Show HN: We structured and compared hospital chargemaster prices(pricemed.org)
pricemed.org
Show HN: We structured and compared hospital chargemaster prices
http://pricemed.org/procedures/transfusion-of-blood-or-blood-products
18 comments
This is the kind of data that is needed for true transparency, and true medical reform. Prices will be gouged so long as you can't compare; Realistically, this still has a long way to go (Because I'm certain that a lot of these differences are in part due to one procedure being billed as many different codes under the current US regulatory mess), but it's a good step up from what we've had available in the past.
The only thing that's going to matter in effectively reforming medical cost structures in the U.S. is getting a critical mass of people who are shut out from medicine due to the insurance scam. While there are presently some people who are in a bad position, it's not enough people to really mount a meaningful united front. Sure, people are upset, but not enough people are upset in the right way to really make policymakers fear for their careers and/or lives.
Huge swaths of "money" in the medical industry are the result of paper pushing, pure and simple. No one is spending their own money, or even really "real" money: the doctor's bill will say something outrageous for the cash price, because they know the insurers will demand a large reduction, and even though they write "$40,000" for something, they don't actually expect anyone to pay that directly. They expect you to either call and get a "cash payment discount", i.e., something close to what they charge insurance companies (which is still really high, because insurance companies aren't spending "real" money either), or to use your insurer to "pay" the bill.
Remove the lecherous middle-men who do nothing but shuffle numbers around and we can start making progress on medical pricing. This is not the ONLY cause of high costs, but it is easily the largest and most perverse problem point, because this type of billing completely destroys all conventional rules of supply and demand.
Interestingly, the Affordable Care Act does the opposite of this, and strengthens the lecherous middle-men to the point that it will be illegal not to give them money (the government will forcibly take the money from you in the form of a "tax penalty" if you do not voluntary sign up for "medical insurance").
Huge swaths of "money" in the medical industry are the result of paper pushing, pure and simple. No one is spending their own money, or even really "real" money: the doctor's bill will say something outrageous for the cash price, because they know the insurers will demand a large reduction, and even though they write "$40,000" for something, they don't actually expect anyone to pay that directly. They expect you to either call and get a "cash payment discount", i.e., something close to what they charge insurance companies (which is still really high, because insurance companies aren't spending "real" money either), or to use your insurer to "pay" the bill.
Remove the lecherous middle-men who do nothing but shuffle numbers around and we can start making progress on medical pricing. This is not the ONLY cause of high costs, but it is easily the largest and most perverse problem point, because this type of billing completely destroys all conventional rules of supply and demand.
Interestingly, the Affordable Care Act does the opposite of this, and strengthens the lecherous middle-men to the point that it will be illegal not to give them money (the government will forcibly take the money from you in the form of a "tax penalty" if you do not voluntary sign up for "medical insurance").
This is a generalized problem with insurance, tho. Ie, if you had a likely expense, you would plan for it (house, college, etc). You buy insurance precisely because you don't think you'll need it.
So, the people that need to use it are always going to be a small group. The people that don't have it, another group. The people getting screwed (on the sharp end) are the subset of those where there is overlap. This will always be a small number (by math).
That being said, for everyone is paying into the system but its more death by thousand cuts. As long as pricing is opaque and uncorrleated with out-of-pocket marginal payments, there will be a problem. The cleaner solution is simply to remove the facade of pricing a-la-carte services.
The problem there, is two fold: (1) how to control the inevitable buracracy with a huge budget making life or death decisions; and (2) how to incentivise research and science/product development without the cash cow of monopoly pricing (patents are useless if selling is illegal).
While these problems seem to be solvable, they are daunting and not simple. In a world where the NSA is spying on every electronic communication over the internet, perhaps even more so. Ie, a world where privacy and trust is being undermined by those seeking to entrench their own power. Its harder poltically to delegate more responsibility to the "government".
So, the people that need to use it are always going to be a small group. The people that don't have it, another group. The people getting screwed (on the sharp end) are the subset of those where there is overlap. This will always be a small number (by math).
That being said, for everyone is paying into the system but its more death by thousand cuts. As long as pricing is opaque and uncorrleated with out-of-pocket marginal payments, there will be a problem. The cleaner solution is simply to remove the facade of pricing a-la-carte services.
