Few people truly understand the complexity of medical billing. For the vast majority of community members, receiving a medical bill is similar to getting a book in a different language. You understand the basic structure, but it is impossible to make heads or tails of the details. Understanding what the charges are, how they were arrived at, and how they compare to others is next to impossible. Even those intimately involved in the medical system often are not fully aware of how it all works.
One of the big challenges is the fact that the same procedure or service may have two totally different costs, depending on the patient and the manner in which they will pay.
All of it creates an immense tangle that keeps all medical billing mired in a fog. And it is one of the key reasons why we are finding it so hard to get a grip on the problem of rising medical costs.
Recently, a TIME magazine expose on the problem made national headlines. The full story can be read here (subscription required). It outlines how medical billing charges are incredibly varied and how the basis for different charges is virtually non-existent. In other words, it is next to impossible to identify why certain things are charged in certain ways except to argue that the hospitals are simply trying to get as much money as possible from whoever happens to be paying for the medical care–private insurers, Medicare, Medicaid, or private individuals without insurance.
Change on the Way
Partially in response to the expose, the U.S. Secretary for Health and Human Services finally released a wealth of new information that provides a degree of public accountability to some of these procedures. As reported in a Swampland blog post, last week the department released a “massive new data file” that may be “a big step closer [for patients] to being able to compare what hospitals charge them for goods and services with what they actually cost.”
The basic data released lists a “chargemaster” price for common procedures and then the actual price that Medicare pays for the procedure–just a portion of the much larger “charmaster” price. Private insurers also make payments lower than the chargemaster rate—though that fraction may vary. In addition, private parties who get caught in a medical emergency without insurance may have to pay the whole amount.
The next step, many claim is to better understand exactly what insurance companies pay for these services. Right now, that data is not collected, making it next to impossible to truly understand the scope of the medical cost problem. That is because the payments made by private insurers are the ones that probably affect the most patients, and (should) impact insurance premiums and the like.
In any event, the publication of this Medicare data should be viewed as a positive development. The medical malpractice attorneys at our firm are used to debating the nonsensical notion that tort reform laws will impact these prices. It is encouraging for the focus to shift on actual issues with a direct bearing on medical costs so that real solutions may be developed down the road.
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