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For more information about the rough guidelines by which pricing works in the US (or doesn't work), check out the often referred to term "usual and customary" (

For more information about the rough guidelines by which pricing works in the US (or doesn't work), check out the often referred to term "usual and customary" (UCR) charges. Read about it and then form your own opinion - I'd rather not bias too much by offering mine. https://en.m.wikipedia.org/wiki/Usual,_customary_and_reasonable https://en.m.wikipedia.org/wiki/Usual,_customary_and_reasona...

tcj_phx 9y ago
There was a reform, maybe sometime around 1985, that replaced "usual, customary and reasonable" with 'what should this procedure actually cost'. Your wikipedia links to this page: Resource-based relative value scale - https://en.wikipedia.org/wiki/Resource-based_relative_value_scale#History https://en.wikipedia.org/wiki/Resource-based_relative_value_... It took the government 20 years to figure out that they couldn't give the medical system a blank check. /methinks a helpful medical reform would be to get insurance-paid doctors on fixed salaries. Under the present status quo, some doctors bill insurance companies for as much as they can get away with.
- sixdimensional 9y ago
  Actually, I used to work in health insurance, so I have a bit more insight into this than most, although I've been out of it for a while (10 years or so). If you look into how the RBRVS are calculated, there is effectively a privately run panel that determines input variables and factors that are used in the RBRVS calculations. At some point, someone has to determine the portion of the calculation that represents "physician value added". While it is true that RBRVS is an alternative system to pure UCR rates, I can assure you that UCR rates still play a major role in many health insurance lines of business and calculations. By the way, RBRVS aren't the only system that organizations have tried to use to figure out how to bill/cost services - there are also DRG groups (diagnostic related groups), ASC groups (ambulatory surgical center) groups and others. RBRVS were mainly made to try to control physician office costs in Medicare and are used by HMOs that offer Medicare plans. While other HMOs and private insurers use RBRVS, there are a lot of them that still use UCR (calculated internally) as well. There was a huge problem around 2009/10 with a big company, Ingenix, that was offering a commercial UCR database which was probably of poor data quality - based on surveys of regional prices from doctor's offices. There were lawsuits, etc. over that and many insurers moved away from commercial sources of UCR and instead brought that in-house. Here's a link that talks a little bit about that: https://www.managedcaremag.com/archives/2009/5/ingenix-aftermath https://www.managedcaremag.com/archives/2009/5/ingenix-after... Price transparency could help (if it could be achieved), but there are a lot of for-profit organizations who actively try to keep their strategies internal. Transparency might not be enough without pricing controls, but exercising control would be extremely difficult for legal/political/profit motive reasons as well. For that matter, coming up with singular pricing systems that govern controls at scale is incredibly difficult.
  - tcj_phx 9y ago
    Thanks for your insights. I have family in the medical field, so I've heard a lot of complaints about the system. It seems like most people don't appreciate how much "complication" in the medical industry derives from third-parties paying for almost everything. I have a doctor who gives his patients a receipt that they can use to "try" to get reimbursed by insurance. He takes cash or check, has all the patients he wants, and zero employees.

tcj_phx 9y ago

There was a reform, maybe sometime around 1985, that replaced "usual, customary and reasonable" with 'what should this procedure actually cost'. Your wikipedia links to this page: Resource-based relative value scale - https://en.wikipedia.org/wiki/Resource-based_relative_value_scale#History https://en.wikipedia.org/wiki/Resource-based_relative_value_... It took the government 20 years to figure out that they couldn't give the medical system a blank check. /methinks a helpful medical reform would be to get insurance-paid doctors on fixed salaries. Under the present status quo, some doctors bill insurance companies for as much as they can get away with.

sixdimensional 9y ago
Actually, I used to work in health insurance, so I have a bit more insight into this than most, although I've been out of it for a while (10 years or so). If you look into how the RBRVS are calculated, there is effectively a privately run panel that determines input variables and factors that are used in the RBRVS calculations. At some point, someone has to determine the portion of the calculation that represents "physician value added". While it is true that RBRVS is an alternative system to pure UCR rates, I can assure you that UCR rates still play a major role in many health insurance lines of business and calculations. By the way, RBRVS aren't the only system that organizations have tried to use to figure out how to bill/cost services - there are also DRG groups (diagnostic related groups), ASC groups (ambulatory surgical center) groups and others. RBRVS were mainly made to try to control physician office costs in Medicare and are used by HMOs that offer Medicare plans. While other HMOs and private insurers use RBRVS, there are a lot of them that still use UCR (calculated internally) as well. There was a huge problem around 2009/10 with a big company, Ingenix, that was offering a commercial UCR database which was probably of poor data quality - based on surveys of regional prices from doctor's offices. There were lawsuits, etc. over that and many insurers moved away from commercial sources of UCR and instead brought that in-house. Here's a link that talks a little bit about that: https://www.managedcaremag.com/archives/2009/5/ingenix-aftermath https://www.managedcaremag.com/archives/2009/5/ingenix-after... Price transparency could help (if it could be achieved), but there are a lot of for-profit organizations who actively try to keep their strategies internal. Transparency might not be enough without pricing controls, but exercising control would be extremely difficult for legal/political/profit motive reasons as well. For that matter, coming up with singular pricing systems that govern controls at scale is incredibly difficult.
- tcj_phx 9y ago
  Thanks for your insights. I have family in the medical field, so I've heard a lot of complaints about the system. It seems like most people don't appreciate how much "complication" in the medical industry derives from third-parties paying for almost everything. I have a doctor who gives his patients a receipt that they can use to "try" to get reimbursed by insurance. He takes cash or check, has all the patients he wants, and zero employees.