By Ronald K. Zoeller
A recent letter to The Buffalo News was published from an individual whose medical treatment resulted in bills of more than $107,000, but his health care providers accepted Medicare payments of about $38,000. This not unusual, as Buffalo hospitals bill on average more than 300% of Medicare for inpatient care.
The problem is that there are no regulatory requirements that mandate real transparency in the billing and payment process. The federal government has mandated pricing disclosure, but the format of price information is controlled by the hospital systems.
Review a hospital website and try to figure out how much your next treatment will cost. The feds could fix a big part of the system simply by mandating that everybody pays the same amount for the same services, regardless of health insurance coverage. Why should an uninsured patient or one with individual coverage be billed more for a gallbladder procedure than someone who has “brand name” coverage? The costs to provide the care are the same.
In a better system, market forces might control medical costs. But try asking the hospital admissions office for an estimate as to how much they will bill you so you can comparison shop for needed services. Just as they negotiate with some insurers, hospitals could charge patients a fixed case rate per confinement that varies by diagnosis. Then you wouldn’t have to ask why that pill cost $18.
Hospitals will counter that most patients don’t experience such egregious charges, but actual payment data is guarded more closely than Fort Knox. The hospitals and insurers negotiate fees in which the three local carriers all pay similar amounts and the national insurers are relegated to a second tier.
It has become routine for hospitals and insurers to agree that (1) their mutual financial arrangements may not be disclosed to anyone, and (2) the insurer agrees not to audit the hospital billings for accuracy or appropriateness. Hospitals comfortably remain “not-for-profit,” operating with too much staff that doesn’t treat patients.
This system has led to escalating medical costs and, for many, unaffordable health insurance premiums. Virtually every employer is represented by an insurance broker, but with an environment of escalating premiums and broker commissions, the brokers do not challenge the local insurers to institute billing and payment transparency and changes to the system.
Health care billings have tripled in the last 20 years. Providers, insurers and employee benefit brokers are in control, with employers and employees funding the dysfunctional system. It won’t change without external disruption.
Ronald K. Zoeller is CEO of Azeros Health Plans, Buffalo.