
Bill of the Month: A $48k Allergy Test - georgecmu
https://www.npr.org/sections/health-shots/2018/10/29/660330047/bill-of-the-month-a-48-329-allergy-test-is-a-lot-of-scratch
======
zaroth
I've commented on HN specifically about Stanford billing in the past. I will
stick my neck out and say that I believe it is straight up fraudulent.

I am convinced, although I have no evidence, that there is a kickback
somewhere along the line back to the insurance company for approving the
inflated bill, knowing that they can kick 20% of it over to the customer as
co-insurance.

I had my own Stanford bill for a child's ER visit which included a basic blood
chemistry and a single shot of insulin that turned into a 5-figure bill of
which they wanted me to pay 20%. They "coded" the visit as intensive care,
even though my child never left a basic exam room, and the only treatment was
a subcutaneous injection. The good news is that after a year of fighting they
wrote it off and I paid nothing. But it took about 100 hours of calls,
letters, and threats. Patients should not have to go through this.

I blame the regulators. I blame the insurance company. But most of all, I
blame Stanford Hospital. They should have their non-profit status revoked,
because in fact, they are one of the most profitable hospitals in the country.

~~~
mitchell_h
Check your credit. My second son was born a month early and spent 3 days in
the NICU. 3 years later I was getting fresh bills from doctors I couldn't
remember. Spent another year arguing with the hospital, the doctors and the
facilities people(hospital and floor space and doctors all are different
bills!!!!!). After a year they "wrote off the bills" what they actually did
was stopped chasing me or accepting my calls, and put a knock on my credit
report for the debt. it was another year of fighting those.

~~~
zaroth
If they told you they were crediting the bill and then slammed your credit,
that's just more fraud. Probably a felony, but IANAL. Of course, nearly
nothing you can do about it except take them to small claims court?

At least in my case it never went to collections or hit my credit report. This
was 5 years ago, I guess it's never too late for them to try. Makes me wish I
recorded the call when I finally was told they were crediting the bill.

------
sonnyblarney
Everyone in the medical industry is complicit.

Doctors, nurses - even if they are removed from it - they are essentially
corrupt and responsible - they cannot wash their hands of it.

This is a deep, deep social problem in the US - far bigger than many of stupid
things they talk about in the press.

It's probably bigger than prison reform, policing issues, privacy etc..

It might be the #1 social problem in the US given how many people it affects
(basically everyone), and the vast sums in involved.

50% of bankruptcies are due to medical bills.

In 100 years I think they will look upon this period as Dickensian.

I think free markets are important but I'm not sure if any of this is free
market at all ...

~~~
lettergram
> I think free markets are important but I'm not sure if any of this is free
> market at all ...

For reference, I worked in a large medical billing office for years.

It's not a free market, it's the opposite. Completely socialized, just in a
very round about way.

Medicare pays roughly 10% of any bill that's charged. It's a flat rate now
(but remains about 10% of what insured people pay). Essentially anyone with
insurance is "taxed" by having to pay 100% (then negotiated down by the
insurance companies). You legally cannot not have insurance, if you make over
a threshold (in part due to Obamacare), which has made the issue worse.

The above combined with the inability to see prices beforehand and the way the
U.S. foots the bill for the worlds medical research has made it pretty insane.

IMO the ideal solution is to make insurance illegal. Hospitals then need to
manage the cost and risk of running procedures. Yes, this means some people
get worse treatment, however -- they also only get paid if you live and are
happy. The incentives are then aligned, and the hospital manages the risk so
better hospitals stay in business longer.

There may be some middle ground there, but having worked in the industry, it's
the only "good" solution I see.

~~~
sonnyblarney
Insurance is up there with penicillin in terms of it's ability to help the
masses. The idea that we can avoid the 1% chance we might lose our homes to
fire if we just pay a small amount has transformed society.

So we still want insurance.

But we need a way to make it more competitive.

Ultimately - even with insurance - the 'price comes home' \- and most of us
are very price sensitive.

If we had to pay for plans out of pocket ... and they were different prices
with transparent points ... we'd see competition.

Also as you say hospitals have to be fully transparent about stuff.

