Medical Billing Question

[Stelth]

I was working through some of my Dad's bills today, and I looked at the one from the hospital her recently spent some time in. He was in the ICU for 9 days, IIRC, and a regular hospital room for two days. During this time he had a thoracotomy due to adhesions and scar tissue in his left lung.

The bill said the total was $235,000, and that the hospital was eating $160,000 of it, and being paid $65,000, if I understood it correctly. The bill was for his deductible, as he is on Medicare and has a Medicare supplement.

I told him I would call the hospital, but that the bill, for $1400, was probably legit, because it looks like that is the correct deductible based on his Medicare supplement policy information.

Now, here's my question: Is there any person, insured or not, that would actually be liable for $235,000 for this treatment? They obviously knew that my Dad was on Medicare when he rolled through the emergency room door, and my theory is that they have to mark up treatments enough so that they can survive on what Medicare, and the supplement provider, pay them.

I'm not on Medicare myself, I'm on one of those "Cadillac Policies" that we get through my wife's employer. I guarantee you that they wouldn't be paying $235,000, either. So is it just a number that the hospital uses to get the amount they need?

Let's PLEASE not bring Obamacare into this discussion, or politics. I'm just trying to understand the mechanics of how a $235,000 bill becomes $65,000, and the hospital doesn't go out of business, and the doctors aren't out begging on the street corners.

 

[eagle23]

Whether anyone is actually billed those amounts I do not know. I've heard both ways. I think at least part of the point for the new insurance law was to avoid the wild discrepancies you mention.

My younger daughter had huge hospital bills several times a year. It wasn't uncommon for the gross billings to be nearly $50k for a 3-week, medically intensive stay, that happened 3-4 times/year. Of the $50k, paid was actually about half of that. This was over 10 years ago.

Fortunately I had excellent insurance coverage and the out of pocket was quite modest. But without it, I'd have had to declare bankruptcy every couple of years with the bills, and that wasn't an option, even then.

What I don't know, but have a guess about, is that the difference in the billing amounts (billed vs. "eaten") allows the hospital to "lose" money on paper. However, sometimes the money "lost" is actual, and cumulatively is enough to actually drive them out of business.

I know that didn't quite answer your question but hope it helps....

 

[JayhawkRoy]

Medicare reimbursement is on the low side, and the rate is basically fixed. That is why the 235K went down to the 65K set Medicare reimbursement as Medicare primary insurance.

Most insurance policies would have paid more than the 65K, but still much less than the 235K, due to preferred provider agreements, etc, which vary by private insurer.

I can tell you that I have seen high reimbursements of 98% of billed rate (hearing aid services from a non-profit hospital clinic provider) to 30% from a preferred provider (anesthesia).

I simply view the higher percentage rate as the provider being more attuned to the local market pricing than one that bills high and accepts low.

Biggest problem is that the whole health costing system is not transparent to the extent an informed consumer choice can be made. I rely on my insurer to make the best possible preferred provider decisions for me to keep my and their costs down.

 

[steveh]

My insurance company always has the member discount that is between about 20 and 50 percent less.

 

[SevenBizzos]

My guess is that's the "list" price. Insurance companies and Medicare negotiate payment rates with the providers. That's why you'll always see an "adjustment" on your bills.

 

[Rand]

I think its criminal.

So If Joe blow walks in off the street with no insurance he paid 235,000$ but elite Eddie who works for the govt gets billed for 1/4 that and then pays 4% of the 4th.

Why is it legal to charge 2 people 2 different rates.

For example I have good insurance. DR office was 160$ I paid about 15$ (insurance paid 60$~~)=75

Friend who didnt have insurance for 3 months between jobs ate 160$ for a similar office visit.

 

[Eddie]

ANYONE WITHOUT INSURANCE WILL BE BILLED THE FULL $235,000. OPS CAPS-SORRY. Many hospitals would go out of busniess if all they ever got was the $65,000.

 

[Rand]

Originally Posted By: Eddie
ANYONE WITHOUT INSURANCE WILL BE BILLED THE FULL $235,000. OPS CAPS-SORRY. Many hospitals would go out of busniess if all they ever got was the $65,000.



do you think its likely they would actually ever collect 235,000$ off someone without insurance though? or even 65000$

 

[LoneRanger]

Not from me they wouldn't. They could stick a bill like that where the sun don't shine. Medical expense = legal robbery.

 

[dave munson]

Things are not all that simple. A co-worker who could not afford medical coverage died a week ago. He died with thousands owed to the local hospital for their work on his broken foot months ago. One of the causes of his death was that he did not buy or take heart medicine he needed nor bothered to keep up with his condition. Just throwing that out here.

Hospitals have become proficient working with collection agencies and courts in getting their fees. They are pretty good at sticking their bill these days.

 

[jd_1138]

Originally Posted By: Eddie
ANYONE WITHOUT INSURANCE WILL BE BILLED THE FULL $235,000. OPS CAPS-SORRY. Many hospitals would go out of busniess if all they ever got was the $65,000.


$65,000 is a huge chunk of change and most likely enough to cover the care. They sure don't make up the difference by charging uninsured people over 3x the amount. Uninsured people can't afford insurance -- let alone a quarter of a million for a week's hospital stay.

Hospitals bill a huge amount and then "write off" the difference when they accept a lower amount from Medicare or insurance co's. This is a tax write off to lower their tax bills.