Tuesday, February 26, 2013

"The Best Health Care System In The World"

Hullabaloo's David Atkins links to this Time magazine article about what he identifies as "the appallingly inefficient and immoral U.S. healthcare system.  He concludes

Be sure to read the whole article, of which this section is but a small excerpt. The essence of the problem is that our nation's long-term deficit problem is largely a healthcare problem. And the healthcare problem is that insurance companies and providers are bizarrely overcompensated in a seller's market without the buying power of a national single-payer system.

If the so-called deficit hawks truly cared about our nation's finances they would work to institute a Medicare-for-all system that brings per capita costs in line with those of other countries. But, of course, we all know that the Very Serious People don't really care about the deficit. They care about slashing earned benefits for the middle class as a moral crusade against "government dependency." The nation's finances and well-being are beside the point.

It's not surprising that roughly 60% of personal bankruptcies in the USA are due primarily to medical costs.  Costs are so beyond the pale that even if an individual is insured, he or she may be left holding the figurative bag.  Times' Steven Brill describes the plight of Steve H., who went to a hospital in Oklahoma and was charged for an implantable device called a

Medtronic stimulator, and that’s where most of Mercy’s profit was collected during his brief visit. The bill for that was $49,237.

According to the chief financial officer of another hospital, the wholesale list price of the Medtronic stimulator is “about $19,000.” Because Mercy is part of a major hospital chain, it might pay 5% to 15% less than that. Even assuming Mercy paid $19,000, it would make more than $30,000 selling it to Steve H., a profit margin of more than 150%. To the extent that I found any consistency among hospital chargemaster practices, this is one of them: hospitals routinely seem to charge 21⁄2 times what these expensive implantable devices cost them, which produces that 150% profit margin.

As Steve H. found out when he got his bill, he had exceeded the $45,000 that was left on his insurance policy’s annual payout limit just with the neurostimulator. And his total bill was $86,951. After his insurance paid that first $45,000, he still owed more than $40,000, not counting doctors’ bills. (I did not see Steve H.’s doctors’ bills.)

Another of the 1,937 reasons only a single-payer system, such as Medicare-for-all, can substantially improve upon the nation's pay-for-fee system is illustrated as Brill explains

The chargemaster, I learned, is every hospital’s internal price list. Decades ago it was a document the size of a phone book; now it’s a massive computer file, thousands of items long, maintained by every hospital.

Stamford Hospital’s chargemaster assigns prices to everything, including Janice S.’s blood tests. It would seem to be an important document. However, I quickly found that although every hospital has a chargemaster, officials treat it as if it were an eccentric uncle living in the attic. Whenever I asked, they deflected all conversation away from it. They even argued that it is irrelevant. I soon found that they have good reason to hope that outsiders pay no attention to the chargemaster or the process that produces it. For there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills...

No hospital’s chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective — like cost — that any hospital executive I spoke with was able to explain. “They were set in cement a long time ago and just keep going up almost automatically,” says one hospital chief financial officer with a shrug.

At Stamford Hospital I got the first of many brush-offs when I asked about the chargemaster rates on Janice S.’s bill. “Those are not our real rates,” protested hospital spokesman Orstad when I asked him to make hospital CEO Brian Grissler available to explain Janice S.’s bill, in particular the blood-test charges. “It’s a list we use internally in certain cases, but most people never pay those prices. I doubt that Brian [Grissler] has even seen the list in years. So I’m not sure why you care.”

Orstad also refused to comment on any of the specifics in Janice S.’s bill, including the seemingly inflated charges for all the lab work. “I’ve told you I don’t think a bill like this is relevant,” he explained. “Very few people actually pay those rates.”

But Janice S. was asked to pay them. Moreover, the chargemaster rates are relevant, even for those unlike her who have insurance. Insurers with the most leverage, because they have the most customers to offer a hospital that needs patients, will try to negotiate prices 30% to 50% above the Medicare rates rather than discounts off the sky-high chargemaster rates. But insurers are increasingly losing leverage because hospitals are consolidating by buying doctors’ practices and even rival hospitals. In that situation — in which the insurer needs the hospital more than the hospital needs the insurer — the pricing negotiation will be over discounts that work down from the chargemaster prices rather than up from what Medicare would pay. Getting a 50% or even 60% discount off the chargemaster price of an item that costs $13 and lists for $199.50 is still no bargain. “We hate to negotiate off of the chargemaster, but we have to do it a lot now,” says Edward Wardell, a lawyer for the giant health-insurance provider Aetna Inc.

