Health Care Scams Coming to a Town Near You

The first step towards slowing the rising cost of health care is blocking all the scammers abusing the system. Unfortunately, Congress is reluctant because scammers masquerade as respectable job creators, who make campaign donations to protect their gravy train.

Our health care system has high premiums due to high medical prices. This results in anemic employee raises because too many stakeholders are looting the health care store. The cost of these scams are mostly borne by workers enrolled in employee health plans. What are some of the frequent scams?

Surprise medical bills are perpetuated by a few bad apples from a handful of physician specialties. What they all have in common is their patients do not choose them. Nor can patients refuse their services when they are out of network and charge much higher fees. Surprise medical bills are a form of market failure when consumers cannot punish price gougers or denying them their patronage.

Patients choose their primary care physicians and network affiliation is often one of the criteria patients consider. Patients do not select their anesthesiologists, pathologists or radiologists. These ancillary physicians work behind the scenes inside hospitals and clinics but get paid by patients and their health plans. Neither can patients shop around for an ER doctor who is in their network or an air ambulance that is. This explains why these specialties are prone to surprise medical bills. Surprise medical bills are a deliberate business strategy to boost reimbursements.

Another form of financial abuse is the outrageous list prices many medical providers charge. So-called chargemaster prices are a negotiating tool, allowing for steeper discount offered to insurers and health plans. Any patient unlucky enough to be out of network, uninsured or even a member of a sharing ministry is liable to bear the highest price. Chargemaster prices are double or triple what health plans generally pay.

Back in May an appeals court in Colorado overturned a jury decision that found a patient did not owe a $228,345 surprise medical bill, that was based on chargemaster prices. The patient had initially been told her cost-sharing would only be $1,337. She thought she had due diligence, after obtaining a cost-sharing estimate. The surgery was supposedly more complex than anticipated, which lead to an unexpected medical bill based on chargemaster prices.

A meeting of the minds is the standard requirement for an enforceable contract. Yet, the appellate judges thought the patient should have been more diligent about what she was signing. They thought a price-gouging hospital should not have to litigate its shenanigans. Health care providers have an incentive to make admission agreements one-sided contracts. Was this patient really supposed to hire a lawyer to review an admissions contract the hospital’s attorneys had years to perfect?

Another form of market failure is diagnostic testing and lab work. Patients have little control over where lab work is processed or billed. Their specimens are sometimes diverted to higher prices labs when cheaper labs are available locally. Sometimes a lab test performed locally is merely billed through a facility hundreds of miles away with a higher contractual rate. In 2016 a shady management company descended on Unionville, Missouri and offered to take over the struggling Putnam County Memorial Hospital. The 15-bed critical access hospital is in a county with a population of less than 5,000. Its annual revenue in fiscal year 2016 was only $7.5 million. After taking over the hospital the new CEO signed a deal with a lab management company he also controlled. The CEO hired 33 phlebotomists to draw blood, only two of which even worked in Missouri. The deal he made was for the hospital to bill for lab tests performed elsewhere and pay his lab management company 80 percent of the revenue. During a 4-month period between November of 2016 and February of 2017 Putnam Memorial billed $92 million in lab work, almost none of which was for patients treated by doctors affiliated with the hospital. Indeed, during an audit the Missouri State Auditor's Office was contacted by two insurers alleging millions in suspected fraudulent activities that were billed to them through the hospital.

Consider this: Your Dallas-based physician orders lab work that is processed locally, but the tests are billed through a much more expensive hospital lab 700 miles away in Central Missouri. Your cost-sharing could be much higher than necessary because of this switcharoo. In the case of Putnam County Memorial Hospital, the perpetrators were caught because the scheme was egregious. Similarly abusive but slightly less egregious arrangements take place all across the country.

These are but a few examples of health care scams that too often are allowed to continue. They are not difficult to identify but federal and state officials sometimes view medical spending as a jobs program or an economic development activity. Ultimately it is all of us who bear the cost to line the pockets of these scammers.

These seem mainly “Part C” plans (Medicare Advantage) plans. Many are “dual” for people with Medicaid also.

