In 2013, The New York Times looked at the hospital bills of 100 patients struck by an outbreak of food poisoning. The newspaper found that when the patients were hydrated with saline – sterile salt water – they were charged from 100 to 1,000 times the manufacturer’s price for the solution.
It’s good to remember that story when viewing the dispute between two health care giants: Anthem, the state’s top health insurance company, and MaineHealth, the state’s biggest health care provider. Last month, MaineHealth announced that Anthem had shortchanged Maine Medical Center, the network’s flagship hospital, by a rate of $1 million a month, and Maine Med will end its network agreement with the insurer at the end of the year.
In response the Indianapolis-based Anthem has accused MaineHealth of overcharging patients, citing bills that include charges of $136 for a bag of saline solution that cost the hospital about $2.
That’s an eye-popping markup, but as anyone who has tried to make sense of a hospital bill knows, it’s neither unusual nor limited to MaineHealth. What’s going on is the way that a provider’s overhead costs are allocated in our fee-for-service health care system.
There is no line item on your bill for the people who make sure the hospital has enough bags of saline, that they are stored properly or that they are put into your body by someone who knows what they are doing. There’s also no line item for the portion of your bill that covers the uncompensated care the hospital is required to provide to people who don’t have health insurance and the difference between the actual cost of a service and what the federal government pays through Medicare and Medicaid.
Anthem, of course, knows all of this. But instead of negotiating a price for things like a bag of saline or the installation of a stent in a patient’s heart, the company is refusing to pay its bills – and this does not appear to be a strategy that’s limited to its operation in Maine. According to news reports:
• The state insurance commissioner in Georgia fined Anthem $5 million in March for failing to pay providers in a timely manner.
• VCU Health in Richmond, Virginia, claims that Anthem owed them $385 million, equal to 40 percent of its claims.
• A federal mediator recently awarded 11 Indiana hospitals $4.5 million after agreeing that Anthem violated its contract by delaying payment for thousands of claims for emergency care.
These cases suggest something is going on here beyond the insurance company’s concern for the health care consumer in Maine.
Other countries regulate health care costs, but that’s not how our system works. About half of the population gets private insurance through work. Negotiations between providers and insurance companies are supposed to put downward pressure on prices. Anthem can complain about the price of a bag of saline after the negotiations are done, but refusing to pay claims won’t lower costs – it can only shift them onto someone else.
We ought to have a more rational system – one where health care keeps us healthy and insurance coverage gives us peace of mind. Instead, high costs drive people away from their doctors, and insurance won’t protect them from ruinous medical bills.
MaineHealth and Anthem should work out their differences – a state as small as Maine can’t have its biggest insurer locked out of its biggest hospital.
But as this case shows, we can’t rely on market forces to control health care costs.
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