THCB

And Yes, The Affordable Care Act Really Does Make Care More Affordable. Here’s One Example ….

Recently I was asked to intervene on behalf of a patient who, trapped by circumstance, was paying off an enormous bill for a lithotripsy procedure. What I uncovered wasn’t news, but it drove home how egregious the current system can be, why it so badly needs to be fixed, and how the Affordable Care Act (ACA) helps move us in the right direction.

The patient had health insurance through her husband’s job. But it was cancelled just after the hospital validated it, because the employer failed to pay the premium. The procedure was performed, and the patient was charged as “self-pay.”

If Medicare had been the payor in this case, the hospital’s total reimbursement would have been a little less than $2,000. But the lithotripsy and associated costs were billed at $33,160, or just under 17 times the Medicare rate. After the patient applied for financial assistance, a 30% contractual adjustment was applied, reducing her bill to just under 12 times the Medicare rate.

If the health system had asked her to pay 190 percent of Medicare – typically the upper end of commercial insurance rates – her bill would have been about $3,800. By the time I was contacted, the patient and her husband – responsible people trying to make good on their debt – had already paid the health system $5,700 or 285 percent of Medicare. The hospital insisted they owed an additional $16,000.

I laid this out in a letter to the CEO and, probably because he wanted to avoid a detailed description of this unpleasantness in the local paper, he relented, zeroing out the patient’s balance. No hospital executive wants to be publicly profiled as a financial predator.

But while that resolved that patient’s problem, it did nothing to change the broader practice. Most US health systems, both for-profit and not-for-profit, exploit self-pay patients in this way. Worse, not-for-profit health systems legally pillage their communities’ most financially vulnerable patients while getting millions of dollars in tax breaks each year for providing charity care.

Aggressive collections procedures, including  home liens, are widespread.
Some states have strictly limited what hospitals can charge low income patients. In California, uninsured patients with incomes below 350 percent of the federal poverty level (FPL) – $82,425 in 2013 for a family of 4 – can be charged no more than Medicare rates. In New Jersey, patients within 500 percent of the FPL cannot be charged more than 115 percent of Medicare.

Section 9007 of the ACA took effect last year and prohibits excessive pricing for self-pay patients, and would revoke a charitable hospital’s tax-exempt status if it charges them more than it charges for insured patients. The language is ambiguous, conceivably allowing health systems to circumvent the law’s intent. But the spirit is clear. To keep their not-for-profit tax status and perks, health systems must stop taking advantage of self-pay patients.

That’s the core point. Most health system executives have, at some time in their careers, released a friend or acquaintance from egregious pricing. Many have forgiven a debtor they didn’t know because the issue was raised and they knew how unfavorable it would look in the local media. In other words, most know that, while these practices are lucrative and mostly hidden, they are also disgraceful.

For that reason alone, it is time for health system leaders to stand up, announce that their systems will adhere to the ACA’s intention, stop pursuing self-pay patients as a windfall opportunity, and encourage systems throughout the country to follow their lead.

In a stroke, this would improve American health care and make life better for millions of patients.

Brian Klepper, PhD is an independent health care analyst and Chief Development Officer for WeCare TLC Onsite Clinics. His website, Replace the RUC, provides extensive background on the role that the AMA’s RVS Update Committee has had on America’s health care cost crisis. This originally appeared in Medscape Connect’s Care and Cost Blog.

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60 replies »

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  3. Exactly! The chargemaster rates are obscene, and not requiring them to be uniform, reasonable, and actually tied to the cost, is an oversight, purposeful or not, that absolutely should be corrected in the very first amendments to this act. I took me months to get information from a hospital about why they charged me $68 for a “surgical kit” when I had an oxygen test. There was a plastic mouthpiece that I needed to use that was in the pack. So, I was charged $68 for a piece of plastic which probably cost the hospital $0.75, and I am not self pay. When I tried to get them to justify that charge, I was stonewalled and received no further responses.

  4. I’m yet to see any solid evidence that this will benefit those in NEED of healthcare. In fact, as a dentist in a small community, I’m even more curious how this will affect those in the private healthcare and dental industry.

    Can anyone shed some light on the subject with factual content ? I’m honestly having a hard time keeping up with this.

  5. Political vitriol aside, healthcare facilities are to be required to offer to Self Pays what they offer insurance companies per the Section of the ACA mentioned. What you failed to point out is that hospitals often offer different contractual rates to different insurances. (BCBS may get 90+%, Cigna may get 60+%, Beechstreet may get 30+%) All a hospital has to do is meet the benchmark of their lowest common denominator (a Self Pay Discount of 30% in this case would be sufficient, but still doesn’t keep people out of medical bankruptcy – as the law was intended.)

