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> There's something horribly wrong with a system in which the doctor cannot readily tell you how much a procedure will cost. There's a reason for this, and I'

> There's something horribly wrong with a system in which the doctor cannot readily tell you how much a procedure will cost. There's a reason for this, and I've written about it in more detail on Hacker News before, but in short: Medicare reimburses rates below-cost. About 7% below COGS, which means providers lose money per-patient, even before they have to pay doctors, nurses, janitorial staff, building upkeep, etc. To make up for this, providers inflate the rates they charge to private insurers. They don't expect private insurers to pay the full amount that they bill for, of course, but private insurers usually peg their final reimbursement agreements to multiples of what Medicare pays (e.g. "350% of the Medicare rate)[0]. The provider can't tell you what you'll end up paying, because they literally don't know - it depends on the rate your insurer ultimately agrees to pay, which depends not just on what your provider charges, but also on whether the insurance network has existing payment agreements that apply to your treatment and supersede the rate that they bill. Private practices that don't accept insurance can always tell you what they'll charge you. Private practices that accept _only_ private insurance actually can sometimes tell you, because they don't have to do the roundabout dance to the same degree[1], so they often have more standardized rates with private insurers. However, standalone private practices are a dying breed - most are part of practice groups, which are themselves owned by hospital networks, so it's very hard to find a doctor who _does_ accept private insurance but is _not_ part of a provider network that accepts Medicare patients[2]. [0] It doesn't help that, in many cases, private insurers are required by law to reimburse more than Medicare does, which perpetuates this whole cycle. [1] They may still have a back-and-forth billing negotiation, but because they don't have to use privately-insured patients to subsidize the publicly-insured ones, they have a much better idea of where it will end up. [2] Some hospitals are actually talking about dropping Medicare altogether, because it's so expensive and complicated for them to accept Medicare patients, but even if they ultimately decide to, it will take a long time to actually implement, for a number of reasons which are rather tangential to the topic at hand here.

DoveBrown 9y ago
Why do providers accept a loss doing treatments for Medicare? If it's a loss per patient, it's a loss and you'll go out of business. What is the advantage for the provider to do any Medicare work?
- chimeracoder 9y ago
  > Why do providers accept a loss doing treatments for Medicare? They don't really "accept" it, as much as Medicare can set the rates unilaterally, and providers don't really have a choice (other than refusing to treat Medicare patients). > If it's a loss per patient, it's a loss and you'll go out of business. Exactly. > What is the advantage for the provider to do any Medicare work? There... isn't a great incentive, really. This wasn't always the case, but it's gotten worse in the last 10-15 years. That's why many private practices have gone bankrupt and closed (or gotten bought out by larger systems), and others have stopped taking Medicare patients. Larger hospitals have some tricks they can use to make the numbers work out, but as Medicare's reimbursement rates have gotten worse and worse (compared to COGS and inflation), they've been feeling the pressure too. That's exactly why some are starting to talk about refusing to treat Medicare patients altogether. There are some exceptions, too. For example, Medicare has a special program for hospitals in rural areas that treat large numbers of Medicare patients, and they'll essentially pay them an extra sum on top of their normal reimbursement rates, to make up for the fact that they don't have many privately-insured patients to overcharge to make up the difference. (But most hospitals aren't eligible for this, even if they treat large numbers of Medicare patients). For independent practices, refusing to treat Medicare patients is easy (and many already have). For larger practice groups and hospitals, refusing to treat Medicare patients is the "nuclear option". It'll take a lot of work structurally to adjust the way they're organized in order for this to be feasible. But the way things are headed, that's what we'll start to see, because, as you pointed out, you can only lose money per-patient for so long before you go out of business.
avoutthere 9y ago
It seems as if the problem of increasing cost of medical treatment has corresponded with increasing government involvement in the health care/insurance industry.

DoveBrown 9y ago

Why do providers accept a loss doing treatments for Medicare? If it's a loss per patient, it's a loss and you'll go out of business. What is the advantage for the provider to do any Medicare work?

chimeracoder 9y ago
> Why do providers accept a loss doing treatments for Medicare? They don't really "accept" it, as much as Medicare can set the rates unilaterally, and providers don't really have a choice (other than refusing to treat Medicare patients). > If it's a loss per patient, it's a loss and you'll go out of business. Exactly. > What is the advantage for the provider to do any Medicare work? There... isn't a great incentive, really. This wasn't always the case, but it's gotten worse in the last 10-15 years. That's why many private practices have gone bankrupt and closed (or gotten bought out by larger systems), and others have stopped taking Medicare patients. Larger hospitals have some tricks they can use to make the numbers work out, but as Medicare's reimbursement rates have gotten worse and worse (compared to COGS and inflation), they've been feeling the pressure too. That's exactly why some are starting to talk about refusing to treat Medicare patients altogether. There are some exceptions, too. For example, Medicare has a special program for hospitals in rural areas that treat large numbers of Medicare patients, and they'll essentially pay them an extra sum on top of their normal reimbursement rates, to make up for the fact that they don't have many privately-insured patients to overcharge to make up the difference. (But most hospitals aren't eligible for this, even if they treat large numbers of Medicare patients). For independent practices, refusing to treat Medicare patients is easy (and many already have). For larger practice groups and hospitals, refusing to treat Medicare patients is the "nuclear option". It'll take a lot of work structurally to adjust the way they're organized in order for this to be feasible. But the way things are headed, that's what we'll start to see, because, as you pointed out, you can only lose money per-patient for so long before you go out of business.

avoutthere 9y ago

It seems as if the problem of increasing cost of medical treatment has corresponded with increasing government involvement in the health care/insurance industry.