How Do Hospitals Bill For Nursing Services

My new book

The Great American Healthcare Scam: How Kickbacks, Collusion and Propaganda accept Exploded Healthcare Costs in the United States

Can now be purchased on Amazon. Here are the links:
Paperback
eBook

Spending time in the hospital is very expensive. Rather than giving you an itemized list of everything that might become into a infirmary stay, I'll talk well-nigh something that should exist about every bit skillful: bills from a hospital, complete with last payments. That should requite us a pretty skilful thought of the value of hospital services, since insurance companies have admission to all the costs and specialize in existence able to offer the minimum corporeality whatsoever establishment is probable to accept.

What I'll show are copies of 3 actual hospital bills to patients. I'll apply them to take yous through some of the typical aspects of hospital billing and payment. And, as you've probably guessed, it'southward going to look a niggling strange.

HospitalBill

Figure 1: Hospital Bill

This offset beak is for a patient who spent two days in the infirmary, and has individual insurance (a Medicare advantage program). Let'southward see how the numbers add together upwards. In the bottom right corner is the Account Summary. From the first line, you can see that the total bill came to $21,274.49, or near $10,000/day for two days. (The services leading to that cost are on the left: a couple of $2,500 CAT scans, a $4,400 ER charge, etc.)

On the next line is the amount the insurance company paid: $2,052.95—just less than 10% of the total due! Ouch! Doesn't that leave the patient on the hook for the remaining $nineteen,172.54 (nevertheless about $10,000/day, which would be a footling hard on most of u.s.a.)? No, because the next line is the insurance Adjustment, which is the amount that the insurance company miraculously convinces the infirmary to forgive. In the terminate, the hospital charges xx-one thou dollars, the insurance company pays ii thousand dollars, the patient pays fifty dollars (that's right, just $50) and the rest but goes away.

EyeSurg2

Figure two: Hospital Bill

This 2nd bill is for a patient who spent three days in the hospital and has completely private health insurance. This patient had some complicated surgery performed on his eye. Now, the Account Summary is a scrap dissimilar on this bill. The total billed is well over one hundred thousand dollars ($126,714.57); plenty to bankrupt just about anyone. The next column over is "patient savings" which is only another term for the adjustment or the insurance disbelieve. In this case, the disbelieve is also well over one hundred thousand dollars (again, almost the entire bill). The insurance payment in this case ends upward being just nether twenty k dollars ($xix,527). This fourth dimension, the patient owes zip.

So the infirmary bills the insurance company the toll of a luxury sports car and the insurance company returns a payment that'south only enough to buy a Honda Borough.

Figure 3: Hospital Beak

This third bill is for a patient who was very sick. This person spent 11 days in the hospital in September 2014 (September 17-September 27) and even spent time in the intensive intendance unit. How much did the the hospital (John Muir hospital) nib for this extended hospitalization? Over $367 thousand! That'due south enough coin to purchase a very decent firm most anywhere in the U.S.

Of course, almost of that enormous sum wasn't paid by anyone to anyone. 3 lines below the line that says "Total charges" you once more see "adjustments." In this bill more than $264 thousand, or merely over seventy% of this enormous beak is again discounted; completely disregarded by the patient'south insurance company. (Again, this is individual insurance that this person got through their employer.) In the end, the full paid on this bill by both the insurance visitor and the patient combined is but over $100 thousand ($102,570) That'southward notwithstanding a lot of coin, but far less (only 28%) of the gargantuan sum that was billed. What's going on here?

How Hospitals Create Their Bills.

The method of reimbursement for a hospitalization differs substantially for unlike insurance companies. It's not simply that the rate is different for each service, merely that different payers will reimburse different services. Medicare, for example, bases their reimbursement rate solely on the patient's diagnoses. A diagnosis of pneumonia will get a stock-still Medicare payment regardless of how long the patient stays in the hospital, what tests are ordered or what treatment is given. Other payers might pay past the twenty-four hour period, or for each individual service. But the hospitals exercise all their bills the same way, no matter who the payer is. So the best way for them to become paid is to put anything that might be reimbursed by whatsoever payer on every bill.

An insurance company will happily ignore the things it doesn't intend to pay, but volition never add together annihilation the infirmary leaves out. Information technology volition too happily pay less than the hospital asks, but certainly will never pay more. In other words, there is no penalization for billing likewise much for a service, simply if the hospital doesn't bill enough, it short changes itself. The merely potential penalty would exist for billing for a service non provided or a diagnosis not justified.

