And a lot of the burden has fallen on private employers, like Savidge, and those with individual insurance policies, says Gerard Anderson, a health policy professor at Johns Hopkins University. The Medicare program sets the rates it will pay based on hospital costs.
But private payers have to negotiate with every hospital and doctor. And Anderson says lack of competition is a big part of the problem. He says that mirrors metropolitan areas across the country. Anderson says another problem is that insurance companies may not even be motivated to rein in costs for many large, self-insured company plans because they earn a percentage of the bill. Over the past three decades, hospital systems have been consolidating rapidly, merging with other hospitals and buying up physician practices.
And when hospitals consolidate, prices go up. South Carolina, where health systems are more highly consolidated, ranks second highest in the country in terms of how much its hospitals charge people with private insurance. Cody Hand, a senior executive with the North Carolina Hospital Association, admits prices for private payers are high, but he said hospitals have to charge them more because Medicare pays too little.
And so because of that, we have to figure out how to collect that difference somewhere else in order to stay open. But If that were true, Whaley said, then hospitals with more Medicare patients would have to charge their private patients more. Another reason prices are high, Hand said, is that hospitals have to spend a lot on salaries and equipment. American doctors and nurses earn more than their counterparts in other wealthy countries. And, Hand said, hospitals are willing to pay more to get the top talent.
But studies show large hospital systems are also responsible for pushing up some physician charges. Again, this is private insurance that this person got through their employer. The method of reimbursement for a hospitalization differs substantially for different insurance companies.
A diagnosis of pneumonia will get a fixed Medicare payment regardless of how long the patient stays in the hospital, what tests are ordered or what treatment is given. Other payers might pay by the day, or for each individual service.
But the hospitals do all their bills the same way, no matter who the payer is. So the best way for them to get paid is to put anything that might be reimbursed by any payer on every bill. It will also happily pay less than the hospital asks, but certainly will never pay more.
The only potential penalty would be for billing for a service not provided or a diagnosis not justified.
When a business sends a bill, to you or to another business, you pretty much expect the bill to show the value of what they provided, and therefore what they expect to be paid. But an insurance company pays the hospital based on pre negotiated rates, no matter what the bill asks for. The hospital can turn away all patients with that insurance, of course but, for each insurance company, that would mean turning away a lot of patients—the insurance companies are now very big.
Hospitals see no problem in sending bills to insurance companies for five to ten times the amount that they actually expect, because they are simply playing the game that the insurance companies fashioned.
For the average person, this is no small matter. As you look at this letter, remember: This 8 cent debt was SOLD to a collection agency, and they used a 44 cent stamp to send it.
Hospitals charge the same amount for a service regardless of whether or not the patient is in the hospital. Anyone getting routine tests or a diagnostic workup from a hospital is likely to be charged five to ten times what an insurance company would pay for it five to ten times what the service is really worth.
So people are completely dependent on their health insurance for even small medical costs. In what other industry would you do this? Would you use your car insurance to buy windshield wiper fluid or replace a burned-out headlight? Keep in mind that insurance coverage varies which means your services or prescription medications may not be covered. During check-in, you provide your complete personal and insurance information to the front desk. During check out, your medical report will be generated and then sent to a medical coder.
This will be translated into actual medical billing code and a superbill is generated that is sent to the medical biller. Billers are responsible for meeting the standards of billing compliance when sending bills.
The process of adjudication requires a payer to evaluate a medical claim and decide whether or not it is compliant. This typically is done by the insurance company. During this stage, a claim may be accepted, denied or rejected.
After this lengthy process, the statement is then sent to you, the patient. In some instances, an Explanation of Benefits will also be sent to you. Once the bill is sent, it is up to the patient to pay any remainder an insurance company may not have. IF the bill goes delinquent, it will be sent to a collections agency for further follow-up. While the above breaks down the process of billing, the costs associated with your medical bills and coverage can look quite different.
Providers, for example, assign costs to patients based on what they charge, rather than the costs associated with providing care. These include:. Just like any other service, hospitals and providers often use demand for their services to dictate prices.
Higher demand often results in a higher medical bill. Hospitals with a greater number of beds can provide more services.
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