Medical Billing - Ultimate Fubaredness?

I certainly think yes. Medical billing as it exists today in the United States (or at least this is how I understand it) is a total mess. Let’s look at a hypothetical situation.

John Doe has a PPO plan. He goes to a doctor and pays $20 co-pay. The doctor performs whatever was necessary to diagnose the problem, does some treatment, etc. John is healed, goes back home and a month from the day of the visit gets a letter in mail. In it, his insurance company indicates that the doctor billed a total of $1,000 for 5 different things (charges are itemized and described in “medical” speak). The letter goes on to say that from that $1,000 it applied a “PPO discount” of $850, it paid $130 and $20 is John’s responsibility (co-pay). Everybody is happy, all charges are settled.

Now, here is what strikes me about this situation:

  1. While John is at the doctor's office in the examination room, there is no way for him to find out how much each procedure is going to cost. Even doctor doesn't know this information - he may know how much he bills (most probably don't), but he never knows how much John will have to pay for it.
  2. What's the incentive for doctor not to order unnecessary treatment intentionally?
  3. What's the point of describing procedures performed in "medical" speak? If you ask me how to configure firewall to allow incoming web traffic and I answer "iptables -I INPUT 1 -p tcp --destination-ports 80 -j ACCEPT", will this help you? Only if you are familiar with Linux command line tools (in which case you very likely won't be asking this question in the first place). In other words, my answer in this case was not meant to help you - it was meant to answer your question (note the difference).
  4. How the heck did PPO come up with $850 discount and not say $950?
  5. Why a doctor who billed $1,000 agrees to take a payment of $150?
  6. Will a person without insurance have to pay $1,000?
  7. So is it insurance or a "discount" or "rewards" plan?

IMHO, helthcare costs problem has a lot to do with this simple description of fubared medical billing case. Make it simple (or at least simpler) - and many things will get easier.

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