The problem there, is two fold: (1) how to control the inevitable buracracy with a huge budget making life or death decisions; and (2) how to incentivise research and science/product development without the cash cow of monopoly pricing (patents are useless if selling is illegal).
While these problems seem to be solvable, they are daunting and not simple. In a world where the NSA is spying on every electronic communication over the internet, perhaps even more so. Ie, a world where privacy and trust is being undermined by those seeking to entrench their own power. Its harder poltically to delegate more responsibility to the "government".
I agree that this is how insurance works. Normal insurance is a hedge against anamolous disaster. Medical care is something that practically everyone will need at one point or another, i.e., it is not an anamolous disaster, and therefore insurance is a problematic billing model from the get-go.
We should start by saying that insurance is often considered a perverse industry because their incentives are inverted. Normal businesses make money by providing a product or service to clients, and the incentives are therefore aligned. Insurance makes money by explicitly NOT providing a product or service in exchange for your money; if they have to give you the thing you've paid for, they are less profitable. The more frequent claims against a particular insurer are, the more incentive they have to make things difficult, because some people will ultimately give up and that'll be one less (or lessened) payout that the company must supply. As medical insurance policies will likely have several claims per policy per year, they have an incentive to be the worst type of insurance.
Most people with home insurance will never use it, because their house is not likely to get robbed, or catch on fire, or encounter even more esoteric occurrences. Considering the multi-hundred-thousand dollar investment most people have in their homes, a nominal fee of a few hundred bucks per year is entirely reasonable to protect that asset.
The opposite is true of medicine. Most people will get medicine sometime, and it's not uncommon to need access to medicine several times per year (even excluding the chronically ill). Even car insurance will often go several years without being used, but not medical, especially not if you have a policy that covers multiple people (policy holder + spouse + dependents).
Insurance simply does not work for services that are commonly required, and that's what it boils down. There is a major feeding frenzy operating on the backs of the nation's health, and everyone is pointing the finger at the other entity, and again, there's more to it than just insurance, but insurance is now and always will be the most major cause of problems in this industry. The only way to bring it back to sanity is to expose it to true market forces; the clientele must spend their own money to receive medical services, and therefore medical providers must set prices within an affordable range or go out of business. The leeches who do nothing but sit there and push paper must be removed, plain and simple. No amount of whining about how it will put some people out of work, etc., can be tolerated on this. The fact is that insurance is a very, very bad thing to have so deeply ingrained in our medical system, and we won't see major improvement until those people go away.
Other countries have band-aided it by saying "OK, I see meidicine 'costs' inordinate amounts of money, we'll just write what is effectively a blank check to the industry", but that's not how we should do it in America. We must accept that market forces must dictate the prices, that hospitals the size of universities are probably not plausible, and that the whole industry must be brought back down to earth. The industry is obviously not going to like that, but it must be done. We need some ballsy politicians who can make it happen.
We should start by saying that insurance is often considered a perverse industry because their incentives are inverted. Normal businesses make money by providing a product or service to clients, and the incentives are therefore aligned. Insurance makes money by explicitly NOT providing a product or service in exchange for your money; if they have to give you the thing you've paid for, they are less profitable. The more frequent claims against a particular insurer are, the more incentive they have to make things difficult, because some people will ultimately give up and that'll be one less (or lessened) payout that the company must supply. As medical insurance policies will likely have several claims per policy per year, they have an incentive to be the worst type of insurance.
Most people with home insurance will never use it, because their house is not likely to get robbed, or catch on fire, or encounter even more esoteric occurrences. Considering the multi-hundred-thousand dollar investment most people have in their homes, a nominal fee of a few hundred bucks per year is entirely reasonable to protect that asset.
The opposite is true of medicine. Most people will get medicine sometime, and it's not uncommon to need access to medicine several times per year (even excluding the chronically ill). Even car insurance will often go several years without being used, but not medical, especially not if you have a policy that covers multiple people (policy holder + spouse + dependents).
