It costs what?

American ER Doc Gone Walkabout Episode 010

I had hoped to do some comparisons, between Tassie and the US, of the prices attached to ER care – from what the patient sees.Unfortunately, I can’t seem to be able to find anything about the payments requested of patients for emergency care in Australia – and I didn’t manage to hurt myself while in Tassie, to test the system myself. Google: nothing. Pamphlets from the various state health boards: nothing. I was never asked to generate a charge code while working in Tassie. What’s up? Don’t you guys ask the unfortunate to pay for their misfortune? How could that be? Maybe I’m missing something.

In the US, the patient might start facing billings very early on in his ER visit, and then receive a bill for charges that have no bearing on what he will be expected to pay, and never actually figure out what the medical care actually “cost.”

A maze of federal laws and regulations start the process: we must perform a “Medical Screening Exam” – an MSE to decide if there is an emergency medical condition. However, we can’t try to discourage a patient from coming to the ER by telling him how much it will cost. So, at some hospitals (most others never tried this, or have given up) the patient gets a brief exam. If no emergency condition is present, he’ll be told that to continue further evaluation, he’ll need to pay first for the MSE.(If an emergency is likely, skip the next step and go on to ordering the CT scan – everyone in the US gets one, I believe. If you’re not sure whether his vomiting is from something in his head or something in his belly, get 2 CT scans – even if he’s vomiting from something that was in the sushi – remember, I can’t charge extra for merely making a brilliant clinical diagnosis.)

Back to the non-emergency MSE… Now, he gets the first shocker: typically $400-$500 combined physician and hospital bills. Depending on his insurance (remember in the US there are about 467 gazillion different insurance plans) – he may be required to pay anywhere from $3 to the full $400 to continue evaluation and treatment of his non-emergency condition (plus the charges for the rest of the ER visit). If he decides not to pay, and goes home, he just gets the bill for the MSE itself. $400 or so to be told there is no emergency. (I can’t for the life of me understand why more hospitals don’t do this: isn’t this a reasonable and easily administered system? Maybe it’s made less desirable by the fact that every third patient threatens a slow and painful death to the physician.)

So, the emergency patient continues on through his evaluation and treatment and then tries to figure out: how much did this actually cost, and how much do I have to pay?

Now, our hypothetical patient eventually receives a bill (in the US, a separate bill for the hospital charges and for the physician fees).

A basic but quite ill patient, but eventually discharged home, but with pathology and imaging might get a charge of $850 from the ER Doc, and something in the $2000 to $5000 range for hospital charges including pathology and imaging. But, only if you’re uninsured (and usually poor), would you actually be expected to pay that much. Various governmental and private insurance covers would pay roughly half of the physician charge and about 30% plus or minus a bit, of the hospital charges. Even if you have a very high deductible (I have a $6000 deductible – bet you can’t get that in Oz), the charges first get “adjusted” to the insurance’s contracted charge, and I pay only that much. Only the poor with no insurance have the opportunity to pay the full bill – which appears to have no relationship to the actual cost of providing their care. Isn’t America a great place! (Sorta fits in with people like Mitt Romney – sadly, I expect that many from Oz actually know who he is – making $60,000 per day but paying 15% in taxes, while people making about that much per year pay a bit more, and people making 2 days worth of his income per year pay 30% in taxes. America, the land of opportunity.)

Oops, sorry, I’m supposed to talk about medicine.

So, here’s some real life examples from my personal experience:

A mammogram. A bill is generated and sent to the patient ( my wife) for $455. If she had no insurance, like 15% of Americans, the hospital would try to get her to pay that bill (actually, the imaging department would never do the test unless she paid prior to the non-emergency test. We have insurance with a high deductible, so we’ll pay the bill – but first it goes to our insurance company for “adjustment”, and the new adjusted bill comes to us $77. We pay $77. What did the test cost? Certainly not the $455 that an uninsured person would be asked to pay? $77 that an insured person pays? Something less?

More dramatically: a little bike crash. Final diagnosis list: Le Fort II and other facial fractures, mandibular degloving, multiple crushed facial lacerations, C5 lamina fracture, moderately bad traumatic brain injury (took a couple months to think clearly enough to return to work, but ER Doc’s have low cognitive needs, so it was pretty quick – the residents did the maths for me when needed), and a host of others. 5 days ICU, week in hospital, 6 hours theatre time plus 3 more hours by plastic surgeon debridement and initial closure in ER, multiple CTs and MRIs.

• Hospital bill: $74,348. Adjusted bill: $18,876. I paid deductible, insurance paid the rest.
• Plastic surgeon bill: $9,192, Adjusted bill: $2,013. Insurance paid that.
• Emergency physician charge: $805. Adjusted charge: $450
• Total Radiologist charges: $1083 Adjusted: $437

(As I was rounding those numbers to the nearest dollar, I was reminded: Have you Aussies ever noticed, that you have no Pennies? Where did they go? What happened? Are there no frugal penny-pinchers in Australia? If you do have frugal people, what do they pinch? Just asking. No criticism implied.)

If this had been my son, self employed without insurance, he would not get those adjustments, and, unable to pay the bills, would have filed for bankruptcy – as do many other Americans with major illnesses, each year.Estimates suggest that about 60% of bankruptcies in the US are related to medical bills.

My insurance contract is considered by hospitals and doctors to pay reasonably well – so, I would conclude that collecting about 25% of the hospital bill, and between a third and half of the doctor bills, provides adequate compensation for the time and costs involved. Howzat?

So, it seems that the true cost is something less than the $18,876 of the adjusted bill. And, that the plastic surgeon was satisfied with the roughly $225 per hour of his time that he was paid – and didn’t really need, nor expect, to be paid the roughly $1,000 per hour that he charged. I trust that you get the point.(Just noticed: He also charged separately for an open nasal fracture. I always thought that the nasal fracture was part of the Le Fort – be pretty hard to do the Le Fort and skip the nose. Maybe I’ll ask for a refund. One might conclude that scamming to increase the revenues is part of the American game. You might be right.)

Now we have a system that generates a charge that is not expected to be paid, but which can bankrupt many people. An adjusted charge, which appears to be a revenue that will pay adequately for the costs of providing care. And no ready way of understanding what care really costs. A CT scan is charged at $2000, but the expected revenue from a good insurance contract may be only $500, and the average cost of doing the CT scan may be $400, and “marginal cost” of doing one additional scan may be only $20 for a non-contrasted scan.So, if I’m trying to make rational decisions, what number do I use? I don’t know.

It helps to explain the common “gripe” among US ER Docs that their collection rate is less than 50% of billings (about 22% in the ER at University Hospital) – the charges are inflated beyond any expectation of payment. Our expected, optimized expected payment should probably be about 50% or less of what’s actually written down. It also helps explain why some cost/benefit analysis in American medical journals is hard to fathom – the articles often just pull charge data which doesn’t relate to reality. But a federal legislative proposal to have an American version of the UK’s NICE (National Institute for Health and Clinical Excellence) is a political football with charges of “socialism” for trying to figure out the cost and benefit of various clinical care strategies.

So, I guess we might never know: It cost what?

Next time:  How much is that doggie in the ICU?