In early 2011 my mother passed away. She was 94 and developed evidence of a metastatic cancer in her abdomen. She wisely elected to receive palliative care in her final months. She had marvelous care via a hospice team in Portland Oregon but did need a few procedures. Various billings have drifted in over the months. This posting is about the most recent one.
Those of us who are insured are likely aware that there are billed charges – retail, and the actual paid charges – wholesale and that providers who participant in various public and private insurance plans are accustomed to writing off the difference between the two. These differences are often impressive, but this most recent case was to me rather startling.
A bill came in from the non-profit Providence St. Vincent in Portland. It was for a non specified ‘outpatient procedure’. Total charges were $1,519.50. Insurance paid $320.08. Adjustments totaled $1,119.40, leaving a patient balance due of $80.02, which I paid.
Noteworthy in this matter includes the fact that the bill did not name the procedure, or indicate the insurance payer. My mother had both Medicare and a Blue Cross supplement from her prior employment as a teacher. Most noteworthy was the 74% reduction in allowed charges in this bill through the insurance carrier. It is reasonable to assume that an uninsured person would be expected to pay the entire amount of $1,510.50, or a person with another carrier would have a different percentage reduction.
What to make of the original amount? Is it reasonable or is it an amount that has built-in excess to allow for cost shifting due to the reductions in the bill my mother and others paid? Or does what was paid for my mothers procedure, a total of $400.01 more accurately reflect the work and value received? What should the cost of this unnamed procedure be assuming that every patient paid the realistic cost of their care in a given facility? What would this procedure pay in Canada, Australia, Germany or any number of industrialized countries with a private provider system and a nationally enforced payment scheme?
What about the startling lack of detail in this substantial bill? Would we tolerate a bill from the grocer for $100.00 that says ‘food’? Yet we routinely receive bills for far more that are equally uninformative from health care facilities and providers. As individuals and employers, how does this sort of scheme impact us and what is likely to occur assuming threatened Medicare cuts in the near future?
Assuming considerable cost shifting took place and is the norm, is this a rational and sustainable system and what direction is it heading? The other day, an appeals court overturned the mandated coverage component of Obamacare. Does this mean that many will continue to gamble with no insurance, and shift the cost to the rest of us?
What happens when an uninsured person comes into a facility like Providence needing care? They get the care and are not turned away. Then they get a bill for the retail cost. They either pay it, often at significant financial hardship, negotiate a reduced rate if they are savvy, or default on all or some of the payment. If the latter, it may be due to medical bankruptcy, indifference, or poverty. The cycle continues and the institution justifies further cost shifting to the private payers and commercially insured populations. This is a form of hidden tax on responsible companies individuals who buy coverage and on businesses who choose to insure their employees.
A system that routinely writes off 75% of the price of treatment for certain individuals is a sick system that is not being straight with us. Providence is a mission driven non-profit, which is not to suggest that they don’t generate serious cash flow and surplus, and pay significantly to their executives like the for-profit sectors. But alone, they are not capable of changing this situation even if they wanted to. How many of us would wish to work for or create a business where customers pay vastly different bills for the same service and what would our responses be. Airline costs come to mind here, but the difference is that in most cases we can decide not to take a given flight, and at least prices are posted for every flight option, leading to some real competition and relative price transparency. Health care costs are opaque and rarely considered or known in advance of treatment.
Those who think that our current health care payment system is working and should be left alone need only look at their next personal treatment episode to see the truth.
And one other lesson here: I have often made the point to the young healthy uninsured person who thinks that they can go bare on health insurance – that they can’t afford to; that one episode of hospital care would easily cost them in the 5 figures and that they would be expected to pay 100% of charges. I have suggested that they buy a high deductible lower cost policy, which nonetheless imposes a PPO discount on the first dollar of care, resulting in a marked discount on the ultimate bill they receive.