The Best Way to Bring Down Health Care Costs

In this Huffington Post article, Justin Graves talks about his experiences with collection agencies, out-of-network physicians, and dentist charges and suggests mandating “transparency” in health care costs would help control what he experienced. Don’t get me wrong. Transparency is a good thing. But transparency already exists in many areas of health care and hardly needs to be mandated.

Problem #1: Collection Agencies

These are out of control, with little regulation so consumers have little protection of downright felonous activity. Even if a consumer can, with great effort, demonstrate that a charge cannot be collected, the collection agency can peddle the debt to another agency and the whole process starts all over again. It’s called “flipping.”  Trust me.  I have  had the same uncollectible erroneous debt recycled over ten times in a five year period, and there is no protection from this kind of harassment.  It should be outlawed by the states, since regulation of collection agencies is left to individual states.

Problem #2:  Advance Knowledge of Fees

Any discussion of health care costs needs to clearly distinguish between the fees dentists charge and the fees physicians charge.

Dentists fees are much freer of the “adjustment” physician fees undergo by insurance companies, Medicare, and Medicaid.

Mr. Graves says upfront pricing should be mandated.  It doesn’t need to be mandated.  Call any physician’s office and  you can find out the cost of a visit.  The physician’s receptionist can also tell you whether the practice is an “in-network” provider for that insurance company. If the practice is not in the network, your own insurance company can tell you what the cost will be.

If you have insurance and are an in-network provider, that $170 charge (Mr. Graves doesn’t tell us what the price of the office visit was) would be “discounted” by the insurance company by as much as 50 percent.  That is, the physician has signed an agreement to take whatever that insurance company pays to be an in-network provider.  The physician cannot charge the patient for that discount.  The physician has to eat it.

Add this to the Medicare notion that rural providers can provide health care for much less than urban providers, and you get urban physicians paid significantly more than rural physicians for the very same care, and still discounted for that 50 percent.

So, of that $170 charge, had the physician of Mr. Graves been in the insurance network, the cost of the visit could have been reduced to as litle as $95.  If the physician practiced in a rural area, the $170 charge would likely have been considered too high, and the insurance company would have reduced the price of the office visit before cutting the reimbursement to the physician.

There are more and more physicians who are refusing to join insurance networks because if they do not, they can charge what it actually costs to provide that office visit, and the patient has to pay the difference. Because dentists are less wedded to insurance companies than physicians, dentists often are able to collect the full cost of their care from the patients.

While it’s true the cost of health care in this country is too high, transparency of costs does not recognize the very real, very serious dysfunction introduced into our health care system by insurances, Medicare, and Medicaid physician reimbursement practices.

Transparency of costs already exist in much of health care and hardly need to be mandated. Health care reform will remain ineffective until the draconian reimbursement practices of third party payers are put on the table and addressed.

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