    Which is a real shame.

  6. Wonderful, so you yourself do this. This is extrapolated to every other doctor practicing in this country? I am glad you do the right thing, I think I do too.

    But, if you have 20% plus of our colleagues who DON’T, what is the endpoint to that behavior? Frankly, I read your rebuttals to either dismiss the concerns I raise about this incessant focus on profits in our profession, or perhaps an insidious acceptance of such behaviors and agendas?

    Plus the fact too many doctors continue to rationalize, minimize, and deny any consequences that arise from the erroneous expectation that we have an obligation to continually treat ALL people who have no interest in boundaries and accountability in participating in health care interventions as asked and expected.

    Reckless naivete and terminal hope, those are the terms I use on those in health care who think we HAVE to care for every single human on this planet. Yes, we have an obligation to evaluate and offer initial interventions to those who walk in our doors, but, we haven’t signed a contract to treat every single person indefinitely who may not cooperate with the health care process.

    Before we can save others, we ourselves have to be safe. Glad all you PPACA supporters are willing and able to sacrifice your well being and professional livelihood to support a partisan agenda. Bet Hippocrates would be out there shouting positive platitudes in the demonstrations to support this law.

    NOT! But, politics corrupts even the best intended. And that is how politicians get ya, use your intrinsic interest for the public welfare to be manipulated to fit political agendas. And you don’t see it until it is too late.

    And this comment is read like I type it in chinese letters to the hopeless and entrenched PPACA supporters. Hope ya law serves you well. My mistake, it makes you servants as well!

  7. Joel,

    We provide care to everyone that comes through the door at the hospitals we cover. The volume of non-paying patients at most of our hospitals probably exceeds 5 – 10%. And in our offices, when I have been asked if we can do a test for someone who needs it, but can’t pay, I have always said: “Ask them to pay what they can and we will do the test”. (Not sure that that always happens the way our offices are run today)

    And of course in the past, before the GOVERNMENT MADE IT ILLEGAL! we always gave professional courtesy to fellow physicians and clergy. We also wrote off many bills if accompanied by a letter telling a hard luck story.

    Finally, for many years I used to come in at night and on weekends for invasive procedures. Never once did I ask what the patients insurance was. I didn’t want to know because I didn’t want it to affect how I treated patients.

    In essence, my conscience is clear. The problem is that the non-paying patients are unevenly distributed. At some hospitals the non-paying patients make up 5 to 10%, at others a much higher number. I am happy to take my fair share, but I don’t want to take my share, plus someone elses, nor do I want the problems our nations healthcare system to fall disproportionately on my back.

  8. Oh, as a suggestion as a start, EVERY doctor should commit some appreciable amount of time treating those in society who are down and out, even if it is just 5-10% of your billable hours, so at the end of your day as a provider, EVERY patient in the community has access to care, whether it be the President or a homeless patient figuratively sitting together in your waiting room for treatment.

    That is a foundation expectation at least physicians should be accepting as a premise to doing what is right and responsible.

    Oh, also, profit margins are put back into the health care system to improve it, not improve select individuals’ private lives.

    Two principles that were the basis of what physicians and large health care systems in communities accepted as tenets 40 plus years ago to being overt examples of what their citizens expected of people in such prominent and important positions of influence, impact, and to some degree, power.

    But, NOT principles to the business model, eh?!?! Every F—-g man for himself, that is what pure profit pushes, true!?

  9. Because most here are commenting through the partisan playbooks of their party’s agenda, not expressing nor committed to any honest and sincere principles to what health care is about and should strive for further.

    And frankly, it is a no brainer what to do when these alleged NON profit centers for providing care are obscenely gouging the public for being a captive audience for care needs. The pervasive silence by what I believe is over 80% of our colleagues is not only astounding, but perverse.

    So, WHEN we see a sizeable portion of docs either try to be sole boutique practices or limiting of treatment access to those only paying cash, or just frankly flee from providing care in any fashion, what is that message?

    Business models are incongruent with health care boundaries. I am sick and tired of the hijack by not only the pure business model non clinicians telling us that health care is a business, but, the traitors within the profession who just reinforce to the antiphysician lobby that docs are solely in this profession to profit.

    That is not rocket science to express nor understand. But, the antisocial element out there to ruin the health care system, they exist and pervade in the fabric of clinical care interventions while those of you allegedly still invested in doing the right thing and committed to patient care just stand there with your hands on your faces doing the best “Mr Bill” imitations when he utters “OH NO!!!”