If someone working on your car can bill you for labour and materials, so can
doctors. This 'billing problem' is BS.

For example - hospitals should just provide many things as complementary, i.e.
just part of the stay in the 'grand hotel'.

Regular doctors + nurses time should just be part of the deal, you only pay
extra for surgery time.

Inexpensive things like x-rays should be part of the daily rate, not a
specific charge.

Can you imagine if the hotel charged you for every coffee creamer? My god.

~~~
GFischer
I've worked in insurance for almost a decade (P&C), and I believe what the
U.S. calls "health insurance" is a travesty.

 _" Insurance is a means of protection from financial loss. It is a form of
risk management, primarily used to hedge against the risk of a contingent or
uncertain loss"_

Insurance should never be used for something CERTAIN and inelastic such as
healthcare. For specific health risks, sure, but for standard care? It makes
absolutely no sense.

I don't know how the U.S. can fix its healthcare crisis, but it's an absolute
disaster. Other countries don't have 48k allergy tests.

------
dmckeon
> Total bill: $48,329, including $848 for the time Winston spent with her
> doctor. > Winston's health insurer, Anthem Blue Cross, paid Stanford a
> negotiated rate of $11,376.47. > Stanford billed Winston $3,103.73 as her 20
> percent share of the negotiated rate. > ... > Winston ultimately paid
> $1,561.86 out of pocket.

48329.00 nominal bill

14480.20 R == ~30% of nominal bill

11376.47 ~80% of R - negotiated rate Anthem paid

3103.73 ~20% of R - billed to patient

1561.86 patient paid, negotiated

So, the patient paid 3.23% - or about 50% of 20% of 30%.

Imagine if other businesses charged like this.

Imagine going into a restaurant, or a furniture store, or an auto mechanic,
and being told "It's not expensive" without a specific price, and then finding
out that the bill is supposedly 30x your typical expected monthly cost.
Whoops, no, 10x. Oh, really 2x. Okay, 1x.

If a billing process like this happened to a character in a movie viewers
would describe it as farcical or unrealistic. But many people in the US accept
it as normal.

How did we get here? More importantly, how to we get to something better?

~~~
mamon
The point is, in most EU countries the bill would be maybe 300-400 USD. Not
just the patient co-payment, the whole sum. So the US healthcare is overpriced
by the factor of 120x.

~~~
noonespecial
Seems like the $50k "bill" might just be sneaky way to get the patient to fork
over the 1.5k instead of the 300.

All the rest is a hand-wavy misdirection. Is it even possible to know if,
after all the shells stop moving, the insurance company really "paid" anything
like they said they did? Or was the real cost of service the 1500 and
everything else just expensive theater funded by the insurance "premium"?

~~~
cosmie
Health insurance companies in the US are legally obligated to[1]:

1\. Spend 80-85% of premiums on medical spending (with a loophole that
"quality improvement" initiatives count). That leaves 15-20% for overhead and
profit.

2\. Rebate you any excess they collect if they don't meet that medical
spending requirement[2].

3\. Justify large rate increases.

The insurance company really does pay those costs, rather than playing
theater. They have absolutely no incentive whatsoever to limit inflated
passthrough costs, and every incentive to justify as high of passthrough to
providers as possible. Any attempt at cost control above the bare minimum will
result in cannibalizing their own profit potential, because they're not
allowed to keep that improvement. And the more inflated the passthrough costs,
the more they can justify large rate increases (which then increases the
absolute size of the 20% they're allowed for non-medical spending).

But wait. Only their health insurance arm is subject to such profit capping.
Now that "market rate" for various intermediate services has been established
at such an excessive level within the environment of payers having no
incentive to reign in costs, they can gobble up some of those middlemen and
reap the benefit of those crazy profit margins. Because their insurance arm is
complying with their 20% overhead mandate, but their newly acquired PBM has no
such mandate on profit[3]. That way the profit transfer from one internal
entity with a statutory profit limit to another without one is seen as kosher
and not a run-around.

