Thursday, March 27, 2014

Pricing madness in health care, the worst run industry in America


I've written about how health care providers have two sets of books. There's one book with the prices for insured patients. And there's a second book with prices for uninsured patients.

I was wrong about that. Heath care providers don't have two sets of books. They have dozens. They set different prices for all kinds of different customers: insurance company A, insurance company B, Medicare, Medicaid, uninsured patients and so on. On top of that they have so many different prices for so many different procedures that no one can keep track of them all unless they're a billing specialist.

This has led to a couple bizarre outcomes. One is that there is a particular job for an expert billing specialist. It's called a coder. The entire job of a coder is to translate the procedure a doctor did into a code used to bill the insurance company. It is a full time job for thousands of people. People with this job get paid enough to own a house and raise a child. (I know this because my niece has this job.) Can you imagine another industry where this kind of cost waste would be allowed to exist? Can you imagine Apple hiring thousands of people who, after you ordered and received an iPhone, sat at home and checked the code on your order—only the code, not whether you ordered the correct phone, not whether it worked well, not whether you liked it, not anything at all other than making sure the correct code was billed? It's like a scene from Brazil, except it's real and it's how we run what's arguably one of the most important industries in our country.

Another outcome from this pricing madness is that there is no way for you and I to find out how much a medical procedure costs until we get the bill. You can't find out beforehand. Try it, ask someone. The nurse won't know, the doctor won't know, the administrator who charges your co-pay won't know, your insurance company won't know. Even my niece won't know; coders only know codes, not costs, and they're not on any Contact Us list anyway. None of these people will even know who to call to find out—I've tried, I've asked. So who knows? Actually, I have no idea, I've never figured it out. There's no other business I can think of where you can't find out what something costs before you buy it.

More reading on the terrifying inscrutability of American healthcare pricing:

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant.

No comments: