I opened the mail to find a medical bill for some lab studies on a family member. Total billings from “Laboratory Corporation of America” for 8 line items of services was $568.50. The adjustments by our insurance carrier, United Healthcare, were a total of $495.56, leaving a remaining balance of $72.94 on which the carrier paid $58.35, leaving a balance payable by us of $14.49.
What does this mean to those who don’t spend much time thinking about this? It is quite simple. The lab, a large national company, billed $568.50, the retail price that they decided to charge, which had we lacked insurance, we would have been expected to pay. The discount was 87% of charges, which means that the carrier used some sort of fee schedule, which is acceptable to the lab as a member of their network, to determine what was likely “usual and customary.” I sampled one of the line items that was charged at $219.00, and while my carrier permitted $21.71, the maximum that Medicare would permit was $16.99. So my carrier is generous compared to Medicare, paying about 27% more.
Why does the lab charge so much relative to what they get from carriers? Because they can. They can make up any number they wish, but clearly are thriving and surviving on actual payments that are 15% or less of what they charge. The small number of uninsured or underinsured, those least able to pay, are getting billed six times or more what their insured neighbors or retired relatives on Medicare are expected to pay.
What if the person in the check-out line buying the same basket of groceries was asked to pay 6 times more than the person in the next aisle because of where they work, or because they are younger, older, or for any other reason? Would we stand for this? Why do we permit this?
That the real prices differ from billed is a given in health care. I am accustomed to seeing discounts of 40% or so. But 87% is a new one that reflects, to my view, flagrant behavior that must be called out and must be stopped.
Lyn Carlsen says
In California, there was a case of a man w/o insurance having an aneurysm repaired. The hospital billed 140K. He second-mortgaged his house to pay, then sued. Since the hospital wd settle for 20K from its largest insurance contract, he argued that the hospital shd be willing to accept that amt in cash from him for the same services. It resulted in a law being passed to force hospitals to do exactly that. If more states’ (or federal) law were changed in this way, it wd be an improvement in the payment systems for those w/o coverage. Not perfect, mind you, but an improvement.