So I'm filling out paperwork for a patient when they show me a list of their hospital charges. They had a previous five day hospital admission with a diagnosis of pneumonia and COPD. How much was their hospital bill? The hospital charged an outrageous cost of almost $22,000. It's no wonder so many uninsured people need help with their hospital bills. The hospital billing system is not intended for the uninsured and the full price of these charges should never be paid.
The hospital billing system is intended to write off the bills of the uninsured. Nobody pays full price under a third party insurance system. Nobody. Even the uninsured are offered significant cash price discounts. Many hospitals have systems in place to negotiate help with hospital bills because they know that what they charge is not what they expect to collect. This is a cat and mouse game. The hospital jacks up their price beyond any reasonable measure. Then they take concessions on price through allowable insurance charges.
It's the nature of a payment model based on insurance instead of market forces. Nobody knows what the true value of the service is. This system allows hospitals to maximize how much money they can capture from all insurance companies. It's the same with physicians. Most physician offices will find out the highest allowable charges by their highest paying insurance company and then charge a rate 15-20% higher than that just in case there are any payers willing to pay it.
Why not? If someone is willing to pay $150 for a service, why would you not charge at least that amount. As a physician, you would be leaving money on the table by not optimizing charge capture.
The people who get the brunt of this system are those people without insurance. I don't blame people who need help with hospital bills. The bills are outrageous. $22,000 for five days of care? Not even close. I'm sure the allowable charges will be cut in half.
This is why if you're uninsured, never pay full price on your hospital bill. Don't even think about paying full price. They will always negotiate. And they will always know what other payers are willing to pay. And you thought physicians charged too much. This original Happy Hospitalist humor ecard helps explain.
Some of this post contains humor that may only be understood by some healthcare professionals. Read at your own risk.