Insurance simply does not work for services that are commonly required, and that's what it boils down. There is a major feeding frenzy operating on the backs of the nation's health, and everyone is pointing the finger at the other entity, and again, there's more to it than just insurance, but insurance is now and always will be the most major cause of problems in this industry. The only way to bring it back to sanity is to expose it to true market forces; the clientele must spend their own money to receive medical services, and therefore medical providers must set prices within an affordable range or go out of business. The leeches who do nothing but sit there and push paper must be removed, plain and simple. No amount of whining about how it will put some people out of work, etc., can be tolerated on this. The fact is that insurance is a very, very bad thing to have so deeply ingrained in our medical system, and we won't see major improvement until those people go away.
Other countries have band-aided it by saying "OK, I see meidicine 'costs' inordinate amounts of money, we'll just write what is effectively a blank check to the industry", but that's not how we should do it in America. We must accept that market forces must dictate the prices, that hospitals the size of universities are probably not plausible, and that the whole industry must be brought back down to earth. The industry is obviously not going to like that, but it must be done. We need some ballsy politicians who can make it happen.
the clientele must spend their own money to receive medical services
The flaw / issue with this, is that sick people are in no position to negotiate. People that are sick are desperate for the drugs. People that are not sick dont really need them. that is ill suited to the simplification required of econ 101. In econ 101 you want the price to converge to the marginal cost of supply, not converging to the marginal amount of residual equity / net worth of the patient's bank account (that's the hold up problem: give me all your money or you die). Imagine if you had to negotiate the price of a fire-department visit with your house burnging? Its just not a service that is ever going to fit the framework (in particular, the behaviour assumption of non-opportunim) of the typical econ 101 course.
That being said, I agree with your analysis of the insurance model when applied to "scheduled maintenance" type services. Opaque pricing and a culture of witholding service is particulary innappropriate here. Assuming that chronic and life-threatening services are another matter, that still leaves the issue of everything in-between. The issue there is that there are life-style type elective surgeries and treatments that some may want access too (the rich) but not be willing to subsidze for others (the poor). So there is a basic triage of the types of health care, and they all need to be thought through from a sociological perspective as well as just an economic and medical/technical one.
The flaw / issue with this, is that sick people are in no position to negotiate. People that are sick are desperate for the drugs. People that are not sick dont really need them. that is ill suited to the simplification required of econ 101. In econ 101 you want the price to converge to the marginal cost of supply, not converging to the marginal amount of residual equity / net worth of the patient's bank account (that's the hold up problem: give me all your money or you die). Imagine if you had to negotiate the price of a fire-department visit with your house burnging? Its just not a service that is ever going to fit the framework (in particular, the behaviour assumption of non-opportunim) of the typical econ 101 course.
That being said, I agree with your analysis of the insurance model when applied to "scheduled maintenance" type services. Opaque pricing and a culture of witholding service is particulary innappropriate here. Assuming that chronic and life-threatening services are another matter, that still leaves the issue of everything in-between. The issue there is that there are life-style type elective surgeries and treatments that some may want access too (the rich) but not be willing to subsidze for others (the poor). So there is a basic triage of the types of health care, and they all need to be thought through from a sociological perspective as well as just an economic and medical/technical one.
This is a fascinating data problem. I noticed a lot of the price distributions are non-normally distributed (specifically with a strong positive skew for the least consistently priced procedures). You guys should have fun with this.
Who will be the primary users of this information? It seems that insurers already are aware of chargemaster prices and ignore them since they're going to be bargained away.
Employers seem not to care to dig into how much their insurers are paying (employers just care what premium they'll have to pay).
Finally, it seems like consumers can't really use this data since they're pretty much locked into their plans anyways and will go wherever is most convenient.
Now given changing consumer behavior, I could see consumers maybe using this so they have to pay less of a deductible, I could also see insurers working with consumers to steer them to the best prices - saving both the insurer and the consumer money. However, this will require overcoming consumer attachments to preferred providers (a challenge for older adults, not so much so for younger ones who often don't have a relationship with a doctor). It can be how surprising how quickly people can overcome sentimental attachments when their money is on the line though, so who knows.
Who will be the primary users of this information? It seems that insurers already are aware of chargemaster prices and ignore them since they're going to be bargained away.
Employers seem not to care to dig into how much their insurers are paying (employers just care what premium they'll have to pay).
Finally, it seems like consumers can't really use this data since they're pretty much locked into their plans anyways and will go wherever is most convenient.
