Show HN: We structured and compared hospital chargemaster prices
pricemed.org
pricemed.org
Huge swaths of "money" in the medical industry are the result of paper pushing, pure and simple. No one is spending their own money, or even really "real" money: the doctor's bill will say something outrageous for the cash price, because they know the insurers will demand a large reduction, and even though they write "$40,000" for something, they don't actually expect anyone to pay that directly. They expect you to either call and get a "cash payment discount", i.e., something close to what they charge insurance companies (which is still really high, because insurance companies aren't spending "real" money either), or to use your insurer to "pay" the bill.
Remove the lecherous middle-men who do nothing but shuffle numbers around and we can start making progress on medical pricing. This is not the ONLY cause of high costs, but it is easily the largest and most perverse problem point, because this type of billing completely destroys all conventional rules of supply and demand.
Interestingly, the Affordable Care Act does the opposite of this, and strengthens the lecherous middle-men to the point that it will be illegal not to give them money (the government will forcibly take the money from you in the form of a "tax penalty" if you do not voluntary sign up for "medical insurance").
So, the people that need to use it are always going to be a small group. The people that don't have it, another group. The people getting screwed (on the sharp end) are the subset of those where there is overlap. This will always be a small number (by math).
That being said, for everyone is paying into the system but its more death by thousand cuts. As long as pricing is opaque and uncorrleated with out-of-pocket marginal payments, there will be a problem. The cleaner solution is simply to remove the facade of pricing a-la-carte services.
The problem there, is two fold: (1) how to control the inevitable buracracy with a huge budget making life or death decisions; and (2) how to incentivise research and science/product development without the cash cow of monopoly pricing (patents are useless if selling is illegal).
While these problems seem to be solvable, they are daunting and not simple. In a world where the NSA is spying on every electronic communication over the internet, perhaps even more so. Ie, a world where privacy and trust is being undermined by those seeking to entrench their own power. Its harder poltically to delegate more responsibility to the "government".
We should start by saying that insurance is often considered a perverse industry because their incentives are inverted. Normal businesses make money by providing a product or service to clients, and the incentives are therefore aligned. Insurance makes money by explicitly NOT providing a product or service in exchange for your money; if they have to give you the thing you've paid for, they are less profitable. The more frequent claims against a particular insurer are, the more incentive they have to make things difficult, because some people will ultimately give up and that'll be one less (or lessened) payout that the company must supply. As medical insurance policies will likely have several claims per policy per year, they have an incentive to be the worst type of insurance.
Most people with home insurance will never use it, because their house is not likely to get robbed, or catch on fire, or encounter even more esoteric occurrences. Considering the multi-hundred-thousand dollar investment most people have in their homes, a nominal fee of a few hundred bucks per year is entirely reasonable to protect that asset.
The opposite is true of medicine. Most people will get medicine sometime, and it's not uncommon to need access to medicine several times per year (even excluding the chronically ill). Even car insurance will often go several years without being used, but not medical, especially not if you have a policy that covers multiple people (policy holder + spouse + dependents).
Insurance simply does not work for services that are commonly required, and that's what it boils down. There is a major feeding frenzy operating on the backs of the nation's health, and everyone is pointing the finger at the other entity, and again, there's more to it than just insurance, but insurance is now and always will be the most major cause of problems in this industry. The only way to bring it back to sanity is to expose it to true market forces; the clientele must spend their own money to receive medical services, and therefore medical providers must set prices within an affordable range or go out of business. The leeches who do nothing but sit there and push paper must be removed, plain and simple. No amount of whining about how it will put some people out of work, etc., can be tolerated on this. The fact is that insurance is a very, very bad thing to have so deeply ingrained in our medical system, and we won't see major improvement until those people go away.
Other countries have band-aided it by saying "OK, I see meidicine 'costs' inordinate amounts of money, we'll just write what is effectively a blank check to the industry", but that's not how we should do it in America. We must accept that market forces must dictate the prices, that hospitals the size of universities are probably not plausible, and that the whole industry must be brought back down to earth. The industry is obviously not going to like that, but it must be done. We need some ballsy politicians who can make it happen.
The flaw / issue with this, is that sick people are in no position to negotiate. People that are sick are desperate for the drugs. People that are not sick dont really need them. that is ill suited to the simplification required of econ 101. In econ 101 you want the price to converge to the marginal cost of supply, not converging to the marginal amount of residual equity / net worth of the patient's bank account (that's the hold up problem: give me all your money or you die). Imagine if you had to negotiate the price of a fire-department visit with your house burnging? Its just not a service that is ever going to fit the framework (in particular, the behaviour assumption of non-opportunim) of the typical econ 101 course.