    Silence is death, colleagues, but, I really think so many of you don’t care, or are convinced you are so insulated you are not affected.

    Jeez, get your heads out of your EMRs and look around for a change!

  10. Joel,

    This post was about how the ACA had prevented hospitals from charging outrageous amounts to patients without insurance. I believe that all the commenters were opposed to those kinds of charges. From there the discussion took off in a number of directions.

    Not sure why you are angry at the commenters. I am a practicing physician, who would like to see our country have a quality, cost effective health care system. Most others are similarly motivated, although have very different ideas about how it should be accomplished.

    What specific suggestions do you have on how things could be improved?

  11. What is both sad and pathetic how politicians twist the differences between principles versus agendas. Principles in health care as a primary basis are do no harm and go from least to most invasive in interventions. PPACA, however, is based on agendas, everyone “deserves” health care and go from cheapest to most expensive interventions. Oh, also politics sees EVERYONE with diagnosis “A” gets the same exact treatment options from moment one.

    After all, this is the basis of everyone is equal and everything has to be fair.

    But, politics, especially these days by BOTH parties are almost solely driven by agendas they masquerade as principles. It is the beast that rules the political mind.

    And almost all of you in these threads dance around the false notions that health care can be contained by business models. Sad and pathetic. You cannot profit while spending money to save lives.

    And no one touches the biggest issues yet to be endured by the public. The shortage of physicians, and the impact of the IPAB.

    Easy to focus on money. Not so easy about the real care and the brutal bureaucratic intrusions to follow.

    Don’t worry, I have no faith in the Repugnocant Party agenda either. Get florid profit margins back in the hands of the few who are more so cronies,and then find another war to simply kill and control.

    Wow, abandonment, or dependency, there are the choices America has for political representation. Thanks, commenters!

  12. Barry,

    Can’t answer your question except to say that if they have made certain representations which they haven’t kept, we will remember at the next contract renewal – “Fool me once ….

    As for the self pay patient, in theory you are right, however keeping cash is tricky, checks can bounce and credit cards have a discount on them.

  13. legacyflyer –

    I understand that imaging is a high fixed cost business. However, it troubles me that you give the large insurer a better deal without any guarantee of a specific minimum amount of volume per year. If I come in as a self-pay patient and I pay immediately by check, cash, credit card or debit card, I actually cost less to serve than an insured patient because you get your money immediately and you don’t have to file a claim. All you have to do is give me a receipt for my payment. I wonder how the large insurer would react if they had to guarantee some minimum amount of volume to get the best price or pay 5% or 10% more per image and not offer a volume guarantee.

  14. “So how do you send patients to the most “cost-effective” providers without gutting inner city hospitals?”

    I can offer a few thoughts on this.

    First, increase GME payments from Medicare to cover the fully allocated cost of educating the next generation of doctors.

    Second, ensure that disproportionate share payments are sufficient to cover the cost of serving the uninsured, especially at teaching hospitals.

    Third, federalize Medicaid and pay Medicare rates for services, tests, and procedures needed by these beneficiaries. While federal taxes would have to be raised to do this, states could use the money freed up to bring the funded status of their state and local pension funds up to or close to 100%. If there’s money left over, cut state and local tax burdens and end retiree health benefits for Medicare eligible retirees. Change state constitutions if necessary to make that happen.

    If all else fails, the inner city hospitals may have to reduce their number of licensed beds.

  15. Simplistically, it costs us the same to offer any particular service. For example, for an MRI there is a BIG expense for the equipment and maintenance contract, expense for the technologist, contrast material, etc. etc.

    Because of the large fixed costs with much of our equipment we may have a “break even” number of 20 patients. If we don’t do 20 patients per day, we loose money on that equipment. Anything over 20 patients per day we start to make money.

    So you can see that it makes sense for us to discount for volume. And an insurance company with 100,000 covered lives can send us more volume than a smaller company.

    Obviously, this is a little simplistic since with greater volume comes the need for greater staffing, more contrast, etc. Still, because much of the cost is fixed more volume is good.

  16. Barry,

    Although I have not personally sat in on any contract negotiations, I believe it works as follows:

    1) Insurer makes representations as to number of “covered lives” and from there estimates are made about volume of procedures.
    2) Based on these numbers, rate quote is provided/negotiated.
    3) We live with the negotiated rate through the life of the contract.
    4) New negotiations occur at end of contract and at that time any discrepancies on numbers are “discussed” and adjustments made.

