Hospital charges and the uninsured

David Catron says there is no such thing as a “hospital overcharge”:

Fact # 1: Hospitals do not have separate price lists for patients based on insurance coverage or lack thereof.
Fact # 2: Most hospitals write off about 90% of the charges generated by uninsured patients.
Regarding the first fact, all hospitals bill their patients based on a single “charge master.” When a patient comes in, her account is charged according to the service rendered without regard to insurance. Thus, if an uninsured patient needs an appendectomy, she is charged exactly what she would be charged if she had Medicare, Blue Cross, Aetna, Medicaid, or any combination of these.

Comments

RJS
Yes, I’m sure insurers put up with being charged $100 for a liter of normal saline, $47 for a vial of sublimaze, and $38 for IV promethazine.
What insurers are charged versus what patients are charged are COMPLETELY different.
Elliott
You quoted David Catron favorably when attacking Ezra Klein’s crdibility. David Catron is a liar. There’s no way to say that differently. I can’t imagine that any honest person would associate with such a blatant liar or republish his commentary uncritically. On the hospital side, I have seen management accounting statements that detail the discount for each insurer. Of course, on the patient side, I can read my EOB.
Anonymous
Yes, every patient is “charged” the same amount. However, patients with Medicare, many insurance plans, and other affiliations receive substantial discounts. These discounts are negotiated by third party payors for “lives” covered by their plans. If you are not covered by one of these payors, you are out of luck. You are charged the “retail” fees and expected to pay them. No card, no discount. Let’s not talk semantics.
Catron
No, elliott, I’m telling the truth. It’s “one price fits all” in the hospital biz. Moreover, no one actually pays the “list” price, including the uninsured. The self-pay patients who actually pay usually take advantage of our “prompt-pay” discount (exceeding 50%) or use our installment plan. Those patients who cannot pay are written off. This is one of the reasons why many hospitals are on the verge of bankruptcy.
shadowfax
Catron, while I wouldn’t be so crass as to call you a liar, the quote supplied by Kevin is disingenuous at best. You KNOW full well that insured patients recieve services at deep discounts but you hold up the fiction of the universal charge master (which does exist but is honored more in the breach than the observance) to imply that there is no disparity. That is misleading to the point of dishonesty.
Further, hospital’s charity polices for the uninsured differ widely. Some will write off almost anything. Some are much mroe stringent and sent many accounts to collections. That sucks when you are trying to get a mortgage or buy a new car or get a credit card. Most employ some sort of means testing and if you are unlucky enough to earn >200% of the federal poverty level and be uninsured then you may well be stuck with the full bill.
Anonymous
Kevin just referenced what someone else said. He didn’t say it.
Anonymous
I am very concerned, I actually agree with Elliot on something
Catron
Most uninsured patients get a 100% discount. Others get large (50%)discounts for paying promptly (as Medicaid and Medicare do). Still others get no-interest installment plans for as little as ten bucks a month. It is a myth that hospitals are cleaning up on the uninsured.
Elliott
Current hospital charge masters are an anachronism left over from the days of insurance reimbursement as a % of charges (and less ancient from CMS paying for outliers). Before that they were intended to provide cost-plus accounting for charges. In those circumstances, you could raise your prices and get revenue enhancement without being subject to the normal elasticity of demand. Once CMS went to DRG’s and insurance adopted similar measures, the charge master is a wierd amalgam of conversion factors. The only current reason that a charge master exists in its current form is because it increases the amount of write off for charity care.
Finally, I have yet to see a charge master where the numbers don’t represent at least 2X net patient revenue and most are in the 3 – 3.5X range. The whole charge master thing is misleading enough, but then to argue that the uninsured patient who is billed directly against the charge master isn’t getting screwed is disingenuous if you’re being nice and a lie if you’re accurate.
Anonymous
And if you have REALLY good ins. they may get charged twice for everything. I had an arthoscopic knee surgery once that ended up costing my ins over 20,000.00. It was billed as though I had 2 complete separate surgeries. I had chondroplasty (billed as one complete surgery) I had catliage(sp) removed, billed as one complete surgery. In addition the hospital also billed twice considering (this 1 small surgery) as though I had been there twice and underwent two surgeries. In reality this surgery consisted of passing a punch and shaver through there. Hell, when I had my total knee replacement it wasn’t as expensive as what this surgery had been. This was at a very large orthopedic institute and there were bills submitted, by every doctor who works there (14), even though I never once seen any of these Doc’s except my surgeon. 20,000.00 for a small 15 minute surgery….Give me a break. And you wonder why medicine is in such a state.
Catron
Elliott, since you are so fond of the words “disingenuous” and “lie,” what would you say about someone who continues to knowingly conflate two different concepts in order to support a fallacious argument? That is what you are doing when you discuss reimbursement and charges as if they are they same thing. It is not a serious (or honest) position.
Happyman
catron is right. the same rules apply to individual doctors’ offices as well.
It’s very simple, actually: let’s say that for an office visit (CPT 99204) the highest-paying insurer e.g. aetna pays $145 as their “maximum allowable rate”. Then, of course to maximize reimbursement the office will bill $150 to aetna for that patient, to be sure to get the maximum. Then, by law, the office must “charge” EVERYONE the same amount for the same service. Otherwise it’d be like discriminating against some patients at the expense of others.
The same rules apply to collection of copays – paying copays pisses people off, but not charging copays is illegal, and seen by medicare & other insurers as conspiring with patients to commit insurance fraud.
I don’t know why this concept is so hard for some to understand.
I’m no fan of hospitals in general, but it’s a myth that they’re getting rich off the uninsured. Here’s an option: If you’re uninsured don’t go to the hospital! Most patients in the ER aren’t truly emergent anyway.
Elliott
