Insurance Company Consolidation: Anthem, Aetna, Cigna, Humana..et al.

[AcronymAllergy]

I was in the hospital industry for several years, and the $ amounts in the charge master (list of how much each item and procedure costs) are simply made up. I know it sounds like an extreme claim, but it's true. They're made up because the hospital knows nobody will end up paying it. Either insurance and insureds pay contracted amounts which are only a fraction of the charge master amounts, or the uninsured are cut "deals" which hospitals can list in their charitable or another account write offs. And, of course, all of them would adhere to the Medicare DRG requirements. That's why there is so much variation in the article.

I remember reading something similar in a news article perhaps a year ago re: the charge master.

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[Goobernut]

Relatedly, did the article mention if those numbers reflected what was initially billed/charged, or what was actually paid?

My guess is billed. The problem however, is that hospitals often keep this price when someone is private pay. I have even see hospitals refuse to give a cash discount, or refuse to write off more than 30% when in fact they write off more than 50% in some contractual obligations with private companies. Yes, this inflates the cost and that makes things look wonky, but people without insurance still get sent bills for the full amount, no discount. Procedure varies by hospital. Some hospitals will negotiate a self pay discount of 70% off billed price. The university system I work for now, does not.

So I see your valid point about billed vs contractual amount, the problem becomes how they handle self pay.

 

[Goobernut]

I was in the hospital industry for several years, and the $ amounts in the charge master (list of how much each item and procedure costs) are simply made up. I know it sounds like an extreme claim, but it's true. They're made up because the hospital knows nobody will end up paying it. Either insurance and insureds pay contracted amounts which are only a fraction of the charge master amounts, or the uninsured are cut "deals" which hospitals can list in their charitable or another account write offs. And, of course, all of them would adhere to the Medicare DRG requirements. That's why there is so much variation in the article.

When I worked for an east coast hospital system, they actually collected data on how much a procedure would cost to perform. Then charged 300% (I'm not kidding) of that so they would hope to recoup actual cost when dealing with private insurance after discounts (and excluding individual portions -- because recouping payments from people is iffy). After working in hospital billing I've decided the whole thing is Satan. I'm a big proponent of single payer or a national fee schedule (with allowances for locale).

Another interesting fact is that Medicare (in part) figures DRG and other cost allowables based on data collected from military clinics and hospitals.

 

[AcronymAllergy]

My guess is billed. The problem however, is that hospitals often keep this price when someone is private pay. I have even see hospitals refuse to give a cash discount, or refuse to write off more than 30% when in fact they write off more than 50% in some contractual obligations with private companies. Yes, this inflates the cost and that makes things look wonky, but people without insurance still get sent bills for the full amount, no discount. Procedure varies by hospital. Some hospitals will negotiate a self pay discount of 70% off billed price. The university system I work for now, does not.

So I see your valid point about billed vs contractual amount, the problem becomes how they handle self pay.

Yep, this is one of the points I was trying to get at; billed, as you've said, can be very wonky once one factors in contracts with various payors, attempting to recoup for time spent petitioning for payment, adjusting for estimated rates of non-payment (by both companies and patients), etc.

And in the end, the private pay folks almost always seem to end up getting hosed as a result, which means that folks without insurance, who may already primarily consist of a vulnerable population, and who are potentially already hesitant about getting healthcare in the first place as a result, are saddled with huge bills that make them even less likely/able to seek healthcare in the future.

 

[smalltownpsych]

And in the end, the private pay folks almost always seem to end up getting hosed as a result, which means that folks without insurance, who may already primarily consist of a vulnerable population, and who are potentially already hesitant about getting healthcare in the first place as a result, are saddled with huge bills that make them even less likely/able to seek healthcare in the future.

Almost every week we have a suicidal or severely psychotic patients that needs inpatient treatment (or maybe even intensive outpatient if we had such a thing in our community), but decide not to go because they don't want the huge bill that comes with it. Then we have to decide if we should go through the commitment proceedings. It's tough because they are making a pretty rational choice and the state hospital is overflowing too.

 

[WisNeuro]

Long story short, the for profit healthcare has generally been terrible. People who need treatment will forgo it until they are in a crisis, thereby needing more expensive acute care, doctors are pressured to order expensive, unnecessary tests that add no treatment or diagnostic value, etc, etc...

 

[Justanothergrad]

When I worked for an east coast hospital system, they actually collected data on how much a procedure would cost to perform. Then charged 300% (I'm not kidding) of that so they would hope to recoup actual cost when dealing with private insurance after discounts (and excluding individual portions -- because recouping payments from people is iffy). After working in hospital billing I've decided the whole thing is Satan. I'm a big proponent of single payer or a national fee schedule (with allowances for locale).

Another interesting fact is that Medicare (in part) figures DRG and other cost allowables based on data collected from military clinics and hospitals.

In line with your statement is a story.
My dad broke his ankle a couple of years ago. He got surgery for it. They needed to put his ankle in a brace following surgery. The brace, new, is sold retail by the manufacturer for 75 dollars. Anyone can order it off of their website. It was purchased for him through the hospital because of the surgery, and the itemized billing came out a little different. He had to pay 150 for the brace while his insurance paid 100 ($250 total). That was the negotiated rate after the hospital billed the insurance $400 dollars for it and they 'negotiated' down. Yup. I'd say the prices are made up and 'slightly' inflated.

It's not psychology, but its a representive story of a systemtic issue.