Sunday, September 21, 2014

Elisabeth Rosenthal exposes hospitals as free-billing zones

I stand back in awe from the healthcare reporting of The New York Times' Elisabeth Rosenthal, who since June 2013 has been exposing in front-page blockbuster after blockbuster the rampant greed and depraved price-gouging endemic to the US healthcare system. Her nine-part "paying till it hurts" series, indexed here, is worthy of a Pulitzer. It should galvanize the country as Silent Spring or The Other America did.

Rosenthal's latest exposes many hospital ORs as free-billing zones in which an array of doctors, physical therapists and other service providers can insinuate themselves in a procedure without the patient's prior knowledge or consent, whether they're in the patient's insurance network or not -- and then relentlessly pursue either the insurer or the patient or both for their exorbitant billings.

The most egregious example Rosenthal spotlights is when neurosurgeons or orthopedists call in out-of-network surgeons to assist -- who bill at out-of-network rates, to the tune of $117,000 in the headline case.  Then there's the smaller-scale gouging:
Unexpected fees are routinely generated outside the operating room as well. On the wards, a dermatologist may be called in to examine a rash and perform an expensive biopsy. The person in scrubs who walks a patient to a bathroom for the first time after hip surgery may turn out to be a physical therapist billing $400.
Rosenthal's fully-documented examples will make you afraid ever to set foot in a hospital -- unless perhaps you're on Medicare with full-bore Medigap insurance. A few policy takeaways from this tale of systemic depravity:

1. States are the first line of defense against this gouging. Some provide partial protection. A new New York law, Rosenthal reports, requires some disclosure from doctors and hospitals as to whether their services are covered by insurance and stipulates that patients are not responsible for unforeseen out-of-network charges beyond what they would have paid in-network.   The Louisiana insurance commissioner, on the other hand, says of a la carte billing, "“This has gotten really bad, and it’s wrong..But when you try to address it as a policy maker, you run into a hornet’s nest of financial interests.”

2. Done right, reference pricing can provide protection as well as financial benefits to an insurer's customers. In reference pricing, insurers offer full coverage for favored providers or for providers who charge below a given dollar amount for a given procedure, leaving patients responsible for the difference if they use a more expensive provider. In some cases, deductibles and co-pays are waived if the patient uses favored providers. Because insurers have worked out payment arrangements with those providers, they can presumably insulate themselves as well as their patients from surprise billings. Done poorly, however, reference pricing can simply leave patients on the hook for billings over a fixed amount, without adequate advance disclosure of costs or good communication from the insurer as to how to avoid such costs.

3. Even with good plan design, insurers have only limited power to prevent price-gouging. The U.S. system is riddled with predatory pricing and billing because it is the only wealthy country in which government does not impose or insure a high degree of uniformity in price schedules and billing procedures.  In the U.S., notwithstanding Medicare and Medicaid's relatively heavy hand, payers are as fragmented as the Syrian opposition to Assad, enabling providers tow ork aroudn their various defenses against overbilling.

U.S. healthcare providers are uniquely free to bill as they will, which has given rise to entrenched lobbies with enormous political clout. A former health minister of Singapore, where the government encourages private competition but makes sure that government providers dominate the market, doubtless had the U.S. in mind when he offered this prescription:
Former Health Minister Khaw Boon Wan has said that the public sector should always play the dominant role in providing care services, but there needs to be a private healthcare system to challenge it. In his view, the public sector is necessary to set the ethos for the entire system— which should not only be about maximization of profits, a primary focus of the private sector. It is the public side that tends to set boundaries and standards for ethics within the system.  services, but there needs to be a private healthcare system to challenge it. In his view, the public sector is necessary to set the ethos for the entire system— which should not only be about maximization of profits, a primary focus of the private sector. It is the public side that tends to set boundaries and standards for ethics within the system.  
Khaw Khaw takes the view that where the private sector does dominate, it will inevitably influence the government and public policy to serve its own interests. If the public healthcare system is too small, it becomes the “tail that tries to wag the dog.” Once a private healthcare system becomes the dominant entrenched player, it is very difficult to unwind it— there are many vested interests and many pockets will be hurt. (William Haseltine, Affordable Excellence: The Singapore Health System , Kindle Location 998--1007).
The U.S. is wound up all too tight in the private sector's Byzantine billing procedures.


1 comment:

  1. Thanks for the post. Rosenthal's articles have all been great.
    New York state finally passed the 'Emergency Medical Services and Surprise Bill this year, to take effect in 2015. There will be an Independent Dispute Resolution board to review excessive charges, when a patient had no knowledge that the physician was out of network.
    This is good but also very sad. Sad that it is not a national law, and sad that the medical profession cannot discipline itself.

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