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Hospital “Chargemasters” – why your bills and insurance are skyrocketing

It is too convenient to blame Obamacare (a.k.a. The Affordable Care Act) for the skyrocketing healthcare costs when the real culprits are the hospitals.  For the past 4 years our office health care insurance premiums have increased an average of 15-20% year.  While an insurance program set up by a government entity is usually destined to failure, let’s take a look at the people that are actually creating those ridiculous medical bills that we individually or through our insurer end up paying.

photo credit – ILO in Asia and the Pacific via Flickr

Today we focus on the “Chargemasters” sometimes known as the codex of hospital pricing. Up until recently this was a closely guarded secret by most hospitals. How else as Topmastersinhealthcare points out can hospitals get away with such things as:

The Bayonne Hospital Center in New Jersey charging $99,960 for a procedure to treat chronic obstructive pulmonary disease (COPD) while The Lincoln Medical and Mental Health center, 30 miles away in the Bronx, NY, charges a fraction for that same treatment: $7,044.

Or try Owen Davis, a reporter for DealBreaker who was charged by his hospital $14,018 for 45 minutes of work to stitch his hand that was cut while chopping vegetables.  They charged him for work that was never performed — such as taking a skin graft from his face and repairing a tendon in his hand. Owen’s insurance company covered his bill, which they negotiated down to $4500, which still seemed excessive for a couple of stitches.  Had he not had insurance, he would have been on the hook for the full amount.  But the other side of it is also true — he had insurance which paid a ridiculous though reduced fee, which he and everyone else in the system is going to have to make up in premiums.

Or you can also look at the net effect of overcharging medical invoices. The extreme exorbitant pricing will have its rewards for the hospitals doing the billing. The hospital Chargemasters realize that Medicare or the private health insurer is going to slash their bill no matter how they make their charges.  However, a research study found that between 2002-2013, when a hospital padded its bills, for each $1.00 tacked on, they got an average return of an additional $.15. Do the math, that’s 15% in unearned added payments just by inflating the bills.

These are just a few examples.  There are thousands more, and most likely you or a close friend or family member have been effected. You could argue that this is a free market and medical care providers can (and do) charge what they think the market will allow.  However, this is not really a free market, because their charges are hidden. Even when you are presented with the bill, it is hard to decipher.

Relax, don’t let this get to you.  The hospitals and AMA are very powerful and are always going to get their way with Congress. Instead take a dive with some Grunts off the Caymans. Maybe you might find during the same trip where these folks are depositing all their $$.

Grunt swimming in coral off Grand Cayman

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