    Note that many of these contracts are ones we have held for a long time so we have pretty good historical data. And someone coming to us with 100,000 covered lives gets a better rate than someone with 10,000 covered lives.

    I was intrigued by the following statement and how it would apply to Maryland:

    “A good database could quickly calculate the commercial contract rate for any procedure at any hospital if we had price transparency tools and then we could more easily direct patients to the most cost-effective high quality providers.”

    As you know, in my State the rates are set by the HSCRC and as a consequence inner city hospitals are awarded MUCH higher rates than suburban or rural hospitals. And although some of this may be due to specialized treatments available at Hopkins or U of MD, much of it is due to payor mix and is in effect a subsidy for the number of uninsured patients treated at that institution.

    So if the insurance companies were to flex their muscles and send everyone where the rates are lowest, Hopkins and U of MD would loose out bigtime. (And for most diseases and procedures community hospitals do as well or better than the academic centers) It is probable that similar things occur in other less regulated states.

    So how do you send patients to the most “cost-effective” providers without gutting inner city hospitals?

  17. Legacy, does it cost you less to administer treatment to patients that come from the 100,000 covered lives?

  18. As Uwe Reinhardt has documented since 2006, we have a wild west cattle-rustlers market for the uninsured in hospitals.

    They are billed enormous amounts, many pay nothing, many bills are partly forgiven, and only a few middle class innocents pay as billed.

    Why 43 or so states do not regulate this has baffled me for a long time.
    I suppose it is because the uninsured are not a voting bloc at all, in fact many do not vote.

    Barry I would go one step further than you. I agree that bills should be limited to 125% of Medicare. I would then have Medicare pay the bills in a lump sum, and then the uninsured would owe the government what was paid on their behalf. Hospitals have payroll to meet and they need the revenue.

    They could pay it over 5 years through income tax withholding, with no interest charges.

    At the current status of uninsureds, this would mean about $30 billion a year of Medicare loans, most of which would be repaid eventually

    We gave more money to AIG and its counterparties in one week in 2008.

  19. And many of those jurors don’t pay anything.

    I wish we could do the same with a malpractice verdict.

  20. Peter1,

    $250 is way too high. Come to Baltimore and I will get it done for you for $40.

  21. Peter1,

    So here is how it works in the real world.

    We meet with insurance companies (and other groups who send us patients) to negotiate prices.

    During the course of these negotiations, the insurer makes representations as to how many covered lives they have and how many patients they are likely to send.

    How many patients we will get definitely influences the price they are quoted. Someone who has 100,000 covered lives gets a better rate than someone with 1,000 covered lives. Just like someone who is buying 100,000 screwdrivers gets a better unit cost than someone buying 10.

    And yes we do get “100s of insured with the same malady”, since we are sent thousands of patients by some insurers.

  22. “Juries in Baltimore City have an average education level of the 6th grade (personal communication from experienced attorney) and are VERY plaintiff friendly. You could say that to some people a malpractice trial and “hitting the lottery” are similar.”

    That’s fair, hospitals charge full charge master to those 6th grade uninsured juries – cause they can, and those juries grant equally unreasonable awards to plaintiffs – cause they can.

    Now you know what it’s like to get screwed.

  23. legacyflyer –

    Thanks for the response and I agree with most of it. I also appreciate your comment about very low Medicaid reimbursement rates and the litigation hell holes in many inner cities and some rural counties across the country.

    I want to make two points though. First, regarding the purchase of one screwdriver vs. Wal-Mart buying thousands of them at once, the manufacturer gets the cost benefit of a long production run in selling to Wal-Mart. Wal-Mart may even pick them up in its own truck and transport them to one of its distribution centers. Lower cost to serve the customer means the vendor can charge less and still make a fair profit.

    By contrast, when a large insurer tells a hospital that it’s getting access to thousands of insured lives but is not guaranteeing the hospital any specific amount of volume or revenue, it’s different. My former employer used to have a contract with U.S. Air that gave the company an 8% discount from its standard fares if it guaranteed $10 million of volume per year. If the company missed that volume target by even $1.00, it lost the 8% discount on its entire book of business with the airline for the year. Moreover, the average person who just wants to fly once only pays 8% more than the corporate customer and not several hundred percent more.

    Regarding hospital billing generally, I think commercial insurers should negotiate a flat percentage above Medicare for virtually all services with a somewhat higher percentage for E&M codes and a lower percentage for procedure oriented CPT-4 codes and MS-DRG codes. A good database could quickly calculate the commercial contract rate for any procedure at any hospital if we had price transparency tools and then we could more easily direct patients to the most cost-effective high quality providers.

