In the WSJ Health Blog:
Hospital Company Sued for Billing Patients When Insurance Doesn’t Pay
Posted by Jacob Goldstein
Say you wind up in the hospital. The hospital bills your insurance, but the insurance company thinks the price is inflated and only pays part of what’s billed. So the hospital decides that you owe the portion your insurance won’t pay.
This is called “balance billing,” and it’s been debated in health-care circles for decades.
That’s also a very insurance-friendly spin. What it actually represents is a company refusing to pay for services already rendered, and deciding unilaterally what they’ll pay. When it’s “Out of network” care, there is no agreement between the service providers and the insurance companies (and, thus, the patients) on what’s paid for at what rate, so just deciding not to pay is a way to use the insured patient as political cover to not pay a bill. Note this never works to the advantage to those actually providing services (hospitals, doctors) but is designed to leave money in the hands of insurance companies.
The insurance companies don’t want balance billing, and it’s not on noble principle, its because enough unhappy customers would cause regulatory changes that would cost them money (like, pay for services already rendered).
I have often wondered why healthcare leaders and legislators allow third party payers to dictate reimbursement rates. I would like to see any of us go into a restaurant, have dinner and than decide to only pay 80% of the bill and walk out, I believe that is called stealing. Somehow payers have been getting away with this for some time just because they don’t like the cost of healthcare services.
Any focus on mitigating healthcare costs needs to be directed at the front end of providing goods and services and not on the back end with payers. That being said, payers should not be dictating reimbursement rates just because they don’t like the price tags. If payers are allowed to continue to drive the fiscal side of healthcare than providers and hospitals as well as other healthcare organizations will cease to exist in the numbers that are required to provide quality care for any community.
I am all for balance billing. However, the health care industry does not have transparent pricing, or pricing that makes sense. Because of that this practice is hard to defend.
It is hard to defend an aspirin that costs 20$ or a CT scan hospital charge of 4000@, etcetera.
The $20 aspirin is similar to the 1970s and 80s $300 hammer the U.S. government was paying for when several issues of fraud waste and abuse came out in the news. Jerry mentions transparency in pricing which is not at all wide spread. Some hospitals do publicly report their pricing structures for tests and certain services but most don’t. I don’t know if price transparency would add much to the equation regarding healthcare consumer choice. It would likely cause a moment of pause for many patients though.
A few months ago NPR ran a story that I commented on with my blog regarding the Japanese healthcare system. I found it interesting that their problem was poor reimbursement for hospitals too, but it was because prices were too low and they – the ministry of health – who regulates ALL prices was going to have to increase the prices of services so hospitals could have improved revenues. An MRI in Japan cost $98.00.
Finally if we want transparency pricing in healthcare lets talk about mark up transparency. How much of a mark up is added by healthcare organizations to products and services?