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The riduculousness of our medical system pricing system

In november I had my annual eye exam with my doctor at Harvard Vanguard, an HMO. I paid the $15 co-pay at the time.

Today I got a not-a-bill From Eye Med Vision Care.

This document showed a submitted charge of $186 with an allowed amount of $67.40 and evidence that $52.40 was paid by Tufts Health Plan Medicare my insurer. AThe bill indicated that Eye Med is administered by First American Administrators.

Four organizations are involved in this transaction - not counting me, my credit card company, and my bank.

This document said the submitted charge was $186, but only $67 was allowed - that is 36% of the submission.

$186 would yield $744 / hour assuming 15 minute appointments which is what I think they do. I wonder if anyone every pays $186.

I also wonder how many different prices get charged for the same service at this HMO. And how automated is this billing process and how many people had to do something in the process.

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Well, yes, some people do pay the $186: the ones who don't have insurance.

The reason is that the insurance plans negotiate rates that are high enough to yield profits for them and their intermediaries, but resulting in lower proceeds to the providers than they need. To make up the difference, they charge inflated rates to the smaller percentage that are uninsured and don't have companies bullying the price down for them.

...which is why single-payer works.

Before I got Harvard Pilgrim (&, later, Medicare), I had major medical insurance with a large deductible. After an operation, I received a bill from the hospital for a large sum, from which was subtracted an almost equally large "courtesy discount", leaving me with a small amount to pay. I was curious about what meant, and I happened to be in the vicinity of the place that day, so I walked in & asked the lady at the desk. She explained that the idea was to make the billed amount large, the better to eat away my deductible. That seemed like fraud to me, but I did not call the police. I paid the small remainder, and since then have made no attempt to understand my health insurance. If I receive a bill, I pay it; if I receive a refund check (I have received several, a couple of them substantial), I deposit it. Every once in while I get a statement of what Medicare and/or my HPHC backup have been charged for this or that -- always shocking amounts, but what do I know?

Yeah, when I was in Canada, hospitals said about 80% of the work of their billing departments was dealing with the insurance companies of folks from the States. My mother had heart-attack-like symptoms (happily not a heart attack) when she visited me and we went to an ER, the total bill (including an EKG & blood work with cardiologist consult) came to about C$600, which would have been about US$425 then.

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