06-09-2015, 11:24 AM
The assumption in the article is that the fees Medicare pays are the "actual costs" of the care. That is not necessarily or even often the case. They often can be much less.
In our small primary-care office, we billed at the highest amount that commercial insurance paid, which was often many times what Medicare (not to mention Medicaid) would pay. What we actually received from the payors were contractually-adjusted payments, usually a fraction of what we billed; we wrote off the difference (as small fry, we had no control over the contracts, which were negotiated by larger entities). For self-pay patients, we either downcoded the visit, or applied a discount, or both, to bring them into line with Medicare fees (Medicare would not allow us to charge less than Medicare!).
I assume the hospital situation is similar, except they also have to deal with the patients who enjoy free care; they know the ER can't turn them away, so they just blow off the bills.
It's a big, complex issue, which is woefully misrepresented by this Post article. Ultimately, IMO, the culprit is third-party payment, which makes hash of the marketplace, but there are many other factors at play, too many to go into here.
/Mr Lynn
In our small primary-care office, we billed at the highest amount that commercial insurance paid, which was often many times what Medicare (not to mention Medicaid) would pay. What we actually received from the payors were contractually-adjusted payments, usually a fraction of what we billed; we wrote off the difference (as small fry, we had no control over the contracts, which were negotiated by larger entities). For self-pay patients, we either downcoded the visit, or applied a discount, or both, to bring them into line with Medicare fees (Medicare would not allow us to charge less than Medicare!).
I assume the hospital situation is similar, except they also have to deal with the patients who enjoy free care; they know the ER can't turn them away, so they just blow off the bills.
It's a big, complex issue, which is woefully misrepresented by this Post article. Ultimately, IMO, the culprit is third-party payment, which makes hash of the marketplace, but there are many other factors at play, too many to go into here.
/Mr Lynn