    Care that must be delivered under emergency conditions to the uninsured or to the insured by an out-of-network provider should not be able to charge more than 115%-125% of Medicare. It’s not conceptually difficult but it’s incredibly hard to overcome the power of special interests that benefit from the status quo.

  24. Legacy, a private radiology clinic in my area used to charge $40 cash per X-ray shot. It was taken over by our state hospital system (the non-profit one) and now charges $250 cash per shot. Hard for me to feel sorry for some loss of income.

  25. Legacy, comparisons of health care to large production runs for large volume orders do not make any sense. Insurance companies don’t send hospitals 100s of insured with the same malady so that hospital can treat as production line cure.

    “could easily be charged the most the market will bear.”

    Legacy, full list on a car is not meant to drive the buyer away. When you say what the market will bear that goes with the power of the courts to exact bankruptcy and strip the patient bare of everything. Charging full charge master makes it more likely the patient will default, not pay the fair bill.

  26. Peter1,

    I am an (evil) specialist. Even for us, income is down, particularly when adjusted for inflation. Our price per unit is way down, but our volumes had been up year after year. Lately though they are flat. There is also “complexity creep” where CTs are ordered instead of XRays, and MRIs instead of CTs.

    The main problem with imaging is not that the unit price is too high, but that too many studies are ordered. Probably half of all imaging is poorly thought out, useless or otherwise unneeded. The reasons for this are multiple and include: fear of malpractice, patients demands for the latest and greatest, ignorance or what the test is likely to show and finally in some cases greed/self referral.

    Will the ACA change any of this? If we go to capitation yes. However in a capitated environment there is pressure to “throw out the baby with the bathwater”. I am sure the number of studies ordered will be fewer, just not sure they will be the right ones.

    Looking on the bright side personally, I can currently afford to retire. So whatever kind of messy clusterf*#k system we end up with I will only have to endure as a patient instead of as both a patient and “provider”. And of course there is also excessive alcohol consumption! 😉

  27. Barry,

    I don’t think uninsured patients should be raped with charges many times that of insured or Medicare patients. I agree that there should be limits on what an uninsured patient can be charged. Maryland’s rate of 136% sounds about right or even perhaps a bit high

    On the other hand, the medical industry is acting (in principle at least) like many other industries. If you want to buy 1 screwdriver at the hardware store you pay a couple of bucks, if you are Walmart and are buying 10,000 screwdrivers you pay a fraction of that. If you buy a car from a car dealer you can typically negotiate some discount over “list”. I am sure that Hertz and Avis, who buy many cars get a much steeper discount. This is not illegal or even unethical.

    Similarly, the rate of a Blue Cross & Blue Shield or a United Healthcare patient has been negotiated by a company that can send thousands of patients. A single patient showing up doesn’t have that kind of leverage and if this were strictly a business transaction could easily be charged the most the market will bear.

    I will tell you that there is a flip side to providing care for uninsured patients – we frequently get paid nothing. In some hospitals in Baltimore, the collection percentage is very poor because of the high number of uninsured and Medicaid patients (Medicaid pays a much lower rate than even Medicare). Our group was offered the Radiology contracts at several large hospitals in Baltimore City. We declined for 2 reasons:

    1) Low collection percentages
    2) Malpractice risk

    The first is easy to understand, the second requires some explanation. Juries in Baltimore City have an average education level of the 6th grade (personal communication from experienced attorney) and are VERY plaintiff friendly. You could say that to some people a malpractice trial and “hitting the lottery” are similar. Plaintiffs lawyers try VERY hard to get cases into the City. The suburban counties are less plaintiff friendly and the rural counties even less so.

    Our group currently has no offices or hospital contracts in Baltimore City. We walked away from a large city hospital about 5 years ago and have turned down several offers for city hospitals within the past couple of years. We also passed up a office located in the city.

    So while this post focuses on how the uninsured get taken advantage of (and I agree that the rates quoted above are indefensible) if one were to look at what the uninsured pay on average, it would look very different.

  28. legacyflyer –

    Yes, revenue actually collected is the sum of commercial insurer contract rates, Medicare and Medicaid allowed rates (dictated / administered prices) and whatever the hospital collects from self-payers. I believe the regulations require that every claim is billed at charge master rates but the hospital only collects the allowances and the commercial insurer contract rates. MD apparently restricts billed amounts to a comparatively low percentage above costs whereas other states, including CA, have no restrictions. In addition, the higher charge master rates are the more hospitals collect from Medicare for outlier cases.

