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Inflated Medical Bills Mask True Cost Of Care

Posted by on Aug. 17, 2011 at 12:55 AM
  • 16 Replies

One man's case illustrates the problem: His medicine to treat Crohn's disease runs the hospital about $6,300 per dose. But the bill he gets is for $38,000.

It's bad enough that her son has a chronic disease that can send him to the emergency room when the pain becomes unbearable. But Susan Kenyon is also grappling with wildly inflated medical prices that have become a mainstay of our healthcare system.

Her son's medicine runs the hospital about $6,300 per dose. But the bill that patients are hit with is a whopping $38,000. Discounts and insurance cover most of that, but the system makes it virtually impossible to know the true cost of a treatment.

"We need to stop the price gouging," Kenyon said. "That's the only way we can start getting costs under control."

It's a problem that affects all of us. As hospitals jack up prices to get more money from insurance companies, insurers in turn hike premiums for all members to cover their rising expenses. It's a vicious cycle that exacerbates the unaffordability and inaccessibility of treatment in the United States.

Kenyon, 56, of Lakewood, has been frustrated by this since her son, Scott, was diagnosed with Crohn's disease five years ago. Crohn's is a disorder affecting the digestive tract. It can cause severe abdominal pain, among other symptoms.

"It's like getting stabbed in the stomach," Scott, 26, said of the flare ups that would send him to the emergency room about once a month. "They'd have to give me morphine to control the pain."

That changed in 2007 when he started receiving a drug called Remicade. "Now things are a lot more manageable," Scott said. "I haven't been to the emergency room once this year."

However, Remicade is expensive. The maker of the drug, Janssen Biotech, a division of Johnson & Johnson, says Remicade is sold to hospitals and pharmacies for nearly $700 per 100-miligram vial. Scott requires an intravenous drip of nine vials every other month — a wholesale cost per dose of about $6,300.

But according to his most recent bill from Long Beach Memorial Medical Center, the hospital charged $38,064.95 for the treatment. It then discounted that amount by almost $25,000.

Why the sky-high charge and steep discount? Government-run insurance programs demanded reduced prices from healthcare providers decades ago. Private insurers insisted on equal treatment, and soon it became standard practice for medical bills to be heavily inflated to accommodate the contractual discounts.

In other words, with mandated discounts baked into the system, hospitals routinely overstate medical fees — often by tens of thousands of dollars — so their final reimbursement is closer to actual costs.

"The charges do confuse things," acknowledged John Cascell, vice president of managed care for Long Beach Memorial. "It would probably be better if the charges weren't even on the bill and you just see how much is being covered by the insurer."

In Scott's case, the roller-coaster of charges resulted in a claim of $13,123.32 being submitted to his insurer, UnitedHealthcare. Of that amount, the insurance company covered $10,498.65 of the cost, leaving Kenyon's family with an out-of-pocket expense of $2,624.67.

Scott recently graduated from Cal State Long Beach with a degree in geology. He's now doing an internship with the U.S. Geological Survey. When that's done, he plans to pursue a graduate degree — if he can.

His parents pay his medical bills, and are prepared to keep doing so. However, Scott's school-provided policy with UnitedHealthcare caps coverage at $100,000 per illness. He's already run up more than $50,000 in claims.

At this rate, his coverage will hit the limit at some point next year. That means, to stay insured, Scott may have to forgo an advanced degree and try to get a job — any job — that comes with health insurance.

He won't be eligible for individual coverage until a provision of the healthcare reform law takes effect in 2014. It will prevent insurers from denying coverage to people with pre-existing conditions.

Susan Kenyon, who holds a clerical job with the Los Alamitos Unified School District, said "it's getting to be a challenge" to cover her son's more than $15,000 in annual medical costs. But she said she and her husband, an engineer, will do whatever it takes to support him.

What bothers Kenyon most is the lunacy of a healthcare system under which pricing bears no relation to actual costs. Is it any wonder that Americans on average pay about twice per person for healthcare than people in such countries as Germany, France, Denmark and Britain?

"Consumers are left in the dark about the true value of services they receive," said Jerry Flanagan, a staff attorney at Consumer Watchdog, the Santa Monica advocacy group. "They're unable to shop around among different hospitals because they don't know what things really cost."

He added that the inflated bills can also devastate the uninsured, who can be stuck with charges many times higher than what other patients pay.

How do we fix things? A first step would be to establish a panel of medical experts who can determine fair prices for most treatments — a sort of Kelley Blue Book for healthcare.

Then healthcare providers and insurers (both public and private) need to agree on new terms for claims and reimbursement that ensure fair and reasonable payments without relying on accounting gimmickry.

Finally, all costs need to be clearly presented to patients so they can understand what they're paying for and be better-informed medical consumers. There also needs to be easier ways for people to challenge being charged, say, $10 for an aspirin tablet.

Supporters of our healthcare system like to say it's the best in the world. But there's no way to justify $6,300 worth of medicine resulting in a bill for $38,000.

