System Suffers When No One is Willing to Pay Fair Share for Healthcare

There have been some news headlines recently about hospital “charges.” Chances are you’re not affected by this issue, because only about 4 percent of patient cases are actually affected by these charges. It’s complicated, but it’s important to remember that what a hospital lists as its charges and what it actually gets paid for its healthcare services are two very different things. Charges are like the “list price” for hospital services. In all but a very small number of situations, those list prices are ratcheted down dramatically by insurance companies or government health programs.

For example, government programs like Medicare, Medicaid and the state’s charity care program all pay hospitals less than their costs for the care they provide to patients in those three programs. Yes, hospitals lose money when they care for a patient on Medicare, Medicaid and charity care. HMOs and other insurance companies also try to drive down payments to hospitals.

Unfortunately, hospitals’ high charges are the result of a broken system in which no one wants to pay their fair share for healthcare services. Hospitals have worked hard to address this problem by voluntarily adopting billing and payment policies that offer patients discounts on charges, along with workable payment arrangements. In addition, state law limits hospital billing amounts for almost all New Jerseyans except those with high earnings.

Hospital leaders agree that our healthcare system isn’t perfect and that high healthcare costs are a worry for everyone. We’re hoping that those problems will be addressed by a meaningful healthcare reform bill in Congress that provides insurance to more individuals. But until then, New Jersey’s hospitals will continue to do their part by providing healthcare services to everyone who comes through our doors, regardless of their ability to pay.

Written by Betsy Ryan at 17:41

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Steve Kelly said...
I agree with the overall thought expressed in your entry, but I find many of your points way off the mark. For example :

- the idea that only four percent of patients are affected by billed charges is absurd and I wish you would stop making this claim. Any patient, plan member, self funded plan etc. that is subject to a bill that is settled as a percentage of billed charges is directly impacted by charges. You do not have to be paying 100 % of charges to be impacted. If I charge you 100 dollars for milk and then offer you a " discount" of 20 % are you not impacted by the charge of 100 dollars? One is a function of the other as any first year business student would know. Are you saying that only four percent of medical bills in New Jersey are paid based on billed charges? This overcharging inflates insurance costs, detroys transparency and erodes the lifetime limits of people with chronic illnesses. Again, you don't need to be paying 100 % of charges to be impacted by grossly inflated charges. And grossly inflating charges is standard operating procedure for NJ hospitals. I will gladly sit with you and go over statistics to prove this point. And please allow me to introduce you to many, many NJ taxpayers who have been harrassed by hosptials and whose credit has been damaged over the difference between a reasonable payment for services and billed charges.

- your comment regarding the entitlement programs is similarly misleading. I am not suggesting for a minute that Medicaid and Medicare are paying their fair share in every case. I know firsthand, because your members cost shift the shortfall to me and other private payers/ employers when we use the hospital. But many providers are able to make a profit on entiltlement programs. Your comment in paragraph two (sentence one) implies every payment is less than costs. False. And shouldn't we be giving equal time to how hospitals report costs, levels of charity care, etc.? You concede that hospital leaders agree the healthcare system isn't perfect. I agree as well!

I will post again in the near future with some Medicare and charity care statistics. I appreciate this forum and wish you a Happy Holiday and hope that in 2010 we all bring creative energy to the business of health care. Yes, Virginia, it is a business.
December 24, 2009 08:30
Steve Kelly said...
I was interested in how the NJHA membership view the recent article in the Philadlephia Inquirer regarding premium increases for the BC Personal Choice product ( 1/7/10 in the Business Section.) Given the increases they ( BC ) are looking for, I would put these people in the category of future uninsured. These are typically the self employed and others that don't have access to a group plan. My experience is that these are frequently middle income families that are now looking at premiums in excess of 2,000 per month in many cases. Plus out of pocket. Doesn't work , pure and simple.

Is this an area where hospitals might offer a plan? I think the market would be very receptive to an exclusive provider type plan. We seem to have this notion that everyone must have access to every provider, but my sense is that many would trade access for affordablilty in a heartbeat. The plan might be streamlined to reduce admin costs and the providers would accept modest reimbursements, (but better than the entitlements.) The Inquirer article said there are 27,000 insureds in this category in the Philadlephia region. If a hospital could attract 10,000 family units at 1,000 per month premium you would be looking at some significant revenue ( 10,000 times 1,000 times 12 equals 120,000,000.) At these levles , there are many reinsurers who would step in and give the plan financial backing. Of course, 10,000 family units is a big slug of business, but even half that is workable. And nothing says the hospitals couldn't offer the plan to other than the self employed / non - group.

There are many politicians and policy people out there looking for creative ideas. Perhaps the hospital community could offer some beta sites. Absent that, many of these people will migrate to the ranks of the uninsured and publicly insured. Gotta be a better way. Interested in thoughts /comments.
January 8, 2010 09:58