So it is theater, in a sense. But it only works because it didn't start out as
theater. They had to truly passthrough costs and get acceptable and normal
market rates established, _then_ start gobbling up the intermediaries in the
value chain that they fattened up. If they hadn't done that, it would have
looked like self-dealing from the outset and never would have been successful.
Whereas now they're able to hand-wave it through regulatory approval with
vague promises of efficiencies.

[1] [https://www.healthcare.gov/health-care-law-
protections/rate-...](https://www.healthcare.gov/health-care-law-
protections/rate-review/)

[2] Individual plans rebate to the individual. Group/Employer plans rebate to
the employer, and don't have to pass it through to the employee if they can
think of a way to "apply the rebate in a way that benefits employees".

[3] [https://www.hallrender.com/2018/03/16/the-wave-of-pbm-and-
in...](https://www.hallrender.com/2018/03/16/the-wave-of-pbm-and-insurer-
integration-continues-as-cigna-and-express-scripts-announce-a-merger-of-their-
own/)

------
pleasecalllater
This one thing keeps me from moving to US. Here in Europe I can pay about $50
for a set of 10 allergy tests (if I go to a private clinic).

I pay about $10 per month for a national health insurance for my whole family
(I pay much more, but most of that is deductible from income tax - so when I
calculated how much money would I have if I wouldn't pay this, it was $10).

As my wife is sick, she needed some special treatment. For the first days in
hospital she got antibiotics, 4 times a day, $300 per injection. I payed
nothing. Then she got some more drugs, sometimes a box for 5 days was worth
about $3k - I payed nothing.

When our kids were born and spent the first 6 weeks in hospital on an ICU, the
cost was about $150 - I payed nothing. When they had to get a special medicine
for $4k - I payed nothing.

And yes, my taxes are a little bit higher than in US, but come on, I'd go
bankrupt if I had to pay for all that. Or rather: I wouldn't pay, I'd live on
street, and we would be dead now.

~~~
craftyguy
That is the one thing that keeps you from moving to the US? Granted, it is a
pretty big problem, but I'd say it is far from being the only thing the US
gets wrong that the EU generally gets right.

~~~
pleasecalllater
This is The Thing. The list is much longer. On the other hand there are many
problems that are worse here as well. But for me the main thing is that in US
people are dying or lose everything just because someone in the family got
sick. This is sick!

~~~
craftyguy
Long prison sentences for non-violent crimes also ruin lives. Police
indiscriminately killing unarmed citizens because they are armed and trained
to shoot first also ruins lives. Non-existent support for mental health
problems also ruins lives. Major homeless problems in all major cities with no
long term solutions also ruins lives. Shall I go on?

~~~
codyb
Those are probably issues that are mostly irrelevant to both the parent poster
and the discussion at hand.

It seems doubtful this family man would move to the US and immediately become
a homeless, mentally ill victim of police violence.

Everyone agrees the US has plenty of issues (and there's plenty of homeless in
Europe too), but you're replying to someone mentioning his personal reasons
and telling him a laundry list of other issues that America has.

------
2trill2spill
This whole practice should be illegal, why can't hospitals list the materials
they used, their cost and how many hours doctors and nurses worked and what
they bill hourly? The cost for a hospital to do a procedure doesn't changed
based on my insurer, so they shouldn't be able to charge differently.

~~~
refurb
Cost accounting.

Hospitals are terrible at it. Even if you asked the hospital, how much does it
cost to take an x-ray? Personnel, capital costs, material costs, everything.
Most hospitals couldn’t tell you.

They tend to measure based on service lines. “Our stroke unit is profitable”.

Beyond that, they are pretty hopeless from what I’ve seen.

~~~
2trill2spill
That's 100% the hospitals fault, no other profession would get away with not
knowing how much the service they provided you costs and then making up a
number to charge you.

~~~
kazen44
how come the US is so opaque about pricing? Any other country i have been to
(national insurance or not) has been absolutely transparent about pricing of
healthcare. Including a GP in a tiny village in france who didn't speak
english who sew back the skin on a finger after a nasty cut. (i had to pay a
fee because i am not a french person, and the EHC doesn't cover "mundane"
injuries like a deep cut in your finger.)

the healthcare system in the US seems like total chaos to me.

~~~
vidanay
We aren't even transparent about the cost of buying a candy bar at the
convenience store.

------
Rafuino
My company has been pushing a high deductible plan exclusively provided by
Stanford. They would NEVER answer questions about pricing up front in the year
I tried the program, so I switched back to another provider that does
(Kaiser). Stanford is a complete racket as the article shows.

~~~
codyb
I always pay extra when given the option for the low deductible plans and the
one time I hurt myself snowboarding and needed physical therapy it paid off
tremendously.

Being on the hook for 5000 worth of care would have been a tremendous burden
where as whatever I was on the hook for (maybe a fifth of that? Maybe less?)
was not so much.

There's also differences in fee scheduling which makes a huge difference. For
instance if you're on a medicaid fee schedule they tend to charge less for a
lot of things making it a lot more difficult to ever hit your deductible
putting you on the hook for more charges over time. If you're on a standard
fee schedule you'll hit your deductible faster.

It's all incredibly confusing in the end and very hard to figure out and most
people don't until something happens and then it's "oh shit I'm getting fucked
aren't I?".

Not a great system, and pretty pathetic for the richest country in the world
to bring so much hardship (as noted, something like 50% of bankruptcies are
due to healthcare costs) upon it's citizens in times when they're probably
already in some of the most stressful situations of their lives.

------
megaman8
Absolute insanity. This should be made illegal... seriously, if policians have
enough time to deal with privacy issues and gdpr and they should have enough
bandwidth to deal with stuff like this.

~~~
craftyguy
US politicians apparently don't have time to deal with privacy issues and
gdpr. They're too busy trying to keep people out of the country, give tax
breaks to wealthy folks, repeal health benefits, prolong armed conflicts, and
tweet about how great they are making america.

~~~
module0000
>> US politicians apparently don't have time to deal with privacy issues and
gdpr. They're too busy

...trying to get re-elected. Every action they take is with that singular goal
in mind.

~~~
stevenwoo
Or make rules and regulations for an industry for which they will transition
into direct hire or lobbying after serving in Congress.

------
mbesto
[https://finance.yahoo.com/quote/UNH/financials?p=UNH](https://finance.yahoo.com/quote/UNH/financials?p=UNH)

$201B last year, from one insurance company alone. That's how much money flows
through just ONE healthcare insurance carrier in the US. JUST ONE.

For the technical crowd out here, Amazon did $177B last year in sales.
Americans are spending more money on healthcare insurance on the largest
healthcare insurer than they spend on retail from the largest retailer in the
US.

The difference?

Amazon:

\- I can freely decide to use them or not. I'm not penalized if I don't

\- I know exactly how much something is going to cost and can shop around
online (at competitors even)

UHC:

\- If I chose a doctor out of network, I get penalized

\- I have no idea what the pricing is and it can change at any moments notice

------
gowld
> 119 tiny plastic containers of allergens were taped to her back over three
> days of testing

> Winston's health insurer, Anthem Blue Cross, paid Stanford a negotiated rate
> of $11,376.47.

> She made the argument that her doctor had told her the cost per allergen
> would be about $100

$48K is some phony list price that doesn't matter.

