Hospitals Charge Double or Even Triple What Medicare Would Pay

The complexities of the health care market are challenging to understand and navigate, which allows much of the general population to be misled and routinely overcharged for their medical costs, as clearly outlined in the article Many Hospitals Charge Double or Even Triple What Medicare Would Pay .

In Indiana, a local hospital system, Parkview Health, charged private insurance companies about four times what the federal Medicare program paid for the same care, according to a study of hospital prices in 25 states released on Thursday by the nonprofit RAND Corp.

Colorado employers were shocked to learn they were paying nearly eight times what the federal government did for outpatient services like an emergency room visits, an X-ray or a checkup with a specialist at Colorado Plains Medical Center, northeast of Denver.

Across the nation, hospitals treating patients with private health insurance were paid overall 2.4 times the Medicare rates in 2017, according to the RAND analysis. The difference was largest for outpatient care, where private prices were almost triple what Medicare would have paid.

Padding the amount charged for a service performed is standard practice throughout the health care industry, particularly within hospital systems. Initially, it was not meant to target health care consumers, but with the rising number of high deductible plans, consumers are paying the price for the lack of transparency in the health insurance and delivery markets.

Padding the Billed Amount, the charges submitted to an insurance carrier for services rendered, began decades ago when insurance carriers set reimbursement schedules, sharing only a fraction of the schedule with doctors and hospitals who provide those services. This practice forced billing experts to arbitrarily choose how much to charge the insurance carrier for any services performed (recall the average 2.4 times Medicare reimbursement rate). If the requested amount is too low, the amount reimbursed is lower than the maximum amount the insurance carrier would pay. Alternatively, if it is high, the service provider receives the maximum reimbursement. While the origin of this practice is understandable, in today’s environment, it has created a deceptively overinflated market that is passed on to the consumer.

…soaring hospital costs have become a significant burden, and many businesses have off-loaded more of the expense onto their employees through higher premiums and deductibles. Families have struggled to cope with surprise medical bills and increasing out-of-pocket costs. The trend toward consolidation in the last several years has also spurred higher costs, as hospitals merged into bigger, more powerful systems that dominated their local markets, demanding ever-higher prices.

The health care industry has become an unethical profit-driven corporate wasteland, rather than a health care delivery system that works to keep its citizens healthy. It is up to America’s employers and the health care industry to trim the waste and stop looking at health care as a profit-based enterprise that creates 17.8% of the US Gross Domestic Product. It’s just gross.

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Cynthia R Stuart DO

Dr. Stuart is Board Certified in Family Medicine. Originally from Georgia, she spent most of her youth in Miami, Florida and has been a Texas resident since the early 1990s. She attended UNTHSC-Fort Worth and completed her residency at UTSW/Methodist Hospital System where she was Chief Resident in her senior year. She is an Associate Professor at UTSW and UNTHSC, participating as a preceptor for medical students and residents. She completed a two-year course at SMU Cox School of Business in Advanced Leadership that enables her to advocate for quality health care providers and local public health programs in her community. She is the head of the Credentials Committee, sits on the Medical Executive Committee and the Ethics Committee at Baylor Scott and White Hospital of Carrollton. She has appeared on numerous news and radio programs to educate the public about various health topics. Dr. Stuart has managed her private practice in Carrollton since 2005 and is now a Direct Primary Care Physician. 

  2 comments for “Hospitals Charge Double or Even Triple What Medicare Would Pay

  1. Mary
    May 30, 2019 at 10:39 am

    The entire reimbursement system needs an overhaul. Private insurance plans make huge profits and pay upper management far too much. A single payer system could help where every provider gets paid the same amount for every service.

  2. Al
    May 26, 2019 at 9:18 am

    Explains fee steaming coffee and flat screen tv in the waiting rooms… corporations comparing their number of people in administration versus others thru MGMA… brain washing of employees in the name of the profit and other aberrances

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