Comparing health care costs complex, daunting

Oct. 29--If you were to walk into a store and pay with cash only to see that the person behind you, who just so happened to buy the same item, was able to get it cheaper by paying with a card, you'd probably feel a bit confused.

The idea of hospitals and billing has been discussed over various political debates -- a health system where we can't exactly decide how much something costs unless we know the players involved in that payment.

Hospitals provide care and are reimbursed after the fact. Obviously, the big players in health care are Medicare and Medicaid. Other payers are either federal or state and federal. The balance, then, are commercial insurance companies and people who pay out of pocket, and every hospital has a certain number of individuals to whom they provide care that isn't paid for. That charity care is essential for many hospitals' not-for-profit status.

So who sets the rates for procedures?

"The benchmark, generally speaking, would be Medicare that is a setter of rates for common procedures," Dave Dillon, spokesperson for the Missouri Hospital Association, said.

Medicare and Medicaid seldom cover the entire cost of care. So the other payers in that system tend to pick up the rest.

"So it is a complicated question to answer what a good cost for providing care for a particular patient for a particular procedure, because the ultimate reimbursement depends upon who the payer is within the health-care system," Dillon explained.

So if you're Medicare or Medicaid, you pretty much dictate that price. If you are a commercial insurer, you negotiate with all of the providers in the community -- hospitals being the large providers -- but also with doctors and other professionals to determine the rate that insurance will pay.

So if you're going in for a knee surgery, for example, is there a set cost available to you prior to the operation?

"The tool for understanding that is largely unavailable, because it's very difficult for the provider to, given the variety of different payers, to provide the complex data of what your individual out-of-pocket costs might be for any given procedure," Dillon said. "The problem is that insurance products work very differently. Even though there is the problem of there being many different insurers, there's also many different variations in how insurance products work."

He goes on to say that many people have a fairly low health literacy, so care providers have to ask the right questions to get the right answers.

"And I'll tell you up front, no one -- including hospitals -- likes the way the health-care-billing system works in this country," Dillon said. "Unfortunately, because of the extreme complexity, the large number of different players, the variation in different plans, the fact that doctors and hospitals are both payed separately for their services, all of these things factor into a system that is really, really complicated. And no one likes to be the one trying to explain it, because it looks like you're being disingenuous ..."

Hospitals also operate very differently -- depending on the equipment that they house and the programs that they run -- they tend to reflect the needs of the patients that they serve. Add to that the population in any given area combined with how many of those people have access to Medicare or Medicaid, and there are just too many factors at play.

On the upside, there are solutions here that can help you get a better idea of what you'll be paying. Focusonhospitals.com is a website created by the Missouri Health Care Association to help you compare those prices, though it's important to note your mileage may vary.

"The first thing is to have a regular place of care, and having a primary care physician that regularly understands your health and can help guide you through the system is probably the most important component," Dillon said.

Going to urgent care for all of your problems isn't advised either, as it's largely incident-based. There's no guarantee they're monitoring your health record, and if you happen to have heart disease or diabetes, you're likely to incur more expense because your chronic disease isn't being managed.

Luckily, when it comes to pricing, there's more hope on the horizon. The Centers for Medicare and Medicaid informed hospitals to make public a list of their standard charges via the Internet in a machine readable format, and to update this information at least annually. Encouragement of such transparency is hopefully a positive step to understanding the costs of procedures, but otherwise, it's best to find a primary care provider to help navigate you through the system.

Daniel Cobb can be reached at [email protected]. Follow him on Twitter: @NPNowCobb.

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