Recent experiences helping an elderly relative navigate the morass of medical bills accumulated after several medical incidents has convinced me of one thing. Medical billing is largely a shell game, and the losers in that game are the ones most likely unable to endure the exorbitant costs.

This relative had some issues that required a couple short stays in the hospital, as well as a new pacemaker – which I wrote about earlier this week. While his Medicare and supplemental coverage has taken good care of his financial obligations in this arena, trying to keep track of what is being paid to who has been a true challenge. And figuring out the why for some of these bills has been virtually impossible.

If you have ever truly looked at an Explanation of Benefits (EOB) from your health insurance provider, you will realize that, absent very serious illness, the true power of being insured lies in the negotiated discount your carrier has with the medical community that serves you. It is not at all unusual to see a billed price for a routine office visit in the amount of several hundred dollars. After the “negotiated discount” of several hundred dollars is applied, the carrier sometimes pays less for that visit than what you provided as a co-pay. I realize that my insurance is there to mitigate my risks should I become seriously ill or injured; but until that point the strength of my premium dollars goes to the negotiated rate.

The relative of which I speak (we will call him Joe) has been getting dozens of bills from our local hospital for a wide variety of services. These include repeated labs, doctor’s visits, outpatient procedures and in-hospital services. They all start with what seem like ridiculously high prices, and then apply either Aetna (his supplemental provider) or Medicare “discounts.” They then list a payment from either source. The remaining amount is what he owes. Generally, his obligations have been extremely small, given the gravity of the services he has received. But then again, in comparison to the original pricing, what the hospital is receiving has been relatively small as well. When it comes to medical billing, for the insured of our nation, retail price has little or any meaning whatsoever.

For the uninsured however, they often bear the full brunt of those otherwise meaningless amounts. 

Seriously, people, there has to be a better way of figuring this out.

To really highlight the disparities here, I can give you the following example. Joe called one day and told my wife he had received a “fairly large bill” and wanted me to look at it. I figured, given the amounts he had been paying, that it would be for a few hundred dollars, maybe a thousand or two. When I saw it, I was stunned. It was for his new pacemaker procedure. As I wrote earlier, this new technology can usually be implanted in an outpatient procedure. Due to Joe’s advanced age and a history on blood thinners, they kept him overnight for observation. The bill he received for these “Cardiology Services” was $125,000. 

I told him it was a good thing they gave him the pacemaker before they sent him the bill.

Joe was not thrilled about the bill but was ready to withdraw the money from his retirement savings and send them a check (seniors are notoriously responsible that way). I noted that the bill mentioned no insurance discounts whatsoever, and it appeared that the billing had not been submitted to Medicare at all. I told him to hold off while I called the hospital to check. That call confirmed the billing was in error, and he should ignore it.

The next month, he received another bill for the same procedure. This one was for almost $30,000. Like the other one, this multi-page bill contained a raft of otherwise senseless line items. However, it also showed a “Medicare Discount” of over $80,000, and a payment by Medicare of $14,000. Again, Joe was preparing to whip out his checkbook and clear the obligation. I suspected something was wrong, and a call to the hospital confirmed that Medicare had denied some services, but they were resubmitting with more documentation. 

The upshot here, of course, is that the original billable amount of $125,000 was essentially meaningless, unless Joe had no insurance. Joe, like most people, doesn’t know that you can often negotiate better rates with your providers, especially when you are paying cash. But when the providers are a myriad of people and entities conglomerated into one undecipherable bill, that option is pretty much out the window. I also wonder how many people, like Joe who would have the means, would pay the bill without understanding the game that is behind it. 

People who do not have the wherewithal could face financial ruin, and quite often the obligation would transfer to the taxpayers to cover the burden. I wonder what type of discount has been negotiated for us.

Bottom line, medical billing today is a shell game, and the people less prepared and aware are most likely to have the biggest costs land on their doorstep. I am not a fan of single payer systems and am not suggesting that as an alternative; but there are many things in our medical system that need to be addressed. A simpler, more direct billing method that eliminated ridiculous administrative processes couldn’t be anything other than a good start.

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