“Beware the Ides of March”
– you know who
If Shakespeare were alive today perhaps his “Ides of March warning” would signify a different reckoning difficult to understand, income tax day. Our medical care bills in the form of EOBs (Explanations Of Benefits) are other reckonings that are difficult to understand. As a retired physician and an experienced hospital administrator, I should be able to easily understand EOBs, but I don’t, not entirely. I find them difficult to parse out, and they often raise more questions than they answer. Here is my analysis of one recent EOB as an example of the complicated “smoke and mirrors” process of U.S. medical care billing and reimbursement.
Total Knee Replacemen EOB
The 68yo patient arrived at the outpatient Ambulatory Surgical Center (ASC); surgery, recovery, and ambulation was accomplished and patient was discharged home with a walker 6 hours later by private car.
EOB CHARGES PAID
Orthopedic MD billed: $42,742.71
Medicare/BCBSMA allowed (paid): $10,429.00
Orthopedic MD billed: $1,468
Medicare/BCBSMA allowed (paid) $183.07
$43,734.71 $11,756.27
ASC billed: $5,870
Medicare/BCBSMA allowed (paid) $0.00 (?)
(ASC payment included in MD payments above?)
Anesthesia MD billed $4,821
(spinal, sedation, and regional injections)
Medicare BCBSMA allowed (paid) $905.15
Total Physicians’ billed and paid $54,425.71 $12,661.45
The ASC is an LLC independent facility owned and staffed by a number of surgeons who are accredited staff members of the local hospital system.
Pre-op Xray (MD office) $144.00
Ins. paid $43.56
Pre-op blood tests at local hosp.
(10 separate charges for 10 individual tests) $761.05
Ins. paid $0.00
Pre-op physical therapy evaluation and treatment
by Rehab outpatient site (3 wk. period) $4,082.00
Ins. paid $610.30
Post-op PT home eval. by VNA (2 days post-op) $478.70
ins. paid $264.23
2 wk.post-op VNA home therapy) TBD TBD
Post-op PT Rehab. outpatient site (next 4 wk period) TBD TBD
Cliff Note Summary -Total Knee Outpatient Replacement:
TOTAL CHARGES: $59,891.46
INS. PAID: $13,579.54 (23% of charges)
Patient Out of Pocket: $0
But it’s not even that “simple”: [How much VNA home PT therapy do you get for 23 cents?]
BCBSMA (BlueCross/BlueShield) administers federal Medicare reimbursements in Massachusetts, but also provides its own supplementary insurance coverage for a premium paid by the patient. Which BCBSMA roles are indicated here?
The Ambulatory Surgery Center (ASC) is owned by the surgeons. What are the details of that contract? The ASC facility has overhead staff and supply expenses. How does it get reimbursed for expenses?
How much higher would amounts allowed (paid) be if this surgery were done in a hospital as an inpatient? -Add inpatient days and higher facility expenses.
Do the surgeons or the ASC pay for the knee replacement hardware? Do different equipment vendors have different prices?
The surgeons, anesthesiologists, radiologists and physical therapists all work for different corporate employers? What are the details of those contracts? How are insurance payments distributed?
The hospital, the physicians, the ASC, and the physical therapists all have their own reimbursement schedules negotiated with Medicare and BCBSMA (and others). What are those details?
Rhetorical Questions of the Day:
If you were trying to penetrate the smoke and determine the true “cost” of this surgical procedure (“Charges” are NOT “costs”), which numbers would you use as a base? What type of “cost” numbers do media reports use? If you were working to reduce the cost of medical care in the U.S., how would you suggest we start?
“If there was only one powerful institution, things would be a lot simpler.What we’re seeing is multiple institutions with opposing interests fighting it out and the resulting Nash equilibrium.” – a Reddit comment on medical care cost “gaming”
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