The Odd Math of Medical Tests: One Scan, Two Prices, Both High

New York Times ^ | 15 December 2015 | Elixabeth Rosenthal

[Lorianne]

Testing has become to the United States’ medical system what liquor is to the hospitality industry: a profit center with large and often arbitrary markups. From a medical perspective, blood work, tests and scans are tools to help physicians diagnose and monitor disease. But from a business perspective, they are opportunities to bring in revenue — especially because the equipment to perform them has generally become far cheaper, smaller and more highly mechanized in the past two decades.

And echocardiograms, ultrasound pictures of the heart, are enticing because they are painless and have no side effects — unlike CT scans, blood draws, colonoscopies or magnetic resonance imaging tests, where concerns about issues like radiation and discomfort may be limiting. Though the machines that perform them were revolutionary and expensive when they first came into practice in the 1970s, the costs have dropped considerably. Now, there are even pocket-size devices that sell for as little as $5,000 and suffice for some types of examinations.

“Old technology should be like old TVs: The price should go down,” said Dr. Naoki Ikegami, a health systems expert at Keio University School of Medicine in Tokyo, who is also affiliated with the University of Pennsylvania’s business school. “One of the things about the U.S. health care system is that it defies the laws of economics, and of gravity. Once the price is high, it just stays there.”

With pricing uncoupled from the actual cost of business, large disparities have evolved. The five hospitals within a 15-mile radius of Mr. Charlap’s home here charge an average of about $5,200 for an echocardiogram, according to an analysis of Medicare’s database. There are even wide variations within cities: In Philadelphia, prices range from $700 to $12,000.

[Mr Ramsbotham]

With a comprehensive blood test they can always find something that’s just a little high or a little low, and keep you coming back again and again for rechecks. This got so disgustingly pervasive at the last practice I used that I simply walked out and won’t be returning.

[The Ghost of FReepers Past]

I’m surprised she could even get them to tell her the cost. Usually you just have to sign on the dotted line that you will pay any freaking price they decide to charge you on the bill they will send you after the procedure is over.

[Pontiac]

The prices of medicines and tests are automatically reviewed and reduced by the panel every two years, and can drop more than 30 percent. “Hospitals need to invest in machines, but after that, they don’t need to spend much to keep doing the tests,” said Dr. Toshiaki Iizuka, a health economist at the University of Tokyo.

What a surprise!

An article in the New York Slimes advocating Government Price Controls on medicine.

I’m shocked I tell you! /S

[buckalfa]

In the medical field, cost has little bearing on published price.

[Organic Panic]

ALWAYS ALWAYS ALWAYS negotiate for medical services. Especially in the age of Obamacare. The rich won’t care about the price. The poor get it for free thanks to we taxpayers, so the only option for anything remotely affordable is to negotiate. If it isn’t a medical emergency always shop around. I had emergency surgery for which I paid cash. Before I even started hammering them about costs I told them I will write a check in their office and they immediately knocked off 50%. That’s a disgusting markup and they just expected some insurance company to cover it or assumed I was a deadbeat that wouldn’t pay anyway..

[KarlInOhio]

“Hospitals need to invest in machines, but after that, they don’t need to spend much to keep doing the tests,” said Dr. Toshiaki Iizuka, a health economist at the University of Tokyo.

The same could be argued about printing presses, especially if the Times has fewer and fewer subscribers every year. Maybe the federal government needs to limit subscription and newsstand prices.

[The Ghost of FReepers Past]

What published price? That’s my point. If you go to a hospital and try to ask what things cost BEFORE treatment, no one in the entire place has any idea what anything costs. They do not know the price of a room per day. They do not know the price of each procedure. Nothing. You are suppose to agree to pay when you have no idea what it will cost.

Four days and you can get a total bill of $80,000. Surprise!!! Your signature at admission says you agree to pay even though at the time of service, no one could offer so much as a guess of even any portion of the cost. No room rate. No procedure cost. No doctor fees. No hourly rate. Nothing.

[Mom MD]

And reimbursement has little to do with the billed price. Medicare and Medicaid dictate what I can bill for an RVU - relative value unit. They also dictate how many RVU’s to each procedure, visit, etc. That said, I am lucky to collect 50% on the dollar billed, even after medicare sets the price and the amount billed. Go figure.....

[buckalfa]

In a past business life as an accountant - analyst for physician practices and hospitals, I have wrestled with wRVUs, and all phases of the revenue cycle. I fear your noble profession is being reduced to little more than highly educated assembly line work. Medicine by the numbers so to speak. EHR’s with treatment decision trees based on recommended best practices. Sad.

[buckalfa]

Your complaint is valid. I used to maintain charge masters (price lists) for hospitals. Problem is pricing is too often based on units of time involved in treatment instead of a fee per diagnosis or procedure.

[Mom MD]

Actually that is the expertise we do bring. pA’s and NPs can use the best practice algorithms most of the time quite well. The real skill is knowing the 5-10% of the time to disregard the algorithms because they don’t apply to a given situation.

However, as we head toward single payer and more and more government controlled medical practice, I fear all the well trained docs will retire or do something else. I plan to retire just as soon as I can possibly afford it. That will leave all of us entrusting our care to less highly trained but highly programmed non physician providers. Mc medicine..... Its sad to see what is being done to what was once the best health care system in the world.

[Artie]

“But from a business perspective, they are opportunities to bring in revenue”

I call BS. Try telling Perry Mason, as you are getting grilled in a deposition, that you didn’t run the test, or the patient’s plan administrator claims it’s not covered even though it is a standard of practice. Ever wonder why malpractice premiums are so high?