Have you ever looked closely at the detail on your hospital and doctor bills? Have you noticed that the amount billed is rarely the amount paid by your insurance? And aren't you glad that you only have to pay about 25% of the amount the insurance company paid? Welcome to the peculiar world of medical billing in America! Let's look at why it is as it is - and how Medicare and other programs are about to be turned into a piggy bank for special interests.
Let's say three people - Larry, Moe, and Curly Joe, are hurt in a mysterious eye-poke incident in which each of them sustained identical injuries. They are taken to the same hospital in the same ambulance, given the same medications, treated by the same doctors, and kept overnight for observation. They are all discharged at the same time, each with a bill for $20,000.
Larry is uninsured. He pays part of the bill with all the money he has available on the day after the accident, and agrees to pay the balance with a series of monthly installments. He pays a total of $20,000 plus interest, and the medical providers make about $18,000 on his visit. Of course, sometimes Larry doesn't always pay his bills, but this one could haunt him forever.
Moe has medical insurance through Cigna Healthcare, and he met his annual deductible earlier in the year. His plan provides for a co-pay of 20%, and the hospital files a claim for $20,000 on his behalf. Cigna knows what medical care costs, and determines that the services given to Moe were worth $4,000 - and so they send a check for $3,200 to the hospital. The hospital accepts the payment, writes off $16,000, and charges $800 to Moe, who gladly pays it. Even after the writeoff, the medical providers make about $2,000 on his visit.
Curly Joe has Medicare, and had also met his annual deductible. The hospital files a claim for $20,000 on his behalf when he is discharged. Medicare's schedule is more restrictive than Cigna's and only values the services rendered at $3,000. So they send a check for $2,400 to the hospital. The hospital accepts the payment, writes off $17,000, and charges $600 to Mr. Joe, who gladly pays it. Even after the writeoff, the medical providers make about $1,000 on his visit.
Is this right? Is it just? Is it fair? Nope, it's just the way it's done here in America. Private insurers like Cigna, and public programs like Medicare, protect patients from "balance billing" - the difference between the original inflated bill and the combined amount paid by the insurer and your own co-pay. It's presently illegal for our Medicare-licensed hospital to collect any more than $600 from Curly Joe. How does Medicare enforce this? Hospitals, doctors, and others enroll themselves as licensed providers to treat Medicare patients. They must agree to accept payment - generally in full - according to a schedule of customary costs [1]. If a Medicare-licensed provider is caught trying to collect the inflated amount, their license is revoked [2]. Similar agreements apply to Medicaid, Obamacare, and federally-funded state programs [3].
That's the way it works now, but don't count on it in the future.
Congressman Tom Price (R-GA) is Trump's nominee for Director of Health and Human Services - the biggest cabinet post in government. HHS oversees Obamacare, Medicare, Medicaid, and more [4]. Conventional wisdom says that Price was selected for this post to oversee the dismantling of the Affordable Care Act. But his record in Congress shows that the threat goes far beyond that.
In 2010, 2011, 2013, and 2015 Price introduced H.R. 6171 (111th), H.R. 969 (112th), H.R. 969 (113th), and H.R. 3100 (114th) [5] into Congressional committee that would effectively eliminate any penalty for violating the medical provider agreements for Medicare, Medicaid, Obamacare, and other state and federal programs. In effect, this legislation would permit doctors, hospitals, and pharmacists to enjoy their participation in government healthcare programs, and still be able to go after patients for any remaining balance of inflated bills. There's little doubt that Price, as head of HHS, could directly affect how flexibly medical provider agreements are enforced, if at all. He might even be in a position to persuade Congressional Republicans to pass a bill like those of his own that died in committee [5].
Some 44 million Americans depend on Medicare, and that number is growing as we get older. We've paid into the program for all of our working lives, and premiums continue to be deducted from our Social Security checks every month. Until now, Medicare has been a pretty good program for keeping our elders out of the poorhouse. But let's look at the consequences for seniors facing inflated medical bills.
Consider Curly Joe's example above, but instead of an eye-poke incident, substitute a bout with cancer, a heart attack, or a stroke. The hospital bills $200,000, submits a Medicare claim, and accepts a payment of $24,000. Now, in a post-Price world, the hospital bills Mr. Joe for $176,000 - not $6,000. If he's lucky, Mr. Joe has a savings account to draw upon. If not, the hospital takes what it can get and forces him into bankruptcy and into a life of dismal poverty in his twilight years.
Why would anybody think this is a good idea? There's big money in the nest-eggs of our seniors. Medical providers would be able to charge whatever they want, and collect whatever they can, to be sure. But there's another hidden agenda here - the interests of the financial services industry. Exposing seniors to unlimited medical expense liability opens up a whole new market for insurers. Catastrophic, high-deductible policies similar to umbrella liability policies would be necessary to avoid the risk of financial calamity for Medicare patients. Medical providers and health insurance companies will realize even greater profits - all at the expense of American seniors who had been looking forward to enjoying a comfortable retirement.
Some would want this post-Price world to come about without anybody noticing - but we're not all stooges! Warning klaxons would be sounding all over the place if we knew what's going on. And people need to know - especially the Senators on the Health, Education, Labor and Pensions Committee[6] who will be looking most closely at the nominee. Every Senator who will be called upon to confirm his appointment must also know. Price's record in the House of Representatives must betray his intentions during confirmation hearings. Even if he is ultimately confirmed, his evil deeds would have to be done in the light of day.
Help raise the alarm, won't you please? Call your congressman, badger your legislators, and write your senators, even if they are Republicans. If you have a senator who sits on the Health, Education, Labor and Pensions Committee [6] make every effort to tell him or her what's going on! (Committee members are listed in link [6].) Contact your party's state and national headquarters and sound the alert. Give them all copies of this article. And tell your friends, even if they're young - after all, they could lose their inheritances as their parents get fleeced on their deathbeds. Besides, even young people might want a little security in their later years.
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