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Why medical bills are a mystery

More people are paying out of pocket for health care. But a new study shows it's nearly impossible to find out in advance what a treatment will cost.

By MSN Money Partner Oct 31, 2011 11:17AM

This post comes from Seth Fiegerman of partner site MainStreet.


MainStreet on MSN MoneyMost consumers know better than to sign up for any service without finding out how much it costs, but when it comes to health care, we have little choice but to do just that.


As one new government report explains, in order to find out just how much a health care treatment might cost, consumers would have to know exactly what treatment and services they're going to receive, the negotiated rates that each medical provider involved in their care charges for those procedures, and how exactly the patient's insurance plan is structured in terms of coverage and deductibles.


These variables make it nearly impossible for patients to find out the precise price of their health care bill in advance, and leave the door open for bill shock when they finally receive their explanation of benefits.


We'll have to see you first

Of these factors, the trickiest for consumers may be finding out the exact treatment and care they will receive before they have to write a check for it. The U.S. Government Accountability Office contacted 20 doctors' offices anonymously to ask about the price of a diabetes screening and were repeatedly told the patient would have to come in for an appointment first for an examination to determine what procedures were needed. Even then, it was nearly impossible to get a price estimate.


At one point, the GAO reached out to 19 different hospitals (again, anonymously) to ask about the cost of a full knee-replacement surgery. They were told that the price could vary from $33,000 to $101,000, depending on unpredictable factors like the length of time the patient ends up staying in the hospital.


The difficulty of coming up with a definitive prediction of the services and care that a patient receives means their insurance company will likely be unable to predict just how much will be covered and what their final bill might be.


To make matters more complicated, there is the often overlooked fact that multiple providers may take part in your medical care, each of which may have their own separate fee and coverage rules. So, for example, the hospital may have one rate, the surgeon may have another and the anesthesiologist could have yet another.


In the case of the knee surgery example, the GAO found that hospitals would only quote their rate, and said nothing about the prices that other providers might charge for the procedure. This puts added pressure on the patient to find out which medical officials are taking part and contact representatives for each to find out what they charge.


If all of that isn't bad enough, the report notes that many medical providers have entered into contractual agreements with health insurance companies that specifically prohibit insurers from disclosing their negotiated rates in order to maintain a competitive advantage. Post continues below.

The consumer is kept in the dark

From start to finish, then, the health care pricing system is designed not to be transparent for consumers, which is all the more troubling because consumers are shouldering an increasing amount of their health care costs. According to the GAO, the percentage of insured workers who are enrolled in high-deductible plans shot up from 4% to 13% between 2006 to 2010, and more than a quarter of insured workers now have deductibles of at least $1,000. That, of course, says nothing about the growing number of uninsured workers who don't even have a deductible to speak of.


Taken together, that means Americans are responsible for footing more of their health care bill but are generally left in the dark as to how much that bill will be.


That said, there is some reason to be hopeful about health care price transparency going forward. Already, 30 states have introduced or passed legislation requiring more transparency, though to varying degrees, and one section of the health care reform package passed last year requires all hospitals in the U.S. to put out an annual report revealing their standard charges for the procedures they offer.


To be sure, this too is only an estimate of what the treatment will cost as each patient is unique, and it doesn't indicate the negotiated rates between providers and insurers or the out-of-pocket costs for consumers. Still, some insurance companies are going above and beyond. Aetna, for example, will show the negotiated rates for treatment in advance and even offers price predictions for multiple services that are typically applied together for particular treatments.


Hopefully more insurance companies will follow this example.


