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Pricing in the U.S. Health Care Financing System: An Anecdote (or Data Point)

Almost four weeks ago, I had a pretty serious pulmonary embolism – a blood clot partially blocking the artery that goes from the heart to the lungs.  (I’m fine, now, thanks, with no long-term harm except a likely need for life-long blood thinners.)  I walked 100 feet and suddenly found myself gasping as though I had tried to sprint 200 yards.  Even a serious denialist/”guy” like me knew that something was seriously wrong, and after quick consultation by phone with my doctor-wife, I hied me to an emergency room.  I’m a happy Kaiser Permanente member (and she’s a happy Kaiser Permanente doctor), but the nearest Kaiser ER was at least a 25-minute drive away, so she instructed me to go to the Stanford ER, about a mile away.

I got into the ER, where they fairly quickly decided it was a PE and not a heart attack (myocardial infarction/MI), which would have been another possibility.  I spent about 7 hours in the Emergency Department and then about 13 hours admitted to the medicine “intermediate care unit.”  I got a CT scan, which showed a large saddle embolism, and ultrasounds on my legs, which showed a deep vein thrombosis that had almost certainly been the source for the PE.  I got a lot of blood work, a couple of syringes of a blood thinner called Lovenox, and they started me on Coumadin/warfarin (the rat poison from U. Wisconsin that is a long-time standard anti-coagulant).  They did not do give me anti-thrombolytics (clot busters) or a “clot screen,” as I remained “hemodynamically stable” – i.e., my blood pressure didn’t plummet. There was some discussion, late at night, about transferring me to the nearest Kaiser hospital, but given that there was still a lot of clot in my thigh that might break lose during an ambulance ride – without the option of using clot busting drugs on it in the ambulance – some combination of my doctors, my wife, and maybe me decided I’d spend the night at Stanford hospital.  So I did.  I slept terribly, but was discharged the nest day at about 11:00 a.m.  I was given the option of getting an echocardiogram but it would have required me to stay in the hospital for another 6 to 12 hours, so I said “no.”  With emphasis.

I am grateful to the doctors, trainees, nurses, and other staff at Stanford.  What I had was dangerous, but not particularly tricky and I’m confident I would have done at least as well at Kaiser, but they answered my questions (mainly), took me seriously, and discharged me in good shape.  (I particularly liked talking Pac 12 football with the former Washington State football player who had to wheel me to the hospital door – they just wouldn’t let me walk out no matter how hard I tried to insist.)  After discharge my care (which has mainly consisted of adjusting my Coumadin dose) has been in the hands of Kaiser, and they’ve done fine, too. I have no complaints about any of my doctors or nurses.

BUT . . . last week, about 3 weeks after I spent a total of 20 hours in the hospital, I began to get notices from the Kaiser Health Plan.  They were telling me that they were about to pay bills on my behalf for my emergency treatment.  (Note – happily, I never saw the actual bills themselves, just Kaiser’s brief description of them.)  So far I’ve gotten six of these notices; more may be coming, but as none have arrived in the last three mail days, I’m thinking this is probably about it.

Each document told me how much the charges were, how much Kaiser paid on my behalf, and how much I had to pay. (So far, the last figure has always been zero.)  Here’s what they said:

Billed amount:                    $57.00      Kaiser Permanente paid:                $31.35

Billed amount:               $1,250.00      Kaiser Permanente paid:              $750.00

Billed amount:                    $55.00      Kaiser Permanente paid:                $30.25

Billed amount:                  $540.00      Kaiser Permanente paid:              $297.00

Billed amount:                  $220.00      Kaiser Permanente paid:              $121.00

Billed amount:             $48,149.96      Kaiser Permanente paid:         $18,296.98

Total:                               $51,271.96                                                            $19,526.58

The first five notices all had the names of doctors who had provided the services.  I didn’t recognize any of the names, but then, I saw a lot of doctors in those 20 hours and may not have been focusing very well on their names.  (Though I do remember the name of the guy I saw the most, a resident, and he, of course, doesn’t show up on any these notices.)  None of the notifications gave me a clue about what services these doctors had provided, but, as I said, I didn’t get the actual bills (happily for me and my blood pressure), which may have had more detail.  The last, and biggest, one was for services provided by “Stanford Medical Center.”

So, $51,271.96 = $19,526.58 = $0.00:  Stanford bills, Kaiser pays, I pay.

Personally, $20,000 for 20 hours in the hospital (including a terrible night’s sleep), with no significant procedures or expensive drugs, seems high to me ($1,000 per hour), but my wife thought it wasn’t surprising.  $51,000 is clearly outrageous, but that’s nothing new . . . the actual charges a hospital makes, before being shaved by insurance, Medicare or Medicare, are notoriously inflated.  And no one, but the unluckiest uninsured, is expected to pay those charges. As someone who has taught health law for nearly 25 years, I know that. But it’s still a little different to see it in one’s own case.  (And an ancillary note – for me, at least, one of the many advantages of being a Kaiser member is not getting these kinds of bills for health care – a co-pay here or there and that’s it.)

So, this is an anecdote and, possibly, a data point, for something that needs no more anecdotes – or data points ­– to convince those who are paying attention of its reality.  But it impressed me.

Hank Greely

4 Responses to “Pricing in the U.S. Health Care Financing System: An Anecdote (or Data Point)”

  1. Paul says:

    Hank,

    Glad to hear you are doing well after your frightening medical experience.

    With respect to the frightening billing experience, do you know why the bills were so high when the provider knows that the amount of the reimbursement (from Medicare or the patient’s insurer) will be significantly reduced?

    How does the provider benefit by this practice? Is there a tax benefit? Why not just determine how much the reimbursement is and bill that amount? Is this widespread, nationwide billing practice done in case the patient is uninsured, in order to have the patient “on the hook” for the arguably inflated charge(s)? And, if that is the reason, it is silly, because almost every uninsured American couldn’t come close to being able to pay the charge(s).

    Once again, hope you are feeling better and are on the road to recovery.

    Regards,

    Paul (Your prolific Maryland v. King/Haskell commenting friend)

  2. Hank Greely says:

    In response to Paul, I don’t really know why they do it. It could be a form of price discrimination – the few uninsured people with money will pay a very high price. (Though, of course, it also means annoying – and worse – dunning and collection agencies for people without insurance who can’t pay nearly that rate, but can pay something significant.) It could be a way of inflating their “losses” for tax purposes (to the extent they have to worry about taxes, which most hospitals, as nonprofits or govt entities, don’t). I suspect it is more a matter of a long time process allowed to play out because it doesn’t really matter. If you start increasing all your charges 6% a year back in 1980, you get very big numbers in 2014. I’d be interested in hearing from anyone who actually knows why hospitals price so fictionally.

  3. Hank Greely says:

    Another statement came in on Tuesday. Stanford billed “me” $750 for services provided by yet another provider whose name I don’t recognize. Kaiser paid them $450. I paid nothing. That brings the totals to $52,021.96, $19,976.58, and $0, respectively, for bills from Stanford for services provided by 6 providers (5% of the charges) and the hospital (95%). For 20 hours, that’s $2,600 per hour billed and $1,000 per hour paid.

  4. Hank Greely says:

    One final (?) comment. About five weeks after my one night, 20 hour stay at Stanford hospital, and after I got my last notice of a bill from the hospital to Kaiser, my health plan, I got a letter from “Stanford Hospital Partners,” asking me to “make a gift to Hospital Partners today in honor of the care you received at SHC.”

    Now, I think I received perfectly competent care at SHC (thuugh my pulmonologist wife is still very upset that they didn’t do an echocardiogram). The people were mainly friendly and informative, if sometimes a bit too numerous, and I emerged healthier than when I went in. And if I hadn’t seen their charges I might even have thought (briefly) about a (small) donation.

    But when they had the chutzpah to bill over $52,000 for 20 hospital hours without any major procedures (and to accept $20,000 from Kaiser as payment in full), my eleemosynary impulses were somewhat chilled. I don’t blame them from trying by sending me a letter; I hope they don’t blame me for breaking out in a (loud) snort of laughter when I read it.

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