By Austin Flickstein, Esq.
As an attorney knee deep in healthcare litigation, I’ve seen my fair share of outrageous bills. I’ve also seen the dramatic difference between what healthcare professionals charge and what health insurance companies and government insurers, like Medicare, actually pay.
For example, Broward County clinics regularly charge about $1,800 for a Lumbar Spine MRI.
But, health insurance companies and government insurers, which comprise close to 80 percent of all payers of medical bills in this country, actually only pay about a quarter ($450-$600) of this charge.
How does that make sense? It doesn’t.
According to Dr. Gerald Zelinger, M.D., former Senior Medical Advisor for the Centers for Medicare and Medicaid Services, under the Federal Department of Health and Human Services, healthcare charges have no correlation to the value of the services. After prices started to needlessly sky rocket in the 1970s and 1980s, the largest payers of medical bills in this country made a change. Medicare and most private health insurers now rely on fee schedules such as The Medicare Physician Fee Schedule which lists “fair prices” for more than 7,000 different services. This fee schedule is annually updated and approved by Congress. The switch from a charge-focused system was made in the early 1990s to restrain costs, in favor of a more rigorous and accurate methodology.
So while 80% of payers have, through rules and regulations, eliminated the requirement to satisfy these fictitious, marked-up prices, the costs themselves have remained high for the uninsured and others.
This is especially relevant in my legal field, representing major insurers. In “No Fault” states such as Florida, healthcare providers are seeking that auto insurers pay the FULL amount charged; not the fair price set by Congress and the market place.
Using the MRI example, the healthcare provider submits an $1,800 invoice to an auto insurance company – the same invoice that the government or private health insurer would pay $450 to $600. Well, if the auto insurance company pays even twice the reduced rate, the healthcare providers often sue for the balance.
Why should you care? Simple: These inflated charges are having a significant impact on rising auto insurance rates. As a result, the issue is being litigated in courts every day. I certainly hope a resolution is reached that reins in healthcare prices to benefit the public.
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