That's not just bad math. It's bad medicine.

http://www.consumerwatchdog.org/story/inflated-medical-bills-mask-true-cost-care

by on Aug. 17, 2011 at 12:55 AM
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Replies (1-10):
jessilin0113
by Ruby Member on Aug. 17, 2011 at 1:00 AM

I totally agree with this article.  There is so much wrong with hospital pricing and insurance rates and all of that.  This is the field I work in and some of the stuff I see just makes me want to scream. 

jonellg
by on Aug. 17, 2011 at 1:01 AM

This is a huge part of our healthcare problem.

PurdueMom
by Sherri on Aug. 17, 2011 at 1:04 AM

Ooooooooooo.... I have so much to say about this, but it's so late and I'm about to go to bed!  Bumping for tomorrow.

I have to get up in 4 hours to go to my job as a nurse in a non-for-profit hospital.  :)

Sherri

Imagine.

survivorinohio
by René on Aug. 17, 2011 at 1:18 AM

I have been saying this for a while...

How far you go in life depends on your being: tender with the young, compassionate with the aged, sympathetic with the striving and tolerant of both the weak and strong.  Because someday in life you would have been one or all of these.  GeorgeWashingtonCarver


    

                                             

                    


Ziva65
by Gold Member on Aug. 17, 2011 at 1:25 AM


Quoting PurdueMom:

Ooooooooooo.... I have so much to say about this, but it's so late and I'm about to go to bed!  Bumping for tomorrow.

I have to get up in 4 hours to go to my job as a nurse in a non-for-profit hospital.  :)

I'm sure you know that not for profit is still a mask for profit... the shareholders are just different.

stormcris
by Christy on Aug. 17, 2011 at 1:30 AM

The mark up rate is tremendous. 

Ziva65
by Gold Member on Aug. 17, 2011 at 1:39 AM

I could go on and on, I used to run the outpatient division of a hospital.

I just erased everything I wrote/// it's probably worse than most people know.

.Bubbles.
by on Aug. 17, 2011 at 9:59 AM

The non-profit hospital my mom works for pulls this crap to and yes non-profit for them doesn't mean what it would for anyone else.  They just have to figure out how to blow through the money by the end of the year with endless remodels and buying up all the local clinics.  While simultaneously paying their employees low wages and not helping patients who are uninsured or under insured.

My son required a vaccine for RSV as an infant because he was born 14 weeks early.  We couldn't risk him getting RSV which is common around here in winter.  The vaccine cost our insurance company between $20,000-$25,000.  At the time I remember thinking how insane that was.  There have been news reports of people being charged $500 for "mucus disposal systems" aka Kleenex. 

eema.gray
by on Aug. 17, 2011 at 10:19 AM

I agree that the prices are insane, not that anybody disagrees about that.  Here's my example:  After my daughter was born (unplanned, semi emergency home birth), she and I went to the hospital for 24 hours.  Standard procedure in my state:  If EMT's are called during a birth, mom and baby have to be transported for at least 24 hours, which makes quite a lot of sense.  Anyway, about a month later the bills started arriving.  

The ambulance bill didn't seem that outrageous ($400 something if I recall correctly, really quite reasonably).  The hospital bill was $14,000, including $7,000 in "rooming in" charge for my daughter who spent the majority of that day with me.  Now, granted, insurance covered 2/3rds of that charge but still, we ended up paying five grand.  That didn't even include the "cost" of the on call pediatrician spending five minutes with my newborn and telling us we could leave at noon.

All total, the bills we got for her birth came pretty close to $18,000.

But the midwife I'm going to for my current pregnancy charges $2300.  Her services include the exact same prenatal care you'd receive at an OB's office, more prenatal visits (I see her every 3 weeks until 37 weeks, then every week), and far superior post natal care.  She'll come to our house each of the first three days post birth, then we go to her office at 2, 4, and 6 weeks post partum.  How does this woman manage to charge $2300 and recoup all her expenses on a birth, while a hospital (that didn't even deliver the baby, lol) can justify $14,000? 

Because the hospital is a non profit and has to recoup their costs to medicaid and slow paying patients somewhere.

EireLass
by Ruby Member on Aug. 17, 2011 at 10:22 AM

Oh boy...don't get me going. For a period of time I didn't have insurance...recently. Maybe for 7 months or so. But I still needed medical care. So I went to the doctor to discuss my medications, possible change them around, something. I could tell in my body something wasn't right. So for 15 minutes, she stood at her desk, I sat on the bed, and we discussed some options. She didn't change my meds (I ended up going to someone else who could work on them better, satisfactorily). I get a bill for $275. WTF!!! I went to the office and asked "does she really believe she's worth that much? $1100/hour? Without touching anyone? The billing office looked through the chart and it said she took my blood pressure "so she made contact". I told her...."I bought a cuff at CVS for $20...maybe the doctor could look into buying one of those!!" haha.  

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