IT TOOK MONEY to resolve my recent health issue—on the surface, a lot of money. But figuring out what it really cost is difficult. Actually, I found it impossible.
Still, being a health benefits nerd, I couldn’t resist looking at the claims processed by Medicare and my Medigap insurance. Trying to understand billed charges, allowable charges and the resulting payments is daunting. I’m guessing most patients wouldn’t even try. Why should they?
My surgery was in the outpatient department but required an overnight stay. I walked into the hospital at 11:30 a.m. on day one and was out at 11 a.m. on the second day. The hospital billed Medicare $43,294, which covered scores of services, each billed separately. Medicare approved the entire amount.
Pharmacy costs totaled $936.71, which is a lot of drugs. The only non-intravenous drugs I had were Tylenol and one Oxycodone. I can attest to how good the latter makes you feel.
My favorite individual service charge was $109 for “insertion of needle into vein for collection of blood sample”—twice. Each collection resulted in seven separate billings for different blood tests, at a total cost of $1,567.10. Interestingly, the same tests were done two days in a row. Could my blood cell count change in 12 hours? Not being a doctor, who knows?
Pathology was $900. The operating room charge was a whopping $20,000. I’m thinking the robot used in the surgery got a piece of that $20,000. Anesthesia was another $5,000. I’m certainly thankful for anesthesia, but the $5,000 wasn’t for the administration of the anesthesia. Instead, the anesthesiologist’s charge was a separate bill. Six assorted injections added another $358.81 to the total.
Is all this itemization necessary? Or does it create an incentive to provide more services? Why is it important to know, for example, that an injection of an antibiotic cost $5.08? The Medicare explanation of benefits says it was a drug “requiring detailed coding.” Administrative requirements, it seems, are not limited to private insurance.
Now for the really interesting stuff: the doctor’s charges. Back in January, I had several rather unpleasant tests and procedures in the doctor’s office. The first test was billed at $1,737. Medicare’s allowed benefit—in other words, what it paid—was $447.04. Another procedure was $1,275 and Medicare allowed $240.82.
The insertion of a catheter was described as “complicated” and billed at $400. Medicare paid $88.76. I’m not sure “complicated” is the right word to describe that procedure. All the services were billed as rendered on a single date, which they weren’t.
Here’s another favorite charge in my journey: The anesthesiologist billed $4,482 and Medicare allowed $393.64.
How can health care providers survive on such low fees? They don’t. Those reduced payments from Medicare are partly recouped through the fees charged to private-insurance patients and, in the worst case, the uninsured. It’s called cost-shifting.
What is a fair and appropriate charge for all this stuff? Who knows? But here’s the thing: I don’t care what it all costs. My out-of-pocket expense for all this health care was just $233, which is my Medicare Part B deductible. Why so little? I pay an additional $240 a month for Medigap supplemental insurance, which covers expenses that Medicare doesn’t.
My attitude to health care costs is similar to that of most patients, who are focused solely on getting better. In any case, given that I didn’t see any of these charges until nearly two months after the services were provided, what could I possibly do?
It makes you wonder who pays for all this care. The lion’s share of Medicare is covered by a 1.45% payroll tax on all wages, which is levied on both workers and employers, for a 2.9% total. On average, seniors pay premiums of around $400 a month, including premiums for Medicare Part B, Medigap insurance and Part D drug coverage. Those who sign up for Medicare Part D prescription drug coverage may also have additional out-of-pocket expenses, which can be quite substantial, depending on the drug.
This is how Medicare works for some 64 million Americans. But what about the larger population? Given the high cost of health insurance and the lack of universal coverage, it’s no wonder many people are seeking a better way. One of the most common recommendations is that we expand Medicare to cover everyone.
But as my recent medical procedure suggests, paying for health care raises all kinds of thorny issues: