Thursday, July 9, 2009

Hospital Billing Scam: Ignoring Health Insurance, Billing Taxpayer Instead

U.S. hospitals fraudulently writing off huge "losses" after inflating prices beyond insurance approval limits.

Health services networks collecting full retail prices from federal government by writing off bad debt of three to six times the billing amounts approved by health insurers.


TYPICAL SCENARIO

You are injured in an auto accident. An ambulance takes you to a hospital, where you are admitted. The hospital collects your insurance data, and provides service.

Your auto insurance, and/or that of the other driver(s), is billed for it's medical coverage, typically in the range of $15,000 to $30,000.

Three months later you get a bill from the hospital for the remainder of your hospital costs, which may be in the hundreds of thousands of dollars. You tell them to bill your health insurance, but the hospital shows you that your health insurance finally declined your claim, 4 months later. They seek a statement from you that you can not pay the bill. They then write it off as bad debt, and assign it to collections.

You file a "medical bankruptcy", just like over half the consumer bankruptcies filed.


WHAT HAPPENED?

Your health insurer is tough for the hospital to deal with. The insurer holds down the price of services by not allowing the hospital and health care providers and suppliers to overcharge. The hospital would rather not deal with this.

Instead, the hospital bills the auto insurance for the limited medical coverage. This insurance does not fight the hospital on the overcharging. The hospital can therefore bill you 3-6 times what your health insurance would pay for the same services.

The hospital ignores the health insurance for (in most states) three months, beyond which time the health insurance will deny the claim by expiration clause.

The hospital then simply writes off the bill, at an average of 3-4 times the amount they would have collected from the insurer. The write-off credits back the hospital about 1/3 of the amount written off, in taxes.

The end result is that the hospital is paid 100% or more of the amount it could have collected from the insurers, and they do not have to invoice or negotiate. The government pays the bill. the debt is simply passed on to the tax payer.

800,000 personal bