About five years ago I had my gall bladder removed, technically called a cholecystectomy. It was a laparoscopic, same day surgery at a local medical center.
Shortly after receiving the bill, I requested a detailed explanation showing where every dollar went.
The bill totaled $47,000 at that time (for the hospital only); however, it stated that some $41,000 was negotiated down by the insurance company leaving some $6,000 remaining, which most was covered by the health insurance.
Interestingly, the complete charge at the Surgery Center of Oklahoma , a company that displays it’s prices online and for the most part, does not accept insurance, for a cholecystectomy at the time was about $5,800.
How is this possible? What’s going on with this process? What if I was a self-pay patient? What’s wrong with the system?
This was well explained in an interview with Surgery Center of Oklahoma CEO, Keith Smith, MD around that time:
“There are a lot of scams that are operational in this industry, the really good news for you is you’re not one of those patients from whom the balance of that $47,000 was expected.
“Hospitals many times prey on patients that either don’t have insurance or don’t have the accepted type of insurance, and so when a hospital and so when a hospital renders a $47,000 to some patients they actually mean it. And they’ll bankrupt people to get that money.
“So, the way this works is this–the hospital charges $47,000 knowing all the while they’re going to accept $6,000 for payment, and then they’ll claim that they lost $41,000, even though the $6,000 fee they’re going to accept is pre-negotiated and agreed upon with one of the PPO carriers.
“The hospital will then claim they lost $41,000, or that they provided $41,000 in care for which they were not compensated. And then this accounting fiction and write-off helps them maintain the myth of their not-for-profit status.
“There’s another dirty side to this in that these losses the hospitals claim then get mailed to the cesspool in Washington and these claims of uncompensated care then form the basis of kickbacks to hospitals called “disproportionate share hospital payments”, so hospitals that claim these giant amounts of uncompensated care, the $41,000 write-off you’re talking about, they are incentivized to report the fictitious losses by this arrangement they have with Uncle Sam.
“So it’s awful and there’s another part of it that just as bad, if not worse on the insurance side. The insurance company that you have, no different than any others, will write into your employer and they’ll say look at what we did–we rode in on our white horse–we had this $47,000 dollar bill from this price-gouging hospital, and we did what we do–we’re so powerful in the marketplace we made them reduce that $47,000 bill to $6,000. And so we saved you $41,000. This is the famous discount that insurance companies claim that they provide.
“Keep in mind that this whole scam has been pre-negotiated- the discount is known to all the players-insurance company and the hospital on the front end.
“Then the insurance company will charge your employer a commission for the discount that they achieve. And they do that in various ways. That commission can be as high as 28%.
“So if you think through that mathematically, the insurance companies actually want the most gigantic charge they can possibly encounter from the get-go.
“I’m told, it’s not uncommon for an insurance company to ask a hospital to double the charge, do a brother a favor and double this charge cause that maximizes the commission they would charge on the savings achieved.
“And it’s easy to get angry at the insurance companies and the hospitals, and people should be angry, but I also think it’s really important to stay focused and understand that the real culprit in all of this is Washington, DC. because all of these scams have been manufactured and maintained by the folks in DC and the cronies that they’ve enabled are the ones on the frontline financially abusing people.
“The real kind of mess in the background is the government. I think that’s important to remember because as people begin to entertain the idea that government can solve what’s wrong with healthcare, I think it’s important that they entertain the idea that it’s the government that’s caused all this mess.
“That’s kind of the long and short of what your bill is, what it represents and why it’s what it is.
“Keep in mind too the entire price for your gall bladder removal at my facility, for everything, is less than $6,000.
“The insurance company that you have wants nothing to do with me, the reason for that is without a giant initial charge, they forego that opportunity to apply a savings or a discount and cash in on that with your employer”.
Grandpa Ernie’s Diary is quick takes (and not-so-quick takes) on issues of politics, society, culture, The Bible and health & disease.