The schizophrenic make-up of American health care showed itself once again with my wife’s recent appendectomy.
The medical half of the equation was performed brilliantly. The care was empathetic. The outcome was excellent. Even the coordination of care between the 20 or so professionals was relatively seamless. The latter is seldom the case in purportedly “integrated” delivery systems, but this time all the players were on the same page.
But the economic side of the treatment was its usual chaotic, expensive self. Dr. Jekyll was fine; Mr. Hyde was amok.
We never got a bill from the health care system itself. You have to ask to get one, which I will be doing.
We did get an “EOB,” explanation of benefits, from our claims administrator. As is customary, it is somewhat inscrutable. Two executives of our company couldn’t figure it all out.
It shows the “sticker price,” the overall charge, of $27,469. (Two smaller bills trickled in later, equally inscrutable.)
Those sticker prices, as we all have learned, mean little, unless you are unfortunate enough to be uninsured, whereupon you pay that bloated charge.
The discount on the sticker charge was $7496, or 27%. That’s not unusual. Discounts can range from nothing where hospital corporations have a monopoly to 80% where they don’t. It’s chaos when it comes to net pricing, which is also called allowed charge. I call them real prices.
Adding to the opacity was the failure of the EOB to show real prices or discounts for line items, such as the hospital room or operating room services.
Some experts believe the bills and EOBs are intentionally hard to understand and track.
What I do know is this: the appendectomy wasn’t cheap. It cost us $5170 and Serigraph $14,803.
Our personal share was mitigated by the company’s contribution to my Health Reimbursement Account and my Flexible Spending Account. Long and short, it was an expensive three days at St. Joseph’s Hospital near West Bend. The result was good; the price was high.
There are many innovations in the private sector to fix the payment abuses in health care:
• Bundled Prices – One bill for an episode of care. (The EOB showed only one overall discount, so it comes close to that.) For instance, Serigraph has now cut a deal for hip replacements at $28,500 all-in with the Orthopedic Hospital of Wisconsin.
• Reference-Based Pricing – Safeway pays $1250 for a colonoscopy, available at several quality providers, but no more than that. CALPERS, the big California pension and health care fund, pays no more than $30,000 for a joint replacement.
• Retainer Fees – Employers in the private sector now hire or contract for their own primary care doctors at a set annual fee of $1500 to $2000 per member covered.
• Capitation – Some hospital systems have cut deals for a set amount per belly button for a year’s worth of care. They are incented, therefore, to keep people well. The current system generates more profit when people are sick.
• Medicare Plus – Some employers have started paying a set percentage over rock-bottom Medicare prices, like 140%. This caps some of the huge shift of hospital costs from government payers to private payers.
• Cash Only – Some doctors have stopped taking payments from the government or insurers. They take only cash customers to get rid of the chaotic discounts and mountains of paperwork.
There are also companies that audit health care bills for payers, the result of many errors on bills, usually on the high side.
Other emerging models allow consumers to onto a transparency web site and look at the quality ratings of hospitals and their real prices. That enables value-based purchasing. In the near future, you will be able identify the best deal on the web and then click through to order a procedure, just as you do for many other products and services.
There’s a quiet but powerful revolution going on to eliminate the near-fraudulent billing in health care.
No car dealer, mortgage peddler, real estate broker or any other retailer could get away with such camouflaged bills.