More on MainStreet and MSN Money:

Nov 2, 2011 10:50AM
I just had open heart surgery. Air lifted to the hospital in critical condition. Waking up from surgery I realized I was not in heaven. First thought was more pain & more suffering. Second thought was is their feeling in my left leg as it had none leaving in the ambulance. Then all the nightmare stories of bills from anyone who touched you. Their true. Pay, pay, pay from the bills. I paid so much I over paid and got some checks for over payment. The charges are excessive as $570 for a doctor visit & $2500 a night for just a bed. One surgeon was $30,000. He was worth it.  Drugs $6,000. Hospital $110,000. Blowing plastic breather $1,000 and so on. Then the out of hospital visits. I had an excellent surgeon and no complaints. Actually praise for his remarkable job. Maybe prices are high but you do not get to ask "How Much."
Nov 1, 2011 5:56PM
Uh, medical bills are most definitely able to be discharged in chapter 7 bankruptcy.  Why do you think one of the leading causes to bankruptcy is medical bills and a lot of economists have discussed why we need a special medical bankruptcy to differentiate the two? 

Nov 2, 2011 11:18AM
I had a nice surprise the other day.I went to my usual pharmacy for my prescriptions,and while the clerk was getting my prescriptions,I got out my usual co-pay out of my pocket.I laid the money on the counter,and the clerk said  he needed more money for my co-pay.The cost was more than 40% higher than the regular rate was before!You can imagine my disdain,I didn't know who to blame.My insurance did not notify me of any changes in my co-payment and the pharmacy claimed no blame.It's great when the economy is so slow that almost everything is going up in price and all these companies are just jumping on the bandwagon raising prices for no apparent reason!It's just plain price gouging!
Nov 2, 2011 12:27PM
old man 76

"The only people who can afford to get the best medical care are millionaires and welfare cases."

Don't forget about politicians (senators and congressmen) who get the best health care available, even after they leave office. The same politicians who want to repeal Obamacare never seem to mention that the health care they receive is too good for you, the average citizen.


There will be many of us to die before going to a doctor or a hospital, I will be among that group.  The system here is set up whereby before obtaining services other than a doctor's specialty there has to be an approval from the attending physician prior to receiving the services of another  different physician.  That cost $140.00 out of my pocket - not counting what he received from Medicare (?).    While, upon asking, the estimate for services removing of cataracts and a hernia, no information came forth.  


The medical profession has blackened it's own name.  Greed feds on greed and to "H....." with humanity.

Nov 2, 2011 12:11PM

The so called health care law (Obama Care) that was passed does not address the true problem of medical cost. 


What needed to be done was tort reform.  Medical professionals insurance cost against lawsuits is going through the roof.


Most of our so called public servants both Republicans and Democrats are lawyers and they will not address this issue.

Nov 2, 2011 12:02PM

I would like to see all medical procedures prices posted at a hospital & Drs office.  Let's see these people compete for customers, we have no idea what any of this costs until after the fact.  I understand there could be changes as different medical conditions arise, but I'm sure we could get a general idea what this stuff costs up front , then you could decide if that Dr. or hospital is worth it.


I'm also tired of paying much more in insurance costs and out of pocket because Drs. & hospitals are treating people with no ability to pay, so the rest of the paying crowd gets gouged to pay for those that don't.

Nov 2, 2011 12:51PM
We have a 51st state that is now a part of our nation. Its called the state of confusion. it was purposefully inaugurated by insurance companies as the 51st state just to keep the system confused enough so they could Choke the last penny out of us.
Nov 13, 2011 1:03PM

If we used our health insured experiences, hysterectomy and 3 colonoscopies , and emergency room after car accident, as our references  we disagree with the author's bias towards Aetna. Try having them for coverage first then report on their progressive billing . Their total lack of understanding their role in being an advocate for the patient is hilarious. If anything is found during a routine exam they're not covering a certain percent. If you're in a accident and there is no fault car insurance coverage , they don't coordinate benefits if their coverage is less then what the primary paid. If they process multiple providers for the same date they think you've gone to more then one dr for the same thing. It's not entirely their fault to be fair medical coding is a language for the providers and to everyons else it's greek. My advice is make sure every test has a V code for it to be covered and choose Humana if you can.

Nov 1, 2011 4:52PM
sense their bills cannot be dismissed through bankruptcy proceedings,(along with the IRS and Lawyers bills), there will never be affordable health costs, they'll just keep stealing us blind.
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