Maybe that's higher than it should be, based on the comparison to averages and
medicare, but I don't see where the shock comes from, as she (+insurance) was
billed 99% of what her doctor told her it would cost.

~~~
dpark
> _$48K is some phony list price that doesn 't matter._

It does matter, though. These high list prices sacrifice the uninsured for
larger chips at the insurance negotiation table. The uninsured don't have
anyone negotiating rates for them so they end up paying the list price (or
going bankrupt instead).

------
usaphp
And on top of that my insurance premiums for a family of 4 is constantly being
increased by at least 20% year over year, and that considering that we have
not visit any doctors with my wife in the last 3-4 years and only do regular
checkups for kids once a year ...it’s getting ridiculous to pay 1300$/month
for the cheapest possible insurance of family of regular size. And we still
have to pay ~$100-120 for each visit and have a 7k deductible ...

------
crb002
Somebody needs to start suing these providers for fraud like consumers did to
RR Donnley publishing a few years back were they were caught regrouping their
price schedules to maximize their profit while telling customers they were
optimizing to give them the best cost. Consider McDonald's Dollar menu
pricing. Same thing sold, how you group it matters on the bill.

------
pettersolberg
Business as usual

------
cryptonector
> Her Stanford-affiliated doctor had warned her that the extensive allergy
> skin-patch testing she needed might be expensive, Winston said, but she
> wasn't too worried. After all, Stanford was an in-network provider for her
> insurer — and her insurance, one of her benefits as an employee of the state
> of California, always had been reliable.

And here we have one of the biggest problems with the American health care
system: a) no one knows the cost of anything (except insurers), b) customers
feel no need to be cost-conscious.

They tested her for 119 allergens, but from her symptoms they could probably
have cut that way down, and tried an iterative process (trial and error) that
should have cost much much less. But the patient "wasn't too worried" because
the insurer "always had been reliable".

If we went back to old-style insurance (think Blue Cross & Blue Shield), you
know, you pay 100% until deductibles are met, then they pay 80% and you pay
20% up to some cut-off after which they cover 100% up to some large max...
then patients would become cost-conscious. Doctors (or their assistants) would
have to be able to quote prices on the spot. All the per-network variation in
prices would be reduced or eliminated. Patients would be able to negotiate
prices with doctors!!

Imagine that, people negotiating prices. In a world where no one feels the
need to negotiate, no one knows how to negotiate, and no one bothers to
negotiate, and so when costs mount all we know how to do is complain.

A free market needs pricing signals. The American health care market lacks
pricing signals. The American health care market isn't functioning very well
like a free market. Indeed, there's a ton of regulation too that, along with
the HMO/PPO/everything-but-traditional-insurance system serves to increase
costs and hide this from the consumer until it is too late.

The most sensible reforms at this point would be those that make the system
more transparent to the consumer _before_ they consume.

On top of all this we have tremendous protectionism:

    
    
      - it's too hard to become a doctor
      - it's too hard to build new hospitals (you need a
        "certificate of need" -- did you know about that
        bit of protectionism??)
      - FDA regulation makes generics manufacturing really
        difficult (my father tells me how he can't sell
        chemicals to generics manufactures even at 25% of
        what they pay someone else because the regulatory
        cost of switching sources is so high)
    

Our system is practically designed to produce ever more cost inflation for
health care.

EDIT: Let's not overlook, either, the conflict of interest that the doctor in
this (and every case) had! The practitioner in this case ordered practically
every test without quoting the customer a price, thus ensuring a bigger payday
for themselves. Sure, they said it _might_ be expensive, and sure, the
customer acquiesced without inquiring further, but the practitioner almost
certainly didn't care whether the customer could afford this, and they didn't
know the final price either. This conflict is unavoidable, naturally, but that
doesn't mean that we cannot deal with it reasonably. Doctors should absolutely
be required to quote prices to their customers prior to performing procedures
or ordering tests, and generics substitution should always be permitted.

------
PHGamer
it was only 3k though after everything was said and done. not as much scratch
as the title is posted. yes the original charges pre insurance are ridiculous
but thats everything.

~~~
Pfhreak
> yes the original charges pre insurance are ridiculous but thats everything.

Why do we do this? (I'm just as guilty as anyone, btw, not calling out you
specifically.)

Why do we acknowledge that the system is totally broken, then shrug and say,
"Medical prices sure are weird, nothing we can do."

It seems pretty rare to see the conversation turn towards, "It was only 3k
after everything, but the original prices were way out of line with what they
should have been. We should really try to fix that."

~~~
dpark
Providers do this because it's a bargaining chip when negotiating rates with
insurers. An insurer will say "this procedure should only cost $100". The
provider will counter by showing that their "list" price for the procedure is
$1200. They'll compromise on $250 and some uninsured schmuck will go bankrupt
trying to cover the "list" prices.

It continues because 1) Having absurd prices is not illegal. Of course absurd
prices are usually self-correcting. 2) It's politically infeasible to fix this
because it means "someone" (aka the government) has to mandate what the prices
should be.

------
titusjohnson
I don't understand why this isn't treated as predatory.

~~~
51lver
Because the predators made the rules.

~~~
moate
And have other large predators (lobbyists) protecting everything.