That being said, I agree with your analysis of the insurance model when applied to "scheduled maintenance" type services. Opaque pricing and a culture of witholding service is particulary innappropriate here. Assuming that chronic and life-threatening services are another matter, that still leaves the issue of everything in-between. The issue there is that there are life-style type elective surgeries and treatments that some may want access too (the rich) but not be willing to subsidze for others (the poor). So there is a basic triage of the types of health care, and they all need to be thought through from a sociological perspective as well as just an economic and medical/technical one.
Who will be the primary users of this information? It seems that insurers already are aware of chargemaster prices and ignore them since they're going to be bargained away.
Employers seem not to care to dig into how much their insurers are paying (employers just care what premium they'll have to pay).
Finally, it seems like consumers can't really use this data since they're pretty much locked into their plans anyways and will go wherever is most convenient.
Now given changing consumer behavior, I could see consumers maybe using this so they have to pay less of a deductible, I could also see insurers working with consumers to steer them to the best prices - saving both the insurer and the consumer money. However, this will require overcoming consumer attachments to preferred providers (a challenge for older adults, not so much so for younger ones who often don't have a relationship with a doctor). It can be how surprising how quickly people can overcome sentimental attachments when their money is on the line though, so who knows.
Some other links to more info are at the footer of the page. There was an interesting US Senate hearing with Steven Brill, the author of the Time article.
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At the top of the page, the search boxes are mis-aligned to the text above them. Fix that. They could also take up more horizontal space, or simply be aligned better.
Add an extra ~3-10px of horizontal padding to table cells (td's) Table headings should be text-align: center except for the longest field (hospital). Also, vertical-align: middle on table headings.
Link color on the tables could also be darker.
Add left-margin/padding on the (?) question mark icon at the top right of fields.
Font size on the search drop downs could be bigger.
May want to try the font "Open Sans", too, on the tables.
Add a hover effect for all links and buttons. It's kind of nuts that you could overlook that.
Add a focus effect for all inputs. Also make input font color brighter, and on focus, make font color darker.
On the "worst hospitals" table, the percentages could use a + sign before them like "+97%".
That guy was on a mission, and his mission wasn't to improve public health. If his mission was that he would have listed the other important metrics. He knows all about them, he is a physician, after all. This sort of dishonesty I cannot stand.
One thing - the google map always sets California as the state, even when I look at hospitals in other states.
To really make buying decisions for your own health care procedures, you would want user reviews in addition to prices, just like you see on every online storefront.
outside of California, the data from a release by Medicare: http://www.cms.gov/Research-Statistics-Data-and-Systems/Stat...
We've also indexed the Medicare DRGs which are a more accurate predictor. Eventually we'd like to index Paid Claims data for insurance companies, which are what actually gets paid.
The prices are all over the map in general, beyond just the chargemaster prices.
But since many actual prices are determined as a percentage of the chargemaster, the provider with the lowest chargemaster price is likely to have the lowest actual price.
Directionally correct data is better than no data? no?
[1] http://www.nytimes.com/2013/05/17/business/bayonne-medical-c...
And I don't think the chargemaster price is even correlated with the final price, so it's not even useful as a relative measure.
I wish it was a real price though - maybe this site could push hospitals that way. But I doubt it because the reason hospitals are able to afford Medicare prices is only because they overcharge the rest, and the prices are made opaque specifically so that that people do not complain about that.
The only way to make transparent healthcare prices is to raise medicare prices so that everyone pays the same, but that'll never happen. So what happens is that insured people pay an extra premium to help out the rest.
Airlines do the same thing, and they too have very convoluted hard to understand prices.
As I see it, there are basically two separate ways to make healthcare work -- expose consumers to prices AND give them the tools to make decisions (with subsidies, etc. if we want to let poor people consume more health care than other things, as a matter of policy; I don't think that's an economic argument), or have an external entity with the correct incentives acting on the consumer's behalf. Medicare seems to mostly work on the latter model.
It's clearly possible to screw up both ways, but an even surer way to screw up is to do neither/both-partially.
