Why are medical bills so hard to understand?

October 8, 2016

It’s come to this: healthcare entities have so successfully bamboozled American consumers with their wacky bills and lack of pricing transparency, compounded with robbing middle-class Paul to pay uninsured Peter, that a chirpy contest for entrepreneurs-yes, a call for people to start an entire business to decode medical bills-is the best chance the American people have.

Editor's Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The series continues with this blog by Monya De, MD, MPH, who practices internal medicine and integrative medicine in the Los Angeles area. The views expressed in these blogs are those of their respective contributors and do not represent the views of Medical Economics or UBM Medica.

 

The cheery email landed in my inbox with great fanfare. “Calling all innovators!” it said. “Patients across the U.S. struggle to understand their medical bills and the medical billing process. Confusion and surprises related to medical bills undermine patient satisfaction with both providers and payers and may cause patients to avoid seeking the care they need to stay healthy. This design and innovation challenge presents an opportunity for you to be a part of the solution!”

 

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Whoever won this thing walked away with $10,000, funded by a national health nonprofit. A nice sum of money, but is that all that understandable medical bills are worth?

It’s come to this: healthcare entities have so successfully bamboozled American consumers with their wacky bills and lack of pricing transparency, compounded with robbing middle-class Paul to pay uninsured Peter, that a chirpy contest for entrepreneurs-yes, a call for people to start an entire business to decode medical bills-is the best chance the American people have.

The contest doesn’t even address a second issue. As if facility fees, out-of-network Tesla-priced ER doctors at an in-network hospital, and $20 hospital Kleenex boxes weren’t enough, frequent errors mar medical bills. I’ve lost count of the times patients and friends have complained to me about large billing errors (not from my practice). These can amount to hundreds of dollars at a time. 

Can you imagine if pricing mistakes at CVS or Best Buy were so common as to be par for the course? There would be uproar and customers would defect quickly to Amazon.com or another drug store. What if AT&T phone bills changed every month by hundreds of dollars, and required half-hour phone conversations with unapologetic billing departments to rectify?

 

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The Federal Trade Commission and the Department of Weights and Measures seem to protect consumers much more than the divisions of government that regulate health care. The Department of Consumer Affairs recently penalized Whole Foods for selling falafel by the piece instead of the pound and for mislabeling prices on packaged goods.

Next: Americans need price transparencies

 

Nineteen states have mandatory pricing laws for retail goods. Here’s some of California’s law, for example:

For sales:

12024.2. (a) It is unlawful for any person, at the time of sale of a commodity, to do any of the following:

      (1) Charge an amount greater than the price, or to compute an amount greater than a true extension of a price per unit, that is then advertised, posted, marked, displayed, or quoted for that commodity.

 

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      (2) Charge an amount greater than the lowest price posted on the commodity itself or on a shelf tag that corresponds to the commodity, notwithstanding any limitation of the time period for which the posted price is in effect.

      (b) A violation of this section is a misdemeanor punishable by a fine of not less than twenty-five dollars ($25) nor more than one thousand dollars ($1,000), by imprisonment in the county jail for a period not exceeding one year, or by both, if the violation is willful or grossly negligent, or when the overcharge is more than one dollar ($1).

      (c) A violation of this section is an infraction punishable by a fine of not more than one hundred dollars ($100) when the overcharge is one dollar ($1) or less.

      (d) As used in subdivisions (b) and (c), "overcharge" means the amount by which the charge for a commodity exceeds a price that is advertised, posted, marked, displayed, or quoted to that consumer for that commodity at the time of sale.

      (e) Except as provided in subdivision (f), for purposes of this section, when more than one price for the same commodity is advertised, posted, marked, displayed, or quoted, the person offering the commodity for sale shall charge the lowest of those prices.

      (f) Pricing may be subject to a condition of sale, such as membership in a retailer-sponsored club, the purchase of a minimum quantity, or the purchase of multiples of the same item, provided that the condition is conspicuously posted in the same location as the price.

 

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Those Kleenex boxes, as commodities, should certainly be priced visibly in the hospital under these laws-I’ll bring my own from Costco, thanks. But what about services? It doesn’t matter. 

In a marketplace situation, in which consumers bear some of the costs of their medical care, comparison shopping and health care budgeting should be easy. Opacity is only acceptable when someone else pays the bill, as in the United Kingdom’s healthcare system.

Americans need both price transparencies for all healthcare goods and services as well as government penalties to discourage overcharging.  Then, no one will need to start a startup to decipher medical bills.