Now given changing consumer behavior, I could see consumers maybe using this so they have to pay less of a deductible, I could also see insurers working with consumers to steer them to the best prices - saving both the insurer and the consumer money. However, this will require overcoming consumer attachments to preferred providers (a challenge for older adults, not so much so for younger ones who often don't have a relationship with a doctor). It can be how surprising how quickly people can overcome sentimental attachments when their money is on the line though, so who knows.
Background on the chargemaster story that broke in Time Magazine. (So glad it was covered by The Daily Show or I would have missed it): http://healthland.time.com/2013/02/20/bitter-pill-inside-tim...
Here's the Jon Stewart segment: http://www.thedailyshow.com/watch/mon-may-13-2013/bi-annual-...
Some other links to more info are at the footer of the page. There was an interesting US Senate hearing with Steven Brill, the author of the Time article.
Some other links to more info are at the footer of the page. There was an interesting US Senate hearing with Steven Brill, the author of the Time article.
Love this!
If there's some unstructured data that you're having trouble taming, contact me. I have a ton of experience with Mechanhcal Turk and can give you some advice on how best to structure your HITs to extract the data that you need.
[email protected]
If there's some unstructured data that you're having trouble taming, contact me. I have a ton of experience with Mechanhcal Turk and can give you some advice on how best to structure your HITs to extract the data that you need.
[email protected]
One suggestion: The dropdown for "Find a Hospital" needs to show the location too. I tried searching for "St. Anthony's" near my town and multiples ones from all over the country showed up. I put in my zip code but it did not filter the results. I have no idea how to look for St. Anthony's near 33708 or not. I don't know if it is St. Anthony's Medical Center or Health Center or Hospital. But there's only one St. Anthony's here in St. Petersburg, FL.
When I entered a zip code, it showed a map w/ nearby hospitals. Perhaps they have no data from yours?
[deleted]
Some tweaks to the design would help!
At the top of the page, the search boxes are mis-aligned to the text above them. Fix that. They could also take up more horizontal space, or simply be aligned better.
Add an extra ~3-10px of horizontal padding to table cells (td's) Table headings should be text-align: center except for the longest field (hospital). Also, vertical-align: middle on table headings.
Link color on the tables could also be darker.
Add left-margin/padding on the (?) question mark icon at the top right of fields.
Font size on the search drop downs could be bigger.
May want to try the font "Open Sans", too, on the tables.
Add a hover effect for all links and buttons. It's kind of nuts that you could overlook that.
Add a focus effect for all inputs. Also make input font color brighter, and on focus, make font color darker.
On the "worst hospitals" table, the percentages could use a + sign before them like "+97%".
At the top of the page, the search boxes are mis-aligned to the text above them. Fix that. They could also take up more horizontal space, or simply be aligned better.
Add an extra ~3-10px of horizontal padding to table cells (td's) Table headings should be text-align: center except for the longest field (hospital). Also, vertical-align: middle on table headings.
Link color on the tables could also be darker.
Add left-margin/padding on the (?) question mark icon at the top right of fields.
Font size on the search drop downs could be bigger.
May want to try the font "Open Sans", too, on the tables.
Add a hover effect for all links and buttons. It's kind of nuts that you could overlook that.
Add a focus effect for all inputs. Also make input font color brighter, and on focus, make font color darker.
On the "worst hospitals" table, the percentages could use a + sign before them like "+97%".
It looks like the sorting is off. It's saying that Cedars-Sinai is the worst priced hospital for the linked procedures, but at "only" a 99% marked over the average $1,300 even though there are many in the $3-5.2k range.
This is all great, but cost isn't the only metric, there is also such things as readmission rate &c. Two weeks ago or three a fellow, a physician, made the front page of HN who listed prominently listed prices for his hospital, but you had to go digging for readmission rates.
That guy was on a mission, and his mission wasn't to improve public health. If his mission was that he would have listed the other important metrics. He knows all about them, he is a physician, after all. This sort of dishonesty I cannot stand.
That guy was on a mission, and his mission wasn't to improve public health. If his mission was that he would have listed the other important metrics. He knows all about them, he is a physician, after all. This sort of dishonesty I cannot stand.
It seems you're implying malevolence and unless the other metrics substantially were worse than the other hospitals.
No one knows about his motives except that person himself, but it is indisputable that a public figure such as he has responsibilities to society, and he does not fulfill them.
No one pays chargemaster prices. The reason hospitals set the prices so high is because they are the starting point for negotiations with networks and insurance companies.
Even consumers without insurance typically don't pay chargemaster prices as hospitals normally have cash pay discounts.
As payers begin to contract with ACO's, I think we'll likely see a shift to a more standard shape bell curve if reform is working.
Great idea! There seems to be a minor flaw in the data though, the Healdsburg District Hospital appears do be doing many procedures for 1$. http://pricemed.org/hospitals/healdsburg-district-hospital
Really cool!
One thing - the google map always sets California as the state, even when I look at hospitals in other states.
One thing - the google map always sets California as the state, even when I look at hospitals in other states.
Isn't the chargemaster price mostly unrelated to anything? http://runningahospital.blogspot.com/2013/05/useless-noise-f...
I'm confused... This is assuming a procedure in facility A by Doctor B is a commodity and is no different than the same procedure in Facility C by Doctor D.
Am I missing something?
For many procedures, that's true so long as they're competently executed, which we should expect so long as the doctor is licensed to practice.
To really make buying decisions for your own health care procedures, you would want user reviews in addition to prices, just like you see on every online storefront.
To really make buying decisions for your own health care procedures, you would want user reviews in addition to prices, just like you see on every online storefront.
I love it, thanks for sharing. Where did you get the original data from? (I thought chargemasters were relatively guarded secrets?)
raw California chargemaster data was in excel files at this gov't website: http://www.oshpd.ca.gov/chargemaster
outside of California, the data from a release by Medicare: http://www.cms.gov/Research-Statistics-Data-and-Systems/Stat...
outside of California, the data from a release by Medicare: http://www.cms.gov/Research-Statistics-Data-and-Systems/Stat...
Very cool. I wished this would be done for hospitals in .NL as well.
Very cool. Does anyone pay the chargemaster price though?
No, no one pays that.
And I don't think the chargemaster price is even correlated with the final price, so it's not even useful as a relative measure.
I wish it was a real price though - maybe this site could push hospitals that way. But I doubt it because the reason hospitals are able to afford Medicare prices is only because they overcharge the rest, and the prices are made opaque specifically so that that people do not complain about that.
The only way to make transparent healthcare prices is to raise medicare prices so that everyone pays the same, but that'll never happen. So what happens is that insured people pay an extra premium to help out the rest.
Airlines do the same thing, and they too have very convoluted hard to understand prices.
And I don't think the chargemaster price is even correlated with the final price, so it's not even useful as a relative measure.
I wish it was a real price though - maybe this site could push hospitals that way. But I doubt it because the reason hospitals are able to afford Medicare prices is only because they overcharge the rest, and the prices are made opaque specifically so that that people do not complain about that.
The only way to make transparent healthcare prices is to raise medicare prices so that everyone pays the same, but that'll never happen. So what happens is that insured people pay an extra premium to help out the rest.
Airlines do the same thing, and they too have very convoluted hard to understand prices.
>because the reason hospitals are able to afford Medicare prices is only because they overcharge the rest
That's simply not true. Medicare prices are explicitly designed to cover costs, based off of collected data and input from the self-interested American Medical Association[1]. They almost carte blanche accept the AMA at their word, and I doubt the doctors at the AMA are shooting themselves in the foot (although they appear to be backstabbing under-represented GPs). What Medicare doesn't do is pay excessively, so poorly ran facilities may go red. One of the motivations behind incentivizing (and soon requiring) electronic health records is the ability it gives Medicare to objectively analyze this information, rather than taking the doctor's subjective assessment.
What does inflate private insurance rates is unnecessary market saturation, where hospitals are expanding to capture patients from competitors and lowering per-hospital utilization in the process. Particularly an issue with non-profits, which have little other recourse to spend their profits on except higher salaries and facility expansion. The other main reason for higher insurance rates is bad debt, which is the percentage of care hospitals write-off because they don't expect to recoup the charges[2]. Since Medicare payments are supposedly break even, this is almost solely absorbed by private insurance. That's one of the reasons hospitals are for Obamacare, because there will be fewer uninsured and hence less write offs; yet, current reimbursement contracts account for that bad debt already, so they're going to get a lovely profit boost until the payors correct the imbalance.
Anecdotely, revenue cycle departments (that collect payments) love Medicare, because it just pays. Private insurers dispute everything and threaten to pass the bill directly to patients, which the hospital knows will never get paid because the member expects their insurance to take care of it.
[1] http://www.washingtonpost.com/business/economy/how-a-secreti...
[2] http://www.acainternational.org/products-health-care-collect...
That's simply not true. Medicare prices are explicitly designed to cover costs, based off of collected data and input from the self-interested American Medical Association[1]. They almost carte blanche accept the AMA at their word, and I doubt the doctors at the AMA are shooting themselves in the foot (although they appear to be backstabbing under-represented GPs). What Medicare doesn't do is pay excessively, so poorly ran facilities may go red. One of the motivations behind incentivizing (and soon requiring) electronic health records is the ability it gives Medicare to objectively analyze this information, rather than taking the doctor's subjective assessment.
What does inflate private insurance rates is unnecessary market saturation, where hospitals are expanding to capture patients from competitors and lowering per-hospital utilization in the process. Particularly an issue with non-profits, which have little other recourse to spend their profits on except higher salaries and facility expansion. The other main reason for higher insurance rates is bad debt, which is the percentage of care hospitals write-off because they don't expect to recoup the charges[2]. Since Medicare payments are supposedly break even, this is almost solely absorbed by private insurance. That's one of the reasons hospitals are for Obamacare, because there will be fewer uninsured and hence less write offs; yet, current reimbursement contracts account for that bad debt already, so they're going to get a lovely profit boost until the payors correct the imbalance.
Anecdotely, revenue cycle departments (that collect payments) love Medicare, because it just pays. Private insurers dispute everything and threaten to pass the bill directly to patients, which the hospital knows will never get paid because the member expects their insurance to take care of it.
[1] http://www.washingtonpost.com/business/economy/how-a-secreti...
[2] http://www.acainternational.org/products-health-care-collect...
But I doubt it because the reason hospitals are able to afford Medicare prices
It's not just Medicare. It's insurance in general, and the arms race to try to get paid the same amount (adjusted for inflation) for the same procedure, over time.
So, suppose you get a really nasty cut that needs stitches, and you go to a clinic, and get that done. And suppose that the clinic adds up all the costs -- medical supplies, nurse time, doctor time, facilities (which includes everything from rent to keeping the lights on), time to process the bill through your insurance company, everything, and decide that $100 covers it, so they send a bill for $100 for "suturing" (the stitches to close up your cut). Your insurance company pays, everybody's happy.
Fast forward a few years. Little bit of inflation has happened, so maybe now the clinic needs to make $102. But the insurance company has used the leverage of its network system to get the clinic to accept a lower rate -- they can threaten to stop sending patients to the clinic if the clinic won't agree. And now the "suturing" billing code only pays $90.
So some clever person at the clinic comes up with an idea: instead of billing "suturing" for $102 and getting $90, they can bill for "antiseptic gel" at $20 and get paid $12, and bill for "suturing" at $100 and get paid $90, which means the clinic gets the $102, but now on a total bill of $120.
Fast forward a few more years. Now inflation has resulted in the clinic needing to make $105, but the insurance pays even less now. So now it's billed as "suturing" at $100 (paying $80), plus "antiseptic gel" at $20 (paying $8), plus "cotton swabs" (to soak up the blood) at $30 (paying $17). The clinic gets the $105 to cover its costs, but now the initial bill comes in at $150.
It does not take a terribly long time for this arms race to turn treatment of a simple cut into a gigantic laundry list of services, materials, personnel and facilities, at a total initial bill that might run into the thousands of dollars, just to get, say, $110 out of the insurance company.
And that is basically what has been happening in the US. When you see one of those "shocking" hospital bills for something that seems simple, what you're seeing is the result of the arms race between the medical billing arm of the hospital and the insurance company, which will have dozens or possibly hundreds of items on the bill, all at prices well above what the hospital expects to get, but calculated so that the eventual insurance payment will cover the actual cost.