That so few consumers seem to be aware of the chargemaster demonstrates how well the health care industry has steered the debate from why bills are so high to who should pay them.

As Brill suggests, Medicare pays less than insurance companies which pay less than individuals, who in the exceedingly unlikely event they are aware of the chargemaster, still would have less bargaining power than even insurance companies. That leaves the wealthy with an advantage over the rest of us in this fee-for-service process.  Brill adds

To the extent that they defend the chargemaster rates at all, the defense that hospital executives offer has to do with charity. As John Gunn, chief operating officer of Sloan-Kettering, puts it, “We charge those rates so that when we get paid by a [wealthy] uninsured person from overseas, it allows us to serve the poor.”

A closer look at hospital finance suggests two holes in that argument. First, while Sloan-Kettering does have an aggressive financial-assistance program (something Stamford Hospital lacks), at most hospitals it’s not a Saudi sheik but the almost poor — those who don’t qualify for Medicaid and don’t have insurance — who are most often asked to pay those exorbitant chargemaster prices. Second, there is the jaw-dropping difference between those list prices and the hospitals’ costs, which enables these ostensibly nonprofit institutions to produce high profits even after all the discounts.

The "Saudi sheik" has more leverage in negotiations than do people of modest, or even somewhat affluent, means.    Fortunately, there is a "growing cottage industry" of

medical-billing advocates. They help people read and understand their bills and try to reduce them. “The hospitals all know the bills are fiction, or at least only a place to start the discussion, so you bargain with them,” says Katalin Goencz, a former appeals coordinator in a hospital billing department who negotiated Janice S.’s bills from a home office in Stamford.

Goencz is part of a trade group called the Alliance of Claim Assistant Professionals, which has about 40 members across the country. Another group, Medical Billing Advocates of America, has about 50 members. Each advocate seems to handle 40 to 70 cases a year for the uninsured and those disputing insurance claims. That would be about 5,000 patients a year out of what must be tens of millions of Americans facing these issues — which may help explain why 60% of the personal bankruptcy filings each year are related to medical bills.

“I can pretty much always get it down 30% to 50% simply by saying the patient is ready to pay but will not pay $300 for a blood test or an X-ray,” says Goencz. “They hand out blood tests and X-rays in hospitals like bottled water, and they know it.”

Still, some hospitals will not compromise on their chargemaster's bill.  Even when they do, Goencz (who charges $97 an hour for the phone calls she makes) and others in the profession typically will be unable to negotiate the bill down to the fees Medicare pays. Brill remarks

It’s not a great deal to pay off $1,000 for a four-mile ambulance ride on the layaway plan or receive a 50% discount on a $199.50 blood test that should cost $15, nor is getting half off on a $7,997.54 stress test that was probably all profit and may not have been necessary. But, says Goencz, “I don’t go over it line by line. I just go for a deal. The patient usually is shocked by the bill, doesn’t understand any of the language and has bill collectors all over her by the time they call me. So they’re grateful. Why give them heartache by telling them they still paid too much for some test or pill?”

So there is a flagrantly exorbitant bill based upon fees which vary from provider to provider and are typically without merit.   Individuals in the know- and sufficiently assertive- can negotiate with hospitals, usually to little or no avail.  Those few who are aware of billing advocates can hire them, but may be stymied in their efforts to lower the bill.  If (as is usually the case) they are successful, the patient still will probably be required to pay more than Medicare or Medicaid would pay for similar services.

The late Paul Harvey would end his commentaries with the simplistic "and now you know the rest of the story."   Similarly, during (and after) the debate over the Affordable Care Act, the right tossed around charges of "government health care" intruding upon "the best health care system in the world" with government" coming between you and your doctor."  After reading the Time article, you may not know the rest of the story, but like myself, you will be especially impressed with the skill conservative propagandists have demonstrated in demonizing health care reform.

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