The Problem is Price, not Utilization

OK, stop me if you’ve heard this before, but I understand we have some new readers, so here are the latest horror stories from my AAP Section on Administration and Practice Management colleagues on the Listserve:

From Sue:

OK...this goes deep into You are $#%^ kidding me, right?

So, I slipped getting of our hot tub a few weeks ago (yes, one extra glass of champagne) while we were at our beach house in NJ. It was 11:30 at night, laceration on my forehead below my hairline. If I had dermabond at home, probably would have glued it, but I didn't. Wouldn't stop bleeding, no "urgent care" open, so I decided to head to the local ER in Cape May Courthouse for a few stitches. I hate over-utilizing healthcare resources, but really had no choice.

Here's the CRAZY COST OF HEALTHCARE!

The ER billed Aetna 

99283 (level 3 emergency service)...to say, Yep, you need a few stitches $725.00.

I had a $200 copay, and Aetna paid $503.24

they also charged a 12013 (repair superficial wound) an additional $725.00 of which Aetna paid $703.24

along with some supplies for nominal charges paid about $50.

ALL total: Aetna paid $1,256.12 for my FIVE stitches and I paid $200. 

Total paid:  $1,456.12

NOW, I get a bill for the ER physician services who are NOT participating with Aetna, asking me for an additional $254.80 for the amount Aetna wrote off and didn't pay them.

No WONDER we are having so much trouble with the insurance companies trying to send everyone to the Urgent care centers. 

This is LUDICROUS!

Sue

But not to be outdone, Michael:

Ah, c'mon Sue.  Your E.R. billing department must be staffed by amateurs if that's all they charged - I'd say that only deserves a "$#"  kidding me :)

When our son got a nice scalp laceration at night and we took him to the E.R. for staples, how's this for a "$#^!@&*^#)(&" kidding me:

E.R. "Emergency Service" charge - $1,906
E.R. "Surgery-Skin" charge - $1,235
E.R. "Supplies-Sterile" - $557 (I'm guessing this is for the stapler and two staples applied)
E.R. "Supplies-Non Sterile" - $160 (this must have been for the H20 flush to clean the wound prior to the staples)
Doctor "Emergency Service" - $284 (the only reasonable charge of the bunch)
Doctor "Surgery-Skin" - $533

So a grand total of almost $5,000 charged for ten minutes of history, exam, and anticipatory guidance,  some water flushed by a nurse (actually I think it might have been a nursing tech), and the doctor putting the staple gun against his scalp for 10 seconds to pop in two staples.   Since I knew this doctor and I hadn't seen him in awhile we probably spent more time catching up then was spent on medical care.

Obviously the insurance PPO discount got it down significantly.    I need to call the billing office on my day off and have some fun seeing how they justify such ludicrous charges.

The policy implications:

While these true stories are amazing on their face, I believe that they are emblematic of what the real problem is with high costs of health care in the US.  The problem is not overutilization, it is high prices, and creative billing by hospitals, and also some doctors.

When reforms to lower health care costs are proposed, a prime question needs to be: would the proposed reform attack those high prices?  Or is the proposed reform something that would diminish utilization more, make utilization “more efficient” (e.g., reduce duplicated tests), or put more burden for paying onto the patient?  If a reform doesn’t attack prices, it is slashing at a peripheral issue only.

Note also from Sue’s post the complicity of the insurance company.  Some say they should be our agents to keep costs down.  But high prices in one sector leads to high prices in another.  If the insurance company has a set margin and it pays out more for care, it raises its premiums so it can collect more, and its profit will be a percentage of that higher number.   As a result, the insurance company and its executives make more money.  This phenomenon, then it collects more in premiums, and the companies and the executives make more.

This is precisely what happened in the auto industry, as UAW and management scratched each other’s back.  Only competition from abroad brought changed that situation.  Bring on more Indian radiologists on call at night!

budd shenkin