It's not just Medicare. It's insurance in general, and the arms race to try to get paid the same amount (adjusted for inflation) for the same procedure, over time.
So, suppose you get a really nasty cut that needs stitches, and you go to a clinic, and get that done. And suppose that the clinic adds up all the costs -- medical supplies, nurse time, doctor time, facilities (which includes everything from rent to keeping the lights on), time to process the bill through your insurance company, everything, and decide that $100 covers it, so they send a bill for $100 for "suturing" (the stitches to close up your cut). Your insurance company pays, everybody's happy.
Fast forward a few years. Little bit of inflation has happened, so maybe now the clinic needs to make $102. But the insurance company has used the leverage of its network system to get the clinic to accept a lower rate -- they can threaten to stop sending patients to the clinic if the clinic won't agree. And now the "suturing" billing code only pays $90.
So some clever person at the clinic comes up with an idea: instead of billing "suturing" for $102 and getting $90, they can bill for "antiseptic gel" at $20 and get paid $12, and bill for "suturing" at $100 and get paid $90, which means the clinic gets the $102, but now on a total bill of $120.
Fast forward a few more years. Now inflation has resulted in the clinic needing to make $105, but the insurance pays even less now. So now it's billed as "suturing" at $100 (paying $80), plus "antiseptic gel" at $20 (paying $8), plus "cotton swabs" (to soak up the blood) at $30 (paying $17). The clinic gets the $105 to cover its costs, but now the initial bill comes in at $150.
It does not take a terribly long time for this arms race to turn treatment of a simple cut into a gigantic laundry list of services, materials, personnel and facilities, at a total initial bill that might run into the thousands of dollars, just to get, say, $110 out of the insurance company.
And that is basically what has been happening in the US. When you see one of those "shocking" hospital bills for something that seems simple, what you're seeing is the result of the arms race between the medical billing arm of the hospital and the insurance company, which will have dozens or possibly hundreds of items on the bill, all at prices well above what the hospital expects to get, but calculated so that the eventual insurance payment will cover the actual cost.
I suggest you read the Time magazine article "The Bitter Pill". You talk as if the insurance company networks are the only ones who are using leverage to push prices paid down. This is no longer correct. Physicians and hospitals have now banded together into cooperative, consolidated practices/groups/networks, and they have absolutely been exerting huge upward price pressures on negotiated payments with the insurance companies.
If the situation was as you described it, the costs for insurance would have been going up, but not at the levels/rates that have actually occurred.
I suggest you read the article. Is is an incredibly well written, balanced, and well sourced piece of journalism. It is also a long and engrossing read.
FYI, the negotiated Medicare rates are actually designed to make sure that hospitals MORE than make up their costs of doing business.
If the situation was as you described it, the costs for insurance would have been going up, but not at the levels/rates that have actually occurred.
I suggest you read the article. Is is an incredibly well written, balanced, and well sourced piece of journalism. It is also a long and engrossing read.
FYI, the negotiated Medicare rates are actually designed to make sure that hospitals MORE than make up their costs of doing business.
Yeah, I get the feeling one could fix healthcare overnight by allowing any private person to pay cash at Medicare prices, or a low multiple (1.5x?). I guess there would still be prescription drugs and devices to deal with, though.
Another idea: make it illegal for anybody but the patient to pay for their healthcare. Insurance pays the patient, who then pays the hospital. If the patient doesn't like the service, or feels they're getting ripped off? They probably won't pay as much.
Bush or Clinton, I forgot who basically was pushing that. Create high deductible plans, add tax benefits attached to them (tax sheltered health saving accounts) so that people are more directly involved in shopping for prices and it was being sold as that would drive the prices and competition to get better.
Yeah, I think the HSA was one of G W Bush's best accomplishments (and, probably, one of the only net-positive accomplishments other than helping in Africa somewhat), which is why I'm sad the new health reforms are basically incompatible with the HSA concept.
As I see it, there are basically two separate ways to make healthcare work -- expose consumers to prices AND give them the tools to make decisions (with subsidies, etc. if we want to let poor people consume more health care than other things, as a matter of policy; I don't think that's an economic argument), or have an external entity with the correct incentives acting on the consumer's behalf. Medicare seems to mostly work on the latter model.
