Combating Hospital Overcharges – Part II


In Part I of this series I discussed three ways in which hospitals overcharge patients. Today we’ll discuss some ways to change that.

This situation is made worse by government programs that interfere with the free market forces that usually lead to lower prices and improved quality. The VA Hospital system that provides healthcare to our veterans if the worst example of government run healthcare but ObamaCare, Medicare, and Medicaid are also problematic for the same reasons.

Robert Pearl, M.D., writing in Forbes, suggests three ways to stop hospitals from overcharging:

Unmask the Chargemaster

In the first part of this series I discussed how the Chargemaster, a computerized database, calculates the full prices for every fee billed in the hospital. The problem is the public has no access to this information. So the solution is transparency.

With transparent prices, consumers can compare one hospital to another and choose accordingly. This will create competition between healthcare providers, which will lead to lower prices and improved quality. The cheapest price may not always be the best but competition will force providers to justify their higher pricing with improved service and quality.

Cap Out-Of-Network Fees

You may choose a hospital that is in your insurance provider network but some of the physicians you see at that hospital may be out-of-network and you get stuck with unexpected higher fees. This is especially true if you go to the hospital as an emergency.

To combat this problem, 23 states have either passed or are considering hospital fair-pricing laws to limit the financial burden of out-of-network emergency care. These laws usually will force out-of-network providers to accept the same payment as in-network providers.

Personally, I oppose forcing providers to accept in-network fees except in emergency situations. But I also believe hospital-based physicians such as radiologists, hospitalists, pathologists, anesthesiologists, etc. should agree to accept in-network rates negotiated by the hospitals that employ them. This would go a long way toward solving this problem.

Simplify Billing By Bundling

Bundling is the practice of combining more than one service for one fee. Imagine a restaurant that offers a pre-fixed menu with several courses for one price. You know what you’re getting and how much you will pay up front.

This will reduce up-coding, which leads to higher than anticipated charges. With pre-determined bundle pricing there can be no after-the-fact changes in the charges except when unexpected complications or diagnoses lead to unexpected treatment.

It all really comes down to transparency. Hospitals, and doctors, are guilty of lack of transparency and consumers have the right to expect more. This will surely lead to lower prices in healthcare and providers will be forced to offer competitive pricing and service. Good hospitals and doctors should welcome this and poorer providers will rightly suffer from the competition.

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