals that take a majority Medicare patients go out of business. Medicare patients are subsidized by the rest of a hospital’s patient population.

That’s a common but false talking point. Hospitals with above average Medicare patients generally get paid more than the general population. It’s also a question of what percentage of a nominal bill gets paid vs sent to collections.

Given that it's a common misconception, would you supply some evidence for your position?

Hospitals receive extra payments when they have an unusual number of Medicare patients.

https://www.medicaid.gov/medicaid/finance/dsh/index.html

It’s just another case where the government splits spending across multiple programs.

When they have a disproportionate share of Medicaid, not Medicare patients.

And the added payment isn’t that much.

Generally Medicaid pays below cost. Medicare is reasonable and leaves providers with a small profit (single digit percentage).

Should have been more clear.

From 2015 to 2017 Medicare lowered it’s uncompensated care payments. However, that program covers uncompensated care underpayment. Medicare explicitly does not pay for everything at hospitals: https://www.medicare.gov/coverage/inpatient-hospital-care

That's Medicaid, not Medicare

I didn't know that program existed. Still, I don't see that the existence of the program adds up to your assertion:

> Hospitals with above average Medicare patients generally get paid more than the general population.

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