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November 30, 2007
| Health Biz | Health |
WSJ has an article about a Mr. Jim Dawson, who was hit with a $1.2 million hospital bill after his insurance maxed out at $1.5 million. Excerpts:
Part of the problem: Even as medical progress and new technologies raise health-care costs, health plans have been slow to raise their caps. Mr. Dawson's $1.5 million cap was relatively generous by today's standards. The Segal Company, an employee-benefits consulting firm, says the average health-plan cap among companies it advises is $1 million a person — the same as it was in the 1970s, when the purchasing power of $1 million was the equivalent of nearly $6 million today.Another issue is the widespread practice of bill padding by hospitals and other health providers. While hospitals say bill padding is their only defense against the aggressive cost-reduction efforts of insurers and government programs, the end result is that individuals can, with little warning, be left stuck with wildly inflated medical bills.
For instance, CPMC charged Mr. Dawson $791 for stockings designed to improve blood circulation. The same pair can be purchased on the Internet for as little as $12.
Allan Pont, CPMC's chief medical officer, acknowledges that the charges on Mr. Dawson's bill are "Disneyland numbers" that health insurers and government programs like Medicare and Medicaid never pay. But he says they reflect the hospital's operating costs, such as paying for doctors, nurses and medical equipment, as well as markups to compensate for the fact that CPMC collects only a fraction of what it bills every year. [...]
Hoping to stall CPMC, Mrs. Dawson sent the hospital two checks for $30. Bills were also piling up from doctors, so Mrs. Dawson also sent them small sums to keep them at bay. The Dawsons weighed whether to declare personal bankruptcy.
Before they made any decision, Mrs. Dawson asked to see an itemized bill from CPMC. When she received it, she was shocked by how much the hospital had marked up inexpensive items like the stockings. CPMC charged Mr. Dawson between $2,225 and $6,675 a night for an oxygen mask to help him breathe while he slept. After he was discharged from the hospital, the Dawsons rented one from a medical-supply store for $250 a month. [...]
"I do not deny that our charges look insane," says Dr. Pont, CPMC's chief medical officer. But all hospitals operate the same way, he says. "It's the reality of the industry."
Once its operating costs are factored into an item's charge price, Dr. Pont says the hospital marks up that price by threefold to account for the fact that it only collects on average a third of what it bills in any given year. [...]
In her quest to know exactly what she was being billed for, Mrs. Dawson also asked the hospital for copies of all her husband's medical records. A copy service used by the hospital called to say the copies would cost $1,030. Mrs. Dawson was outraged. Further angering her, a letter from CPMC's foundation soliciting a donation came in the mail.
That's how we roll here in the greatest country on Earth USA.
Posted by Jonathan at November 30, 2007 02:11 PM
