COMMENTARY

This Medical Bill Can't Be Right, Can It?

Tom G. Bartol, NP

Disclosures

April 12, 2018

A Shock to the Pocketbook

A patient called me the other day having received a bill for $850 for some lab tests. He has hypertension, and I had recently ordered a basic metabolic panel and a lipid panel. Upon further questioning, I learned that he had also been to his dermatologist, who ordered several other very expensive tests in the work up for a rash. His insurance company's negotiated rate was $850 for the tests, and with his $3500 deductible plan, the bill was all his. He had no idea that the lab tests ordered by his dermatologist would cost so much—and probably neither did his dermatologist (the results were all normal).

The advent of high-deductible health insurance plans is exposing the cost of our healthcare. On a positive note, this has revealed that healthcare that was previously thought of as "free" because it was covered by insurance actually has a not-insignificant cost, and this knowledge should lead to wiser choices. The downside is that we have to pay that cost, but we often don't know how much it will be until the money has already been spent.

No other business in this country is run like healthcare. For those with health insurance, three parties are involved in each healthcare "purchase": the clinician who orders the care (diagnostics, devices, and drugs), the patient who is the recipient of care, and the insurer who negotiates prices and pays all or part of the bill. In business transactions outside of healthcare, consumers choose what they want to buy, do some research or consult someone to help with their choice, determine the cost in advance and whether they can afford it, and then pay for the item. Before the purchase, buyer and seller both know the cost.

In healthcare, the clinician typically chooses the purchase by ordering tests, medications, and procedures but may have no knowledge of the costs or any obligation to pay for those choices. The consumer presumes that the choices are wise and necessary purchases based on the role of and his or her relationship with the clinician. Insurers have formulas for determining what they will pay for and how much, but these are not usually clear to the consumer. Moreover, the final cost and payment determinations are made after the transaction has been completed and a bill has been submitted. It would be like receiving a gift in the mail, followed by a bill requesting payment for the item!

Cutting the Cost of Care

A recent study in JAMA[1] revealed that the high cost of healthcare in the United States is largely related to the price of labor (higher physician and nurse salaries) and goods (including pharmaceuticals and medical devices), more utilization of expensive CT and MRI scans, and higher administrative costs. The healthcare business seeks opportunities to make a profit.

Cutting healthcare costs doesn't mean skimping on appropriate care. It means choosing care that is necessary, with an awareness that the goal of a business is always to sell more products or services. Costs will decline when we start to conduct healthcare transactions (at least in nonurgent settings) more like other business transactions—with transparency, accurate information, and an understanding of the alternatives. With transparent pricing and more responsibility on the part of the consumer to pay for healthcare, the consumer will want to be informed and to participate in making those decisions. Clinicians will need to know more about how a pill or test might affect outcomes.

This is consistent with the concept of evidence-based medicine. A clinical decision is formed by the patient and clinician together, using the knowledge, experience, and skills of the clinician along with the patient's values and preferences, filtered through the best available evidence.[2] This decision-making model can result in more patient-centered and economically prudent healthcare.

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