Health insurance, health costs–Who pays what & why

Two interesting stories in the New York Times.  “Insurers Alter Cost Formula, and Patients Pay More” discusses how the settlement of a case against health insureres in New York State has led to greater, not lesser costs to patients.

Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient. . . .

The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.

It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially. 

To read the complete article, click here.

“The Confusion of Hospital Pricing” on the Well blog describes how even people with good health insurance can end up paying tens of thousands of dollars for hospital care.

When Augie Hong awoke with severe abdominal pain nearly two years ago, he went to the hospital emergency room closest to his home in San Francisco. The diagnosis was acute appendicitis, and doctors removed his inflamed appendix.

Mr. Hong had health insurance, so he wasn’t too worried about paying. Then the bills started to arrive.

“That’s when I got nervous,” said Mr. Hong, 36, who has insurance through his job at an investment firm.

In all, Mr. Hong was charged $59,283, including $5,264 for the doctors. According to the Healthcare Blue Book, that amount is six times the fair price for an appendectomy in Northern California, which is $8,309 (including a four-day admission) for the hospital and an additional $1,325 for the doctor. Even after Mr. Hong’s insurer paid the hospital $31,409 and Mr. Hong paid the doctors $4,034, the bills kept coming.

A new study suggests that Mr. Hong’s experience is not unusual. Hospital charges are all over the map: according to the report published Monday in the Archives of Internal Medicine, fees for a routine appendectomy in California can range from $1,500 to — in one extreme case — $182,955. Researchers found wide variations in charges even among appendectomy patients treated at the same hospital.

To read the complete article, click here.

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