    As I’ve said numerous times, there needs to be limits on how much the uninsured can be charged and there also needs to be limits on how much can be charged for care that must be delivered under emergency conditions which, by definition, precludes price shopping.

  29. I did not write this article to exclaim how terrific the ACA is. The reform law, written largely by health care industry lobbyist who contributed $1.2 billion in Congressional campaign contributions in 2009, is an extremely complex and nuanced mish-mash of good and terrible legislation. But one of the positive contributions in the law is this provision that would revoke a health system’s NFP status for charging self-pay patients so differently than covered ones. Why it should be hard to distinguish themselves from payday loan shop is a mystery to me, but clearly these behaviors are continuing, and probably stop until some health system gets very visibly sued and has its NFP status taken away.

    With that as context, Dave, and as longtime readers of this blog will vouch, I am not a “cool-aid drinker trying to create a distraction to cover the hard truth.” Take your bush league, barely informed, unprofessional attitude and stick it where the sun don’t shine.

    Saurabh Jha, I disagree about the brilliance of Steven Brill’s piece. Contrary to his comments, the excesses associated with the chargemaster were hardly news within the health care industry, and while it is a serious problem, it is no more of one than the excesses generated by, say, the AMA’s RUC, or the refusal of the health IT firms to agree to adhere to guidelines for interoperability of health care information, or the continuation of fee-for-service reimbursement, or any of a dozen other major structural system problems.

    Even more importantly, describing a problem is very different than the changing it in an environment in which law is dominated by the health care industry’s influence. Has anything changed as a result of Mr. Brill’s article? Not that I can tell.

    You are confusing the meat of the bill with the mostly-slanted political crossfire associated with the warring on the bill. There is much in the bill that will do good. Many people who have not had access to coverage will get it. For example, uninsured people with cancer will be able to access care. On the other hand, the sidelining of cost containment mechanisms and the continuation of volume-based reimbursement are translating to much higher premiums that will further destable the system.

    In other words, I’ll see your Shania Twain and raise you a Steely Dan. “The things that pass for knowledge I don’t understand.”

    Joe, since I’ve devoted much of my career to these issues, OF COURSE I’ve considered why charges bear no relationship to cost. The answer is because health care pricing, cost, quality outcomes and safety data are opaque, because that allows health care professionals and organizations to extract more money from us than they’re legitimately entitled to. There is no mystery to this, and the law was an effort, compromised by Congress’ open-armed acceptance of lobbying dollars, to bring some of this under control. As is clear, they were only modestly successful.

    Bob Hertz, your idea about sending letters about the case studies of these practices to local churches and country clubs is a good one. If they had any spine, the local papers would do it, but they’re generally afraid that the health systems will squeeze their advertising dollars.

    LegacyFlyer, physicians are seeking the shelter of hospital employment because its become increasingly difficult to for small practices to be financially viable. The system is becoming increasingly corporatized. That’s a trend that, like many other parts of life, is a mix of good and bad.

    Hope this is helpful.

  30. “- Physicians incomes will probably go down.
    – Hospital incomes will probably go down
    – Insurance companies that have participated in the ACA will probably loose money due to adverse selection.”

    Admittedly a statement made in frustration at being forced to buy into the most expensive system in the world – without a subsidy and seeing all the incompetence at its launch. Nothings changed for me with ACA, certainly not the prices. I’d prefer to be uninsured as I’ve gotten pretty good at navigating the “system” as a healthy person who pays premiums to myself.

    Here in NC we will pay some of the highest premiums under ACA, given that BCBS holds the monopoly on coverage and our new Republican house/senate/governor put ideology ahead of community. Probably going to pay even higher premiums now that, “you can keep your policy”.

    The ACA adds many more customers to insurance and cuts hospital charity care – hard to see how they will loose money. Insurance is not adversely affected at all seeing that those higher rates reflect actuarial calculations of community ratings. Specialists certainly not loosing money, doubt other docs will as well – no pesky uninsured negotiations.

    I recognize PCP problems with income compared to specialists, so if you are a a PCP I sympathize and wish PCPs were allowed a larger roll.

  31. Barry,

    Explain that to me:

    “total charges billed by hospitals at charge master rates exceeded revenue actually collected by 27% in Maryland and 366% in California. Yet the overall operating margin earned by the hospitals was 6.7% in MD and 7.3% in CA.”

