Hospitals are caring and compassionate institutions that are dedicated to providing quality health care to patients. But that compassion doesn't always extend to their billing practices.
Hospitals certainly need to get paid for the services they provide, but they should not be in the business of bankrupting patients. If their mission is to really provide compassionate care, they should consider adopting a policy of billing Medicare fees to patients who are struggling financially. Here's why:
We've all heard horror stories about poor or uninsured patients who need to have a routine MRI or visit an emergency room, only to get socked with a gigantic bill that will take them years to pay and could eventually bankrupt them. This could also happen to patients who have insurance but, either knowingly or unknowingly, go outside their insurance company's network for care. In my opinion, there's a solution to this problem that would be fair to both parties.
For an example, let's use the simplest of these services, an MRI, since I'm a radiologist and am most familiar with billing issues in imaging. There are a variety of different fees a hospital might charge for an MRI, such as:
- The "chargemaster" fee. That's the highest charge every hospital has for every service (there's a reason for that, but let's not get into it).
- A discount off the chargemaster fee, often billed to uninsured patients or insured patients who use an out-of-network service. This is also referred to as the self-pay rate.
- The fee paid by a patient's insurance company. The insurance company negotiates this rate with each individual hospital, and the approved fee at one hospital is different from that at most other hospitals. It depends largely on how much clout the hospital has in the local insurance market. Hospitals that are "must haves" for an insurance company's network can extract higher payments. These insurance company payments are always less than the full chargemaster fee and usually less than the discounted chargemaster fee.
- The fee paid by Medicare. This is usually less than what the commercial insurance companies pay and invariably is well below the chargemaster fees.
- The fee paid by Medicaid, which is almost always less than Medicare.
- A special fee some hospitals offer to try and attract business.
Confused yet? You're not alone.
An MRI of the low back is a test that is commonly done for back pain. According to the Inquirer's Philly Health Costs database, that test when done in one of the Philadelphia region's major hospitals will cost between $1,300 and $3,000. The majority of these costs appear to be the discounted chargemaster fees. If an uninsured or out-of-network patient has a low back MRI, they will generally be charged this self-pay rate.
Meanwhile, the Medicare payment for this test is approximately $330. And it's worth noting that almost every hospital (and its radiology department) in the country accepts Medicare. Although its rates are low, it's a reliable source of revenue.
So imagine the plight of the under-65 uninsured patient who does not qualify for Medicaid or other financial assistance and undergoes that MRI at a major Philadelphia hospital. The patient is likely to be low or middle income, or possibly unemployed. The patient could get billed between $1,300 and $3,000 for that MRI. The same applies to a patient who has insurance but has received the MRI at an out-of-network facility. But if the patient had been covered by Medicare, the federal government would have paid about $330 and the hospital would have accepted it, no questions asked.
Now, we've been talking about an imaging test but imagine if that same patient has to instead go to the emergency room or have urgent surgery. Then the costs may be 10-15 times higher.
Many not-for-profit hospitals, my own included, have financial assistance programs for low-income patients. Under these programs, some patients who are below federal poverty guidelines can qualify for free or discounted care, but others who are somewhat above these guidelines, yet still struggling to get by financially, will be faced with those very high bills. Is it fair that these lower-income patients get stuck with the highest possible charges, when the hospital would be willing to accept Medicare fees for other patients? I think not.
That's why hospitals should consider billing financially unstable patients at the Medicare rate, rather than the discounted chargemaster fees, which are much higher. This would only apply to United States residents who can demonstrate true hardship, as indicated by their latest tax return. It would not apply to foreign visitors or wealthier individuals who could afford health insurance but voluntarily forgo it. Uninsured or out-of-network patients who are truly needy make up a very small percentage of the patient population of most hospitals so their revenue hit would be minimal. Let's not make the financial problems of lower-income Americans more difficult than they already are.