Ending employer deduction for healthcare (and/or making it deductible for individuals) would be a huge step, too (in either model). I see no actual upside to employers paying for health care vs. individuals or the state at all.
And stuff like charities to help certain classes of people (poor kids who would benefit from a $300-5000 operation once, like Watsi, seems like a better use of charity money than an 80 year old guy living one extra day) seem like absolute good, too.
I have noticed a lot of doctors refusing to take medi-cal (Medicaid) and some other doctors who won't take any Medicare and some who won't take insurance at all, but these tend to be specialists and not hospitals.
That's simply not true. Medicare prices are explicitly designed to cover costs, based off of collected data and input from the self-interested American Medical Association[1]. They almost carte blanche accept the AMA at their word, and I doubt the doctors at the AMA are shooting themselves in the foot (although they appear to be backstabbing under-represented GPs). What Medicare doesn't do is pay excessively, so poorly ran facilities may go red. One of the motivations behind incentivizing (and soon requiring) electronic health records is the ability it gives Medicare to objectively analyze this information, rather than taking the doctor's subjective assessment.
What does inflate private insurance rates is unnecessary market saturation, where hospitals are expanding to capture patients from competitors and lowering per-hospital utilization in the process. Particularly an issue with non-profits, which have little other recourse to spend their profits on except higher salaries and facility expansion. The other main reason for higher insurance rates is bad debt, which is the percentage of care hospitals write-off because they don't expect to recoup the charges[2]. Since Medicare payments are supposedly break even, this is almost solely absorbed by private insurance. That's one of the reasons hospitals are for Obamacare, because there will be fewer uninsured and hence less write offs; yet, current reimbursement contracts account for that bad debt already, so they're going to get a lovely profit boost until the payors correct the imbalance.
Anecdotely, revenue cycle departments (that collect payments) love Medicare, because it just pays. Private insurers dispute everything and threaten to pass the bill directly to patients, which the hospital knows will never get paid because the member expects their insurance to take care of it.
[1] http://www.washingtonpost.com/business/economy/how-a-secreti...
[2] http://www.acainternational.org/products-health-care-collect...
It's not just Medicare. It's insurance in general, and the arms race to try to get paid the same amount (adjusted for inflation) for the same procedure, over time.
So, suppose you get a really nasty cut that needs stitches, and you go to a clinic, and get that done. And suppose that the clinic adds up all the costs -- medical supplies, nurse time, doctor time, facilities (which includes everything from rent to keeping the lights on), time to process the bill through your insurance company, everything, and decide that $100 covers it, so they send a bill for $100 for "suturing" (the stitches to close up your cut). Your insurance company pays, everybody's happy.
Fast forward a few years. Little bit of inflation has happened, so maybe now the clinic needs to make $102. But the insurance company has used the leverage of its network system to get the clinic to accept a lower rate -- they can threaten to stop sending patients to the clinic if the clinic won't agree. And now the "suturing" billing code only pays $90.
So some clever person at the clinic comes up with an idea: instead of billing "suturing" for $102 and getting $90, they can bill for "antiseptic gel" at $20 and get paid $12, and bill for "suturing" at $100 and get paid $90, which means the clinic gets the $102, but now on a total bill of $120.
Fast forward a few more years. Now inflation has resulted in the clinic needing to make $105, but the insurance pays even less now. So now it's billed as "suturing" at $100 (paying $80), plus "antiseptic gel" at $20 (paying $8), plus "cotton swabs" (to soak up the blood) at $30 (paying $17). The clinic gets the $105 to cover its costs, but now the initial bill comes in at $150.
It does not take a terribly long time for this arms race to turn treatment of a simple cut into a gigantic laundry list of services, materials, personnel and facilities, at a total initial bill that might run into the thousands of dollars, just to get, say, $110 out of the insurance company.
And that is basically what has been happening in the US. When you see one of those "shocking" hospital bills for something that seems simple, what you're seeing is the result of the arms race between the medical billing arm of the hospital and the insurance company, which will have dozens or possibly hundreds of items on the bill, all at prices well above what the hospital expects to get, but calculated so that the eventual insurance payment will cover the actual cost.
If the situation was as you described it, the costs for insurance would have been going up, but not at the levels/rates that have actually occurred.
I suggest you read the article. Is is an incredibly well written, balanced, and well sourced piece of journalism. It is also a long and engrossing read.
FYI, the negotiated Medicare rates are actually designed to make sure that hospitals MORE than make up their costs of doing business.