The “dual” people pay zero (except some might have Medicare part A premiums taken out of their social scurity though, not sure), and could just have Medicare+Medicaid and always pay zero for their medical care and drugs. However the Medicare Advantage companies basically get about the same amount of money per patient that the feds think they pay out, and if they can lure patients into these part c dual plans, then the company gets to keep any money they do not spend. And they are good at not spending it.

In effect these companies are permittted to BRIBE potential patients by offering all kinds of other stuff, including over the counter stuff, dental, cheap glasses, rides, and even gift cards!

And the money they make comes from money they don’t spend. They of course try to cherry pick healthier people to join. They harrass and limit doctors and hospitals, have weird network requirements, etc. Patients create problems for themselves, to some extent, by picking what turn out to be bad plans for their real needs just to get some extended (and often cheap) product the plan offers, not realizing the limitations.

The non-dual patients who only have medicare (no medicaid) ARE paying premiums for both part A plus the non-covered 20% plus part d drug plans, so there are some premiums involved on those plans. The premiums are socialist in that not everyone pays the same, people with some incomes have to pay often a lot more.

However, even in that case, their profit comes from spending less that the services they provide. The companies are specialists in RATIONING to the patients. They will of course claim they lower their expenses by preventive efforts to keep their patients healthy, but studies show that prevention almost always costs more.

Prevention is valuable to people and worth paying for, but in the long run, in a population, it always costs more — sooner or later we all get hurt or sick anyway, it just created a new expense and kicked the can down the road that will still cost a little later. They just pay the lip service to prevention that the feds require.

The plans save money mainly by refusing services, limiting options, creating hoops to jump through that cause people to give up trying, etc. All this after they have lured in their pigeons and sheep.

At least that’s my take, sorry if any of the above is somehow a little off or misstated. I just do not like these companies tricking old and ill people into bad decisions that they are stuck with for a year all because they dangled a free ride to the doctor, so I hate seeing their smiley ads.

Wow, I really agree with you.

Sorry for the late reply, but that is so true.

(Sorry, writing fast, apologize for anyeone reading this if there are poor wordings etc.)

To me you could make it, “it is illegal to charge different people different prices for the same service. It is also illegal to force different people’s services to be considered “different” when they are substantially the same service.”

This prevents them from forcing doctors and hospitals etc to use “Price Masters” where they have a series of ridiculous prices on a list that no one pays unless they are a cash customer.

(Because if, as a doctor, you set a low price, the insurance companies only want to pay you a percent of it. So everyone sets a fake “real” price (charge master price) and cites that to any insurance company that it is “contracting” with. This forces all doctors and hospitals and labs to set up fake prices (that only affect cash customers) because that is where they negotiating from. It’s a conflict of interest fixing the market — they know this forces uninsured people to buy insurance because they are out in the cold created by those very insurance companies! It’s a joint market-fixing collusion by insurance companies, but no one has stopped them.)

Everyone with some type of insurance gets a massive discount due to some variable mechanism. Your insurance company’s main job is to have wheeled and dealed in advance. Those companies and people who don’t buy insurance (cash cunstomers) are left out in the cold.

You can of course get a price up front, if you push hard, but it’s not the price you want, the price that most people pay. They are embarassed by their “master” prices! A lot of place will discount for cash up front, but it’s not enough of a discount to be fair compared to what theu charge others, and there’s no good feedback to the free market.

These companies and hospitals are quite happy to receive a surprisingly small amount for services on most things, charges go from 10,000 to $1,200 for example on some things, even worse than that. Lab tests that go from $300 “retail” to $18 “real” price.

Eliminating tag with fake prices, and tag with the fake procedure codes (which would occur if you did not address that too — they would have 10 versions of the same blood test all with different prices, and only certain people could buy certain tests) would help.

So lets go somthing like here:

One Procedure Code at One Price for all People receiving a substantially similar medical procedure ...

Then price setters would have to pick a price, the price could compete in a real free market, and common sense would again reign.

Then we would have to publish it in an advance marketplace so that competition could occur. Shopping in the middle of the night when you are stuck with the only ER around if like living in Hooterville and buying everything at Mr Haney’s.

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