The complicated medical billing procedure

Historically, government health insurance programs such as Medicare have been able to negotiate with hospitals and health care providers, securing deep discounts on medical procedures and costs for government program participants. Several decades ago, private insurers caught on to this practice and cried foul, demanding the same level of discounting. Now, it is standard practice for health care providers to overcharge patients before offering discounts to bring down the final cost. This occurs whether a patient is insured or uninsured.

In an article with the Los Angeles Times, author David Lazarus examines this confusing practice in depth. Lazarus argues that, while inflating and then discounting health care does not harm the patient, insurer or hospital, it obscures the actual cost of medical care and procedure, and makes it difficult for a patient to shop around for medical procedures in order to avoid high medical bills. Lazarus urges that greater transparency be adopted throughout the medical billing process.

In his article, Lazarus explains that hospitals routinely discount for "services covered by most insurance plans" and includes quotes from hospital billing employees who state that no patient ever pays the full price for their medical care. However, the discount varies based on the procedure and the patient's insurer, making it impossible for a patient to deduce the actual cost of their health care short of receiving the bill.

To allow patients the chance to shop around for the best prices, Lazarus argues that hospitals and insurers need to introduce transparency into medical pricing and standardization into billing and reimbursement so patients can determine how much their medical care actually costs. Until then, he says, medical pricing will remain "little more than a guessing game."

Source: Los Angeles Times, "Medical bills need reconstructive surgery", David Lazarus, 24 March 2011