Now permit'due south await at what all this ways. When a business sends a bill, to yous or to another business, you pretty much expect the bill to bear witness the value of what they provided, and therefore what they wait to be paid. Just an insurance company pays the hospital based on pre negotiated rates, no matter what the bill asks for. The hospital tin turn away all patients with that insurance, of course simply, for each insurance company, that would mean turning abroad a lot of patients—the insurance companies are now very large.

And then because the hospitals know that they'll just ever get less than what they pecker, the process of infirmary billing has stopped being a normal business transaction, and turned into something more like a child daydreaming about his Christmas list. But it works, (well, not really), equally long as it's just a game between the hospital and the insurance company.

Here is where it goes Totally Wrong.

Hospitals see no trouble in sending bills to insurance companies for five to x times the amount that they actually expect, considering they are simply playing the game that the insurance companies fashioned. Just retrieve, they merely produce one kind of bill, and it's designed to ship to someone who holds all the cards (an insurance company), and and then can simply refuse to pay annihilation they didn't already agree to pay. That'due south their game.

Simply what happens when yous have to play the game with the hospital lonely (if you don't have insurance, or if your insurance doesn't cover that stay for some reason). Then you're on the claw for the unabridged amount. Most hospitals have a policy that allows people to negotiate for a lower corporeality, only virtually people don't know this. And don't expect the hospital to tell you well-nigh information technology, allow alone aid out. So fifty-fifty if you tin remember to negotiate while you're convalescing from a long hospital stay, good luck trying to get the deal the insurance company gets.

For the average person, this is no small-scale affair. In the get-go example, a ii day hospitalization that the insurance company got for $two,100 (later the insurance adjustment), would toll an uninsured person over $21,000. The adjusted charge ($2,100) would be a pretty nasty kicking in the finances for virtually families, merely they could bounce back. The unadjusted charge, which is what you'll get if yous don't have insurance, is an almost certain trip to bankruptcy.

And y'all'd better believe the hospitals will become after you for every penny. Here's a copy of a letter one of my patients brought me.

image002.191102622_std

As you lot expect at this letter, remember: This viii cent debt was SOLD to a collection bureau, and they used a 44 cent stamp to send it.

This problem of excessive mark-up doesn't just apply to people who are hospitalized. Hospitals accuse the same corporeality for a service regardless of whether or not the patient is in the infirmary. Anyone getting routine tests or a diagnostic workup from a hospital is likely to be charged 5 to ten times what an insurance company would pay for it (5 to 10 times what the service is really worth).

So people are completely dependent on their health insurance for even small medical costs. In what other industry would y'all do this? Would you apply your car insurance to buy windshield wiper fluid or supersede a burned-out headlight? Would y'all use your homeowners insurance to supersede a screen? In medicine, people are routinely billed several hundred dollars for picayune tests that shouldn't cost more than a car headlight, just because they don't take insurance, or the insurance visitor denied coverage for that test.

This isn't merely a problem for patients. But because the hospitals are playing the game doesn't mean they're winning. Some aren't even even breaking even. Many modest customs hospitals are currently in deep fiscal trouble. There are probably a number of reasons for this but much of it probably has to do with the fact that small hospitals don't do well when they're playing a game designed to pit big hospitals against large insurance companies.

Rather than trying to collect a fair amount for each affordable service direct from patients, hospitals go through the insurance companies for even the about mundane fees. In lodge to practice this, each hospital needs a large staff of billers, who spend thousands of hours each year chasing later the money that'south owed them. That'due south administrative toll, which they demand to embrace out of insurance payments. And, since each patient simply brings in a small profit, each denial puts them in a financial pigsty. Their answer: lean harder on the patients who owe them money.

How many ways is this system cleaved? As I said at the very beginning, ane of the biggest problems with medical costs is that the real costs are so well hidden in all these games that virtually no i even knows what they are, let alone what to do with them. This applies to doctors every bit much every bit patients. We saw how patients tin can easily be dislocated into buying drugs for far more than they cost, but because they have insurance. Doctors are run around just as much by the absurd organization of insurance reimbursement. Now, nosotros find that even the biggest players; the hospitals, are playing the same crazy games by the same crazy rules.

But at present it begins to really hurt the patients. It'southward frightening enough to have to stay in the hospital because of a serious disease. And then add the worry of a potentially crushing debt, just because a fault was made in billing or charting, or because your insurance visitor merely wants to play games. Hospitals oftentimes attempt to justify placing this burden on patients to brand up for the financial problems the insurance companies give them. (The insurance companies blame the hospitals, of course). In other words, they both brand the case that they're bullies because they're being bullied. The irony of this is remarkable. How tin can hospitals mutter nearly not being paid after doing so much in so many ways to discourage straight payment. Again, in what universe does this make any sense?