Expert Actuary is Overcharged by the Hospital in ‘Collusion’ with the Insurance Company– Guess Who Wins

From NPR Why Your Health Insurer Doesn’t Care About Your Big Bills

This is a terrific article that explains a lot about what is wrong with our health system’s economics.  This article details how an expert actuary is overcharged by Aetna and NYU Langone for a partial hip replacement and how insurance companies are NOT good financial representatives for patients.

Some excerpts:

Widely perceived as fierce guardians of health care dollars, insurers, in many cases, aren’t. In fact, they often agree to pay high prices, then, one way or another, pass those high prices on to patients — all while raking in healthy profits…

Before Frank’s hip operation, he asked NYU Langone for an estimate. It told him to call Aetna, which referred him back to the hospital. He never did get a price…

For one item in his bill the implant, Aetna said NYU Langone paid a “member rate” of $26,068 for “supply/implants.” But., the maker of his implant, … told him the hospital would have paid about $1,500…

Turns out, insurers don’t have to decrease spending to make money. They just have to accurately predict how much the people they insure will cost. That way they can set premiums to cover those costs — adding about 20 percent for their administration and profit

It’s as if a mom told her son he could have 3 percent of a bowl of ice cream. A clever child would say, “Make it a bigger bowl.”

Wonks call this a “perverse incentive.”…

After the hearing, Nugent said a technicality might have doomed their case. New York defendants routinely lose in court if they have not contested a bill in writing within 30 days, he said. Frank had contested the bill over the phone with NYU Langone and in writing within 30 days with Aetna. But he did not dispute it in writing to the hospital within 30 days.

My take: While I’m no expert, I have had a similar experience where I was convinced that my insurance company would want to look into their agreement with a local hospital (Northside Hospital) because I was charged exorbitantly for the processing of a pathology specimen.  Further aggravating the situation was that I had no idea that this specimen, obtained from an outpatient visit, would be sent to a hospital system, rather than an outpatient pathology group.  It turns out that the insurance company had no interest in looking into this matter, even though the cumulative effect of these types of pathology charges were enormous.

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