Amazing difference in cost for same procedure

[whitestick]

DW recently had to have a couple of cat scans and we had a chance to compare the costs and were flabbergasted at what we found.
Quoted price at one hospital (by the way, a terrible place) was list price for the two scans of $8246, with a negotiated rate on our insurance plan of $5125 - leaving us to pay 20% of that negotiated rate.
The second hospital, a much higher quality place, friendly competent staff, and a much better experience had a negotiated rate of $1735 - forgot to ask what the original list price was for them - leaving us to pay 20 % of that rate on our insurance plan.
We compared billing codes and they were exactly the same. The insurance plan used was exactly the same. The two occurrences were 3 weeks apart.
The hospitals were 5 miles from each other.
How can there be this much of disparity between the two hospitals, both on the insurance company's plan. Doesn't the insurance company negotiator talk to the one doing the other hospital? Is there some corruption or payment system like the car dealers have with the manufacturers, where a dealer invoice cost is not really what the dealer pays, and I just seeing this in the procedure rates from different hospitals?
In the business world, this kind of thing would get around, and the lousy hospital with the higher rate would either lose customers, or have the info blasted on the business page for all to see. Not so with the medical system. Not taking shots at the folks on this board, just wanting to know how these hospitals and insurance companies are getting away with this.

 

[donheff]

The whole enterprise is perverse. Everybody sets exorbitant rates and then negotiates down for insurance companies. So the poor Joe who looses his insurance and can least afford the costs gets charged the full rate - insane.

 

[Rich_by_the_Bay]

Don's right. Also, you probably will never know the negotiated insurance fee for this. The true fees hide behind dozens of technicalities. It's a reimbursement black box rife with inequities.

IMHO this is one of the reasons why proposals to fix the system by forcing everyone to have private health insurance is destined to fail.

 

[A854321]

That black box that Rich refers to is the healthcare administration quagmire that is making billionaires out of insurance executives, and driving uninsured working people into bankrupcy.

There are lots of considerations: Does the insurance company or it's parent company own any part of the hospital? Does one bill include the radiologist's fee and the other not?

You will never know the difference. This has to change massively. Unfortunately, highly-paid insurance lobbyists are deeply entrenched in both Democratic and Republican politics. We will certainly be offered some sort of healthcare bill as a teaser, but you can be sure the insurance companies will not be left out.

 

[whitestick]

That black box that Rich refers to is the healthcare administration quagmire that is making billionaires out of insurance executives, and driving uninsured working people into bankrupcy.

There are lots of considerations: Does the insurance company or it's parent company own any part of the hospital? Does one bill include the radiologist's fee and the other not?

That's why this was so preverse. There was no difference in the two tests. They billing codes, the doctors orders, the spelling of the test words (as best as we could determine by reading the doctors handwriting) was exactly the same for both. Both tests were done as an outpatient procedure. I could understand your explanation if it was mixed in with something else. But it wasn't.
One thing that struck me by what you and RIT said. That I would not know the exact negotiated rate. But isn't that the information that has to be put on the Explanation of Benefits, to show how much they paid and how much I pay. Or are they lying about that. If so, wouldn't that be grounds for fraud? But I digress, that would be on the insurance company, and my original question was about the rates quoted me by the hospitals. I guess they do go together though. How does mere mortal man figure this stuff out?

 

[NW-Bound]

Twenty five years ago, my former employer - an Arizona division of a megacorp - mounted a political campaign to reform healthcare at the state level. It has been a while, but as I remember, one of the things they tried was to force transparency on medical procedure and hospitalization costs. Exactly as you pointed out, it was to allow for price comparison. Another point was to reveal the true cost of health care to beneficiaries, so people would know health benefits cost money and did not "grow on trees".

Remember that this was back when it was customary for corporations to provide free insurance to employees, and require very little premium to extend the coverage to family members. There were also no copays as there are now. As I remember, there was no deductible either (we were young then, and practically use no health services, so do not remember all the details). However, the company foresaw that health care cost would rise out-of-sight, and tried to do something about it.

Well, the company campaign failed. It was debatable whether the health care industry or the insurance industry was more successful in their anti-campaign to shoot it down. The responsibility rested with the voters; they simply did not care how much anything cost, because they did not have to pay, and did not care to know.

In the voters' mind then, there was no reason to change if it had been working for them. Hopefully, things will change as we now have to shoulder more of the cost.