David, you’re a dishonest hack and after this post, I’ll give you the last word (which is likely to be even more BS). I’m not the one conflating two different things. You have tried to argue that a price is the same for all patients because the charge master is the same for all patients. The truth is that the charge master no longer has any validity when it comes to the price that customers actually see. (You said as much) In other words, I was trying to point out that your conflation does not represent reality. At one time it did when there was cost-plus or % of charges type of contracts, then the charge master had some relationship to price. Then there was the use of the charge master to justify exceptional reimbursement to CMS but that got so abused that it stopped so, in that sense in that circumstance, the charge master had some passing relationship to price. Finally there are only two items left currently where the charge master has any relationship to price and that is in the write-off of charity care where it makes the hospital look better because an inflated number is written off (although regulations are cracking down on this use as well) and in the billing of the uninsured. Your argument that reimbursement does not equal price is ludicrous. If I agree to buy something then the price paid and the dollars received are the price (not some bogus number that noone pays). You claim to have an MBA and should know this. Price = contracted reimbursement and there is no conflation going on there. There are different prices for different customers and that is a fact no matter how much you try to muddy the water by talking about the charge master. The charge master has little to do with anything in modern hospital accounting except as an inventory/cost accounting mechanism that needs to be massaged a 1001 ways before it can actually be used for anything.
lfjlkdjflsdkf
Fact #3: Hospitals write off a large % of an insured patient’s bill.
I know, because I’ve spent years doing just that for 40 hours a week.
The indigent get write offs, the insured get right offs, and the people who pay their own way get screwed.
mitch
As someone who knows, since I’m a consultant who concentrates on the revenue side of things these days, I can honestly say that the main reason hospitals have charge masters is to simplify the charge capture process for their revenue generating departments. Putting the blame on a charge master for what patients may ultimately end up owing is like putting the blame on butter for what cake does to you later on. Many hospitals across the country are now setting up plans for self pay patients that will actually discount their bills down to the amount of their best payer, which means that off the top some patients will get a 50% discount. Now, after that, there are many charity care programs at most hospitals that those who really don’t have the cash will end up with some nice discounts. Those who don’t qualify, and also don’t have insurance,… I have no sympathy for. But I’d also said for years that I didn’t think it was fair to put the fiscal viability on the backs of patients who ended up having to pay 100% of hospital charges; that’s pretty much been rectified after the Oregon lawsuit of 2 1/2 years ago.
gibbon1
“Those who don’t qualify, and also don’t have insurance,… I have no sympathy for.”
Get sick, loose your job, lose your insurance, get left with a chronic condition that costs $400/mo, get part time job with no insurance cause that is what you can do. Granted I can get insurance for about 800/mo.
mitch
“Get sick, loose your job, lose your insurance, get left with a chronic condition that costs $400/mo, get part time job with no insurance cause that is what you can do. Granted I can get insurance for about 800/mo.”
Thing is, if you lose your job and are working part time, you’d possibly qualify within a few months. If you lose your job, you’re covered under COBRA for two months from your past employer. Add one month to that, and you’ll then qualify for charity care if your income isn’t sufficient. There are always outs. Now, if you live in an area where you only have for profit hospitals,… I can’t answer those questions, since here in New York we don’t have for profit hospitals.
geoatwhgi@aol.com
someone doesn’t know what in hell they are talking about. Of course, the world is full of know-it-alls. Here’s my story: i’d lost my job, and my benefits. I’d worked for the same company for 35 years. All during that time, I had medical insurance for my family.Prior to that, I was in the military and had coverage there. In 2006, my wife had a fall at home. I rushed her to the closest hospital, OVMC in Wheeling, WV. Barb was 64 years old at the time, a year short of being eligible for Medicaire. She was diagnosed with a broken hip, a broken shoulder, and a severe head injury. the inexperienced techs in Radiology forced her to stand up for x-rays even tho she was in agony. while a patient at the above facility, she went into a coma because of an overdose of drugs. She was found by a nurse to be “non-responsive” and transferred to the hospital’s ICU where she developed pneumonia and placed on a respirator. Because the hospital staff could not find a vein, she was sent to surgery to have a port implanted through wich vital drugs could be administered to her. Several days later, my daughter, who was a lab tech noticed that her pillow was soaked with the meds. Evidently, her port had become dislodged. God only knows how she must have suffered. Back to Surgery and another shunt implant. During that time, Barb had a stroke. As soon as she was stabllized, Barb was discharged from the hospital to an “Extended Care” facility which accepted her as a “charity” patient. She spent two weeks there and was, eventually discharged. The following day, I got a bill for $116,500 from the hospital and $38,000 from the “Extended Care” facility. This did not include the cost of the surgeons, the anesthesiologists, the guys who read her x-rays, the guys who read her EKGs or a host of other “referrals”. I called the hospital and explained that we did not have insurance and could we make some sort of deal? They flat out refused. So, I sent them $100/mo. Same was true of all the other physicians/surgeons and hangers ons. The hospital eventually turned me over to an out-of-state collection agency which demanded the total amount now. I also called the “Rehab Center”. that CFO laughed when I called. He said…..”We thought she waas a charity case.” I said..my wife is not a charity case…give me a cash price. He said “$13,700 if you pay now.” I wrote the guy a check. So, Mr Expert, you are full of shit. Oh, by the way, for the hospital, I wrote a letter to my state senator. Miraculously, the hospital somehow agreed to accept my $100/mo payments. Oh, by the way…I checked some web sites and found that Barb would have recieved better care, might have avoided all that pain and suffering and a stroke had she been lucky enough to recieve treatment from Johns Hopkins University……..and for a thrd of the cost.

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