It's clearly possible to screw up both ways, but an even surer way to screw up is to do neither/both-partially.
Ending employer deduction for healthcare (and/or making it deductible for individuals) would be a huge step, too (in either model). I see no actual upside to employers paying for health care vs. individuals or the state at all.
As I see it, there are basically two separate ways to make healthcare work -- expose consumers to prices AND give them the tools to make decisions (with subsidies, etc. if we want to let poor people consume more health care than other things, as a matter of policy; I don't think that's an economic argument), or have an external entity with the correct incentives acting on the consumer's behalf. Medicare seems to mostly work on the latter model.
It's clearly possible to screw up both ways, but an even surer way to screw up is to do neither/both-partially.
Ending employer deduction for healthcare (and/or making it deductible for individuals) would be a huge step, too (in either model). I see no actual upside to employers paying for health care vs. individuals or the state at all.
There are a few insurance companies like this. However, the patient must have the cash flow for these large expenses. It often takes takes time to get reimbursed.
so much for... let's see... expensive treatments like heart transplants, free enterprise, risk sharing... impecunious family member/relative/unrelated S.O. needs expensive treatment and let's see how fast opinions change on that.
Not letting me spend my post-tax money how I see fit (which might include paying for an open source developer who makes a tool I love's inherently expensive medical care) is bad, too.
And stuff like charities to help certain classes of people (poor kids who would benefit from a $300-5000 operation once, like Watsi, seems like a better use of charity money than an 80 year old guy living one extra day) seem like absolute good, too.
And stuff like charities to help certain classes of people (poor kids who would benefit from a $300-5000 operation once, like Watsi, seems like a better use of charity money than an 80 year old guy living one extra day) seem like absolute good, too.
Except that a hospital/provider could still refuse to provide the service at that price, even the low multiple.
Hospitals stay in the Medicare system for a variety of reasons, even though the reimbursements are small. It provides a large volume of predictable revenue to pay for fixed costs, it is necessary for some residency/specialties and medical schools, etc. As long as Medicare and the cash-medicare-1.5 were an all or nothing bundle, it would probably work.
I have noticed a lot of doctors refusing to take medi-cal (Medicaid) and some other doctors who won't take any Medicare and some who won't take insurance at all, but these tend to be specialists and not hospitals.
I have noticed a lot of doctors refusing to take medi-cal (Medicaid) and some other doctors who won't take any Medicare and some who won't take insurance at all, but these tend to be specialists and not hospitals.
Yeah, fair. Regarding "I wish it was a real price though" that's why we want to run this analysis for insurance companies. They're the ones that have the best real data, and can benefit from it the most.
Chargemaster is kind of like (a more screwed up) MSRP when you buy a car, so not exactly, but it's an indicator of the pricing disparity for the same procedures.
We've also indexed the Medicare DRGs which are a more accurate predictor. Eventually we'd like to index Paid Claims data for insurance companies, which are what actually gets paid.
The prices are all over the map in general, beyond just the chargemaster prices.
We've also indexed the Medicare DRGs which are a more accurate predictor. Eventually we'd like to index Paid Claims data for insurance companies, which are what actually gets paid.
The prices are all over the map in general, beyond just the chargemaster prices.
Yah, the joke I've heard from industry folks is that "only the Sultan of Brunei would pay those prices."
But since many actual prices are determined as a percentage of the chargemaster, the provider with the lowest chargemaster price is likely to have the lowest actual price.
Directionally correct data is better than no data? no?
But since many actual prices are determined as a percentage of the chargemaster, the provider with the lowest chargemaster price is likely to have the lowest actual price.
Directionally correct data is better than no data? no?
Chargemaster is also a brilliant and evil tax deduction[1].
[1] http://www.nytimes.com/2013/05/17/business/bayonne-medical-c...
[1] http://www.nytimes.com/2013/05/17/business/bayonne-medical-c...
I thought uninsured folks were charged the chargemaster price. They may not end up PAYING that price. . .even if they spend their entire lives trying. . .but I thought that's what uninsured folks were CHARGED.
Lung transplant: 0 results
Didn't see that earlier - and there's only one listing. $413?? More like $143K.