How We Can Improve Medical Billing

Posted by on Aug 27, 2015 in News | 0 comments

Medical billing has been widely scrutinized as overly inflated and confusing. The gamesmanship involved with negotiated fees/network discounts and multi-dimensional cost-shifting really has gotten out of hand. We all know that billed charges bear little or no relationship to the actual costs to provide the services. Personally, I’m offended when my bill claims that the provider has “written-off” a substantial portion of the charges, like I’m some sort of charity case. Doc, you agreed to that fee when you signed up with my network – don’t act like you’re doing me a favor by simply abiding by your contractual obligation. And then we have billing explanations describing a tissue as a “mucus recovery system”, a charge for a nurse to hand you medication as an “oral administration fee”, or a plastic cup referred to as a “medication administration container”, it’s no wonder why patients are often confused by the terminology used on their bills. Combine that with the exorbitant charges listed for simple supplies and procedures and it’s not only a recipe for frustration, but also causes those in and out of the medical community to question whether fraudulent motives may be at play.

Last month the Washington Post reported a story of a San Diego man who was charged over $150,000 for treatment of a rattlesnake bit. The same story also mentioned a Missouri man who died after he refused medical treatment for a snakebite because he was afraid he couldn’t pay the bill. The truth of the matter is that these are not uncommon scenarios. In fact, hospitals have been known to charge $15 per pill for Tylenol, $8 for a plastic bag to hold your personal possessions and up to $53 per pair of non-sterile gloves, which makes it easy to understand how easily medical bills can sky rocket unbeknownst to the patient until it’s too late.

We encourage patients to become engaged consumers, and they are trying to comply, but the confusing medical terminology makes it difficult for them to identify what they are paying for, what recourse they may have if there is a mistake on their bill and what options they have if the bill is more than it should be or they simply can’t afford to pay.

This situation has given rise to a whole new profession, known as patient advocates, dedicated to helping patients understand and reduce their medical bills. Hiring a patient advocate can result in a substantial bill reduction, but unfortunately it may also compound your debt with fees as high as $200 an hour. Really? The solution to out of control costs and abusive billing practices is to add on another high cost administrative layer that the consumer has to pay for? There has to be a simpler way.

Simple Steps

So what can be done to correct these issues? A few simple changes could greatly improve the medical billing process and simplify the process for providers, patients and insurance companies alike:

  1. Require providers to only bill for what they’ve already agreed to charge.
  2. Impose a plain language requirement for all bills and explanations of benefits.
  3. Restrict prices on commonly available products, such as over-the-counter goods, to bear some reasonable relationship to what you can get it for at nearby retail stores.
  4. Do not allow patient billing until insurance claims are finalized.

There are other simple changes that could be made, but these would set us on the right path. While it will likely require legislation at the federal or state level to achieve these, a voluntary effort along these lines by the medical community would go a long way toward improving patient relationships, and securing positive reviews on medical rating sites.

Major Steps

To further simplify medical billing and ensure fair pricing, I would also recommend a few more radical policies be set in place, such as:

  1. Uniform prices for all consumers.
    • Each provider should be allowed to freely set prices, but must charge all patients the same, regardless of insurance status.
    • Due to the impact on federal and state budgets, as a practical matter, there might need to be an exception for government programs.
  2. Require price disclosure before a valid contract is assumed to be in place between the provider and patient.
    • Until then, the amount required from the patient would still be negotiable
    • At least for services where it is reasonable to know what’s needed in advance, such as office visits, simple procedures, etc.
    • For more complicated procedures, it would be acceptable to provide a reasonable estimate of average, with high charge possible stipulation, as long as a plain language explanation is provided.
  3. Ban gag clauses from carrier/provider network agreements, to facilitate patients’ efforts to determine what the fair marketplace values for medical services.
    • To help put them on equal footing with providers in negotiating fair charges.

In Closing

In recent years, as premiums have risen faster than any other segment of the economy, people have moved toward lower cost health plans out of simple fiscal necessity. This trend is expected to continue, partly due to Obamacare requirements. These plans typically come with high, sometimes very high, deductibles and out of pocket maximums, leaving folks more sensitive to medical billing practices than ever before. For these people, gone are the days of $5 office visits and the protection of $1,000 (or less) out-of-pocket maximums. Arguably, this is a good thing as it has the potential to enlist the masses in efforts to rein in healthcare costs. But it won’t work if the current barriers to understanding medical charges and the ability to engage in fair negotiations are not brought down.

Medical professionals yearn for the days when the community revered and trusted them implicitly. Many of their patients would like to go back to that environment as well, but it’s hard to trust folks your last encounter with them (i.e., the bill that arrives in the mail) seems like some sort of scam. Adopting transparent and rational billing practices is really about treating patients/consumers with dignity and respect. Who knows, it just might be the first step back to those days.

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