    Charge master rates are the high rates charged to people who don’t have insurance – is that correct?

    What does “revenue actually collected mean”? Is that the average bill for a patient receiving the same service who has insurance?

    If that is the case, then I would say that the HSCRC is doing a good job in that one area, while overall being ineffective.

  32. According to a recent article from the electronic publication “Fierce Healthcare,” in a recent year, total charges billed by hospitals at charge master rates exceeded revenue actually collected by 27% in Maryland and 366% in California. Yet the overall operating margin earned by the hospitals was 6.7% in MD and 7.3% in CA.

    I know that legacyflyer practices in MD and stated in a recent comment that the Healthcare Services Cost Review Commission (HSCRC) has not been all that effective in mitigating medical cost growth in MD but it apparently has been effective in protecting self-pay patients from being ripped off by hospitals, most of which are non-profit.

    Moreover, as Brian noted in his post, state level legislation in CA and NJ protects at least some of the uninsured population from expectations of payment at or close to charge master rates. This is a problem easily fixed by state legislatures without blowing up the whole healthcare system but they need to stand up to hospitals and their lobbyists. A few articles published in local papers about predatory hospital billing practices and perhaps some bad faith lawsuits might also be helpful.

  33. Peter1,

    In fact the only people I see getting rich off of this clusterf*#k called the ACA are the EMR vendors.

    – Physicians incomes will probably go down.
    – Hospital incomes will probably go down
    – Insurance companies that have participated in the ACA will probably loose money due to adverse selection.

    But if I can force a doc or hospital to buy a sh*#ty EMR because of a government mandate I can make money as an EMR vendor. Lock them in with proprietary software and make them pay a ransom (recent incident in Milwaukee) to get out. Now that is a business plan!

  34. Peter1,

    ” the ACA gives providers a license to print money ”

    Please explain this to me. I am a provider (physician) and would like to get my printing press rolling.

    If the ACA means such good things for physicians, why are so many of them seeking the shelter of hospital employment rather than rev ving up their own presses?

  35. Thanks Brian

    Jessica Curtis of Community Catalyst has been very active on this issue. See an article in the Huffington Post this summer on “Federal Price Cuts in Limbo” for an accounting of the very slow implementation of this law and its loopholes.

    I have no love of trial lawyers, but we really need them to take after hospital CEO’s. There was a multimillion dollar settlement on behalf of California ER patients a few years ago.

    Meanwhile, I would send protest letters on all price gouging to the country clubs and churches to which these CEO’s belong, every time it occurs. They are vile.

  36. “Brian- have you considered the problem of WHY ‘charges’ bear no relationship to reality?”

    To put the fear of God into the uninsured masses. It plays into the hands of the insurance industry. Hospitals and insurance – co-conspirators.

  37. and excessive rates for hc consultants remain legal…

    another case of the vultures running the show

    Brian- have you considered the problem of WHY ‘charges’ bear no relationship to reality?

  38. “They depend heavily in healthcare on the private networks of physicians, hospitals and specialists cobbled together by the insurance companies.”

    Medicare represents a huge buying group impossible to ignore. What it needs is more independence from politicians (like inability to negotiate drug prices) to operate more like the post office, which I think does a tremendous job, despite having to pre-pay for retirement costs.

    It should not be forced to just take the old and the sick. Of course what it lacks is the ability to bribe politicians – a definite handicap.

  39. NASA and the military are largely in control of their supply chain. Medicare and Medicaid are not. They depend heavily in healthcare on the private networks of physicians, hospitals and specialists cobbled together by the insurance companies.

    How much money do the insurance companies play with? And by play with, I mean spend on non-care items like private jets, AARP branding rights, giving away Medicare Advantage premiums and billion$ more. By most estimates it’s somewhere between $200 – $700 billion a year.

    Insurance companies are licking their lips ready to charge more not only in premium dollars, but in the use of healthcare once we need it.

  40. Agree completely that, at root, the political system is a complete TRAIN WRECK.

    Medicare for all, with buy ins for people not categorically eligible, should been on the table for decades by now. It would have been imperfect but it would have been a justifiable and reasonable starting point for the conversation.

  41. “My anxiety, however, arises out the fact that government does so much so poorly (just as a matter of routine) that I don’t know how we make it work.”

    NASA seems to work, the military seems to work. Many departments seem to work. It’s a large system prone to political abuses. Businesses fail all the time also. But what you describe is an increasingly failing and dysfunctional political system driven by money that is paralyzing day to day functioning government . That would have to change.

    Maybe we could start with a Medicare for all option. Easy words but difficult details.

  42. Outside of this country, no I do not. I have seen Medicare as an example of government involvement in medicine. Also note I said potentially, and I’m not sure why things would be different for single payer.
    At any rate, it won’t matter because as Vic says probably our only option at this point.

  43. “More paperwork, less autonomy and less time to care for the patient.”

    Really? Have you direct knowledge of existing single-pay systems?

  44. Excellent points Vic and Saurabh.
    As a physician, I fear the limitations and extensive mandates that would potentially be part of a single payer system by the government. More paperwork, less autonomy and less time to care for the patient.

    And really, where has all this money been going, as pointed out by Mr. Brill’s article?

  45. Peter1: I am largely a proponent of free markets, but I am rapidly coming to the conclusion that the healthcare system is so completely screwed up, and so unfixable because the people who got us there are the same ones now getting rich off “reform,” that single payer might be the only hope left. My anxiety, however, arises out the fact that government does so much so poorly (just as a matter of routine) that I don’t know how we make it work.

  46. Vik, we do agree about “non-profit” being largely a fraud in it’s window dressing – these aren’t run by nuns pledging poverty. I would go further than you and make these hospitals community owned and transparent and not privately run.

    I agree with your last paragraph in that the ACA gives providers a license to print money (unbridled by insurance companies). Single pay anyone?

  47. Brian,

    Isn’t it remarkable that the issue of the sinfully high chargemaster rates did not receive national attention until Steve Brill’s brilliant expose?

    Isn’t it ironic that a major motivator for healthcare reform, medical bankruptcy, was not pried for its causes?

    Nearly a thousand pages of regulations and hospital charges gets a solitary footnote!

    To quote Shania Twain: “that don’t impress me much”.

    And instead we have been mud wrestling about death panels, free contraception and other issues of national importance.

    Future generations will ask us: “how did you miss the elephant? Were you playing the fiddle?

  48. The author makes several good points, but as others here have written, doesn’t go far enough. In particular, I want to expand on his allusion to the money grabbing done by community hospitals and health systems, who, since I began my career in 1986, have been screwing self-pay patients and hiding how much they really contribute to their communities via charity care.

    It’s time to strip hospitals and NFP health systems of their tax exempt status, which is utter b******t in most communities. They need to be regulated like what they are — local utilities — with full transparency about pricing, executive compensation/perks, free care provided, and important clinical data. They should face public hearings and comment on price increases. Where I live in St Louis, there are faith-based health care institutions that refuse to release data about how much charity care they provide on the grounds that they are a church. They literally claim to have the legal standing of a church and so no obligation to disclose these data. Utterly absurd.

    I agree also with other comments here that the ACA is only making things worse and is a powerful financial play for the insurance companies. The worst of that probably won’t be apparent until 2015, but, according to a financial analysis published in JAMA last week, ACA-driven changes are already driving prices higher because of provider consolidation in local markets and huge spending on magical health IT that, as of right now, is not saving anyone a dime.

  49. “the ACA is an embarrassment and is not doing what it was purported to do at all.”

    It’s the web site that’s not doing what it was purported to do – not the act.

    “Premiums are going up and access is going down.”

    Going up for whom? Going down for whom? Why do you think premiums are going up for some people? Can you prove access going down?

  50. You’re right, your article is just one example. One small, insignificant example of circumstance, rather than an application of the broader way healthcare takes advantage of those seeking its services.

    The ACA lines the pockets of the insurance companies who are no longer subject to simple cost hikes of 2X-5X multipliers of inflation as has happened over the past 12 years.

    The ACA makes it legal for insurers to gouge the American public with premium rate hikes of 100% and more.

    But it’s not even about premiums. It’s about the dollars ($1.8 trillion a year) involved in payments for the utilization of care services. Insurers are sitting on mounds of cash from this gold vein of revenue. How much so? Somebody ask UHC what they spend just on branding rights each year to AARP. Go ahead, and you’ll see how much money is in play from the river of utilization money.

  51. I agree that a self pay patient shouldn’t be charged an outrageous rate. The cost should probably be limited to what the best or average insurance payment is.

    IF that is in the ACA, that is a good thing.

    Now as to whether “The Affordable Care Act Really Does Make Care More Affordable …” that is really a much larger question than the gouging of self pay patients.

  52. Another cool-aid drinker trying to create a distraction to cover the hard truth: the ACA is an embarrassment and is not doing what it was purported to do at all. Premiums are going up and access is going down. Our health system has problems and the ACA only makes it worse.

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