When there’s no incentive to control costs – a personal anecdote
MCNTalk enjoys hitting its head against a wall; a wall of ignorance, flippant political soundbites, and denial. This article is banal in its lack of new information and its reaffirming what is well known by all – that our system lacks transparency, consumer engagement, and other features that generally help to self-regulate economic behaviors including pricing.
The article does have an additional piece of insight not usually pointed out – that insurance companies have little motivation to control costs, since they are adroit at passing the costs on in the form of premium increases. And perhaps there is an unstated desire on the part of management of these companies to have higher revenues resulting from higher costs, driving higher compensation, higher profits and corporate bragging rights. Who would not prefer to be a 20 billion dollar company than a 10 billion dollar company, if costs double for the same basket of services?
This writer had a recent experience that drove our out of control system home. A family member had a run-in with a raccoon, resulting in a bite one evening. In an abundance of caution, a local ER was visited to assess potential danger and she drove herself there to be seen. The main attention was the cleaning of the wound, as well as rabies immune globulin administration and a dose of rabies vaccine.
Before reading the next paragraph, the reader is invited to guess what the hospital charge was for the visit. Write it down on a piece of paper before proceeding.
The answer is $8,887,75. The “discount” negotiated by the insurance carrier was $4,375.65 or 49%. The doctor service was separate and billed at an undiscounted $235.40. This extraordinary number for the ER visit both before and after the discount was presented to the patient for review and comment. It went straight to the carrier who apparently was unconcerned and sees it as quite normal.
Out of concern and curiosity the itemized bill was requested. Upon receipt and review, I noted that the visit was upcoded by a level to level 4. It should have been a level 2 or level 3.
It was also interesting that one of the medications which should have by weight resulted in 9 units at $629.00 per unit was sold at 10 units for another $629.00. One billed unit was excessive and not clinically appropriate at the weight-based dose guidelines. And the charges for the medications were about 2.5 times that which was paid for subsequent doses bought at a pharmacy ($692.49 vs. about $250.00 for the rabies vaccine dose, of which 3 more were administered after discharge).
Had we not called and requested a copy of the bill from the hospital we would not have known any of these details. The carrier processed an inflated bill without questioning. How many other bills have significant errors and how often are patients or their doctors actually presented with the hospital bills they generate? Was the upcoding an innocent mistake or a deliberate action undertaken based upon the belief that it would slide through without question?
This unfortunate event was not extraordinary in any way other than the massive bill. The medical care provided was not highly intense, and the resources used were basically what one would find in any physician’s office. Unfortunately it took place at night and the patient was advised to not wait. While an after-hours premium is not unreasonable, what should this be? As one can see from the relatively modest physician charge, the hospital did quite well. What would Medicare or Medicaid pay for these services compared to the list price, which we would have been expected to pay at 100% if we did not have insurance and could least afford it.