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* * Medical charges make no sense


Old things can break down and it can be expensive, but sometimes it’s worthwhile to fix them. For example, suppose you need to replace the clutch in your Studebaker Lark. You do some shopping, call on some reputable repair facilities, and contract for the work. Your invoice has costs for parts and labor, and the vendor is bound by supply and demand, subject to going out of business if the workmanship is poor or the costs too high.

Which brings me to my wife. And her wounded knees.

It seems that the medical industry isn’t subject to the same constraints. This was illustrated in the aftermath of her recent knee replacement and the EOB, the Explanation of Benefits.

Before I fill this column with numbers and charges and such, let me say that the surgery, done at a local Blacksburg hospital that won’t be named, was excellent in every way: skilled and caring medical professionals, world class equipment, widespread professionalism, which produced outstanding results. But at what about those costs?

The EOB is seven pages long, each page with a spreadsheet of charges. Understanding them is nothing less than a major challenge. For example, there are four primary columns, with two each of charges and payments. Under charges are “Total charged” and “Patient savings.” Under payments, there are “Medicare pays” and “Your health plan pays.” (Note: My wife is over 65 and thus covered by Medicare, with a supplemental plan through Anthem.) What do these numbers mean?

I’ll jump right to the bottom line: The “Total charged” for everything (You better sit down.) is $118,975.00. This new artificial knee is over 1/3 the average price of a Blacksburg home.

Then, we see that the “Patient savings” is $109,219.29. The “Medicare Pays” is $8,356.13, and “Your health plan pays” $1,399.58, a sum of $9,755.71. What will my wife pay? $0.00.

This all begs some serious, disquieting questions. First, does anybody really pay $118,975.00 for this surgery? I’m guessing not. And if not, why publicize it or mention it or even attempt to calculate it at all? It should have an asterisk beside it, saying “Attention foolish people: don’t pay this amount; nobody does.” Second, if a hospital can make a profit charging $9,755.71, how can they morally ask someone to pay $118,975.00?

I did some reading online about knee replacement overseas, and costs vary from around $15,000 to $24,000 in Singapore down to $6000 to $13,000 in India. There is an entire industry in medical tourism where Americans travel overseas to obtain necessary surgeries they can’t afford here.

One of the line items on her invoice was for the implant itself; that is the physical artificial metal-and-plastic knee put in place of her original biological one. Cost for that? $62,243.00. “Patient savings,” is $62,243.00. What I think this means is that the hospital would like to charge $62,243.00 but instead are accepting a payment of $0.00. What’s with that? We all agree that some compensation is necessary as they had to pay for it. How can they give it away?

Overall, I get the impression that there is lots of smoke and mirrors here, lots of backroom dealing and backslapping. I envision a spinning wheel in the billing office as prices are plucked from the peg where it stops.

As I type this, it is being reported that the President has signed an executive order to expose prices in health care. Wonderful! I have zero confidence this will produce any measurable, positive results. For one thing, industry groups will fight back. “Donald,” they’ll tell him, “you’re ordering us to disclose private negotiations between hospitals and insurers. How would you like the government (Remember, Donald, you hate the government, especially its intrusion into free enterprise.) to force details on private negotiations between contractors and real estate developers?” He’ll back down. If not, we may see hospitals RAISING costs to match what rivals are getting. In exposing rates, it may fuel support for universal health care, perhaps Medicare for All, which I’m sure Republicans will fight. I’ll be astounded if we ever see anything positive from this.

Maybe someday we’ll see open, transparent, and reasonable pricing for needed medical care. Meanwhile, I hope you can find a clutch for your Studebaker Lark.

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