The New York Times (8/22,  Kliff, Katz, Taylor) reports, “This year, the federal government ordered hospitals to begin publishing a prized secret: a complete list of the prices they negotiate with private insurers.” The Times says “data from the hospitals that have complied hints at why the powerful industries wanted this information to remain hidden.” The data show “hospitals are charging patients wildly different amounts for the same basic services: procedures as simple as an X-ray or a pregnancy test.” And it “provides numerous examples of major health insurers – some of the world’s largest companies, with billions in annual profits – negotiating surprisingly unfavorable rates for their customers.” In many cases, insured patients “are getting prices that are higher than they would if they pretended to have no coverage at all.”

“Data being released for the first time by the government on Wednesday shows that hospitals charge Medicare wildly differing amounts — sometimes 10 to 20 times what Medicare typically reimburses — for the same procedure, raising questions about how hospitals determine prices and why they differ so widely”.

“Medicare does not actually pay the amount a hospital charges but instead uses a system of standardized payments to reimburse hospitals for treating specific conditions. Private insurers do not pay the full charge either, but negotiate payments with hospitals for specific treatments. Since many patients are covered by Medicare or have private insurance, they are not directly affected by what hospitals charge.

“Experts say it is likely that the people who can afford it least — those with little or no insurance — are getting hit with extremely high hospitals bills that may bear little connection to the cost of treatment.”

Blogfinger Ocean Grove Off-Shore School of Medicine.   Commentary by Paul Goldfinger, MD, FACC.

A friend informs me that after 15 years of Medicare coverage and without ever getting balance-billed,  he received a bill for $1,700 from a hospital where he spent one day as an in-patient.

According to a Medicare representative, the charge was for the pills that he normally would have taken if he were not in the hospital.   Further inquiry revealed that if you are admitted to a hospital for “observation” then you may receive such a bill.

He was admitted from an emergency room to a cardiac care hospital bed because of a suspected mild stroke.  But he turned out to be OK and he was released the next day.   The hospital record indicated that he was labeled “observation.”

He appealed to Medicare and was denied. The hospital then insisted on payment from him.  He plans another appeal to Medicare.

We checked with a knowledgeable physician practicing in Monmouth County who verified that such unfair balance billing has been happening.

And don’t expect that your “Medigap” insurance will back you up.  They only pay when Medicare has approved the hospital charges.

As for the varying prices described above at 3,300 hospitals across the country, it reveals that hospitals can charge what they want and that Medicare will decide what it is willing to pay.

But if you have no insurance or if Medicare denies approval for your hospital bill, then you will be charged whatever the hospital wants to charge with none of the usual Medicare restraints on pricing.   It will be as if you have no Medicare coverage at all.

That is why our friend received a bill for $1,700 to cover his everyday medications that he could have brought from home if they had informed him and if the hospital had allowed it, which it would not.   Those drugs would likely cost under $10.00 at your regular pharmacy or mail-order provider.

This is a scam that can hurt you if you are caught up in it  After all, if you go to an ER and they recommend admission, you have no choice and you may find yourself with a big bill later.

If this turns out to be a common practice the pressure will be on Washington to fix this loophole.