Ranting to /dev/null

Medical billing

Over Christmas break, I had surgery. Nothing that interesting, nothing major, but it needed to happen. Okay. Fortunately, I'm insured. When I went home for break this past week, I saw a bill for the procedure. The total bill was for $8282.25. For an operation that lasted around two hours (I think, couldn't have been much longer than that), this isn't that bad. An appendectomy or having a baby will cost about $10k, so as far as in-hospital procedures, this wasn't that bad.

Where it gets interesting is when you look at what exactly the hospital got paid. The bill I've got in my hand is a line-item bill, and indicates the cost for every item and the total reimbursement the hospital has received to date (morphine only runs $1.15/mg, which seems pretty cheap, considering a bit dose is only 4mg). So, the hospital billed for $8283.25. Somewhere along the line they reduced this by $1272 for reasons which are not clear to me. The first two items on the bill show up again on the last page for a credit of half the original amount. Nobody ever said medical billing was simple. Anyway, that would bring the total to $7011.25. My insurance paid for $4296.98. Which would leave me with a bill for $2714.27, right? Wrong. My family paid a total of $50. What happened to the other $2664.27? A "contractual adjustment" with Blue Cross. Essentially, the insurance company told the hospital that they'd pay for a certain percentage or absolute amount, and the hospital could either take it or leave it, but they can't come after my family for the difference.

And the hospital is lucky to get it. If I was on Medicaid, they'd be lucky to have gotten $3k, as the Mediplans only tend to pay 30 cents on the dollar. And people complain about the spiraling cost of healthcare... If you were a business owner that knew that you'd get about a third of what you bill, you're going to bill three times what your services cost, just to stay afloat.

The way this really gets bad is that there are plenty of people - lower middle-class working families - who don't qualify for the Mediplans but also have no private health insurance. They get no "contractual adjustment" and have to pay the full freight. All $8200 of it. So the entitlement plan that was designed to help people pay for medical care is actually harming a lot of people. Why? Because hospitals charge way more than procedures cost because they know that the Mediplans - and thus private insurers - will only pay a fraction of the bill, and they won't be able to recover the rest of it. Thus, under the current system, unless you're benefiting from insurance or a Mediplan, you're screwed.

Anyone else for privatizing social safety net insurance?

Posted by ryan at March 20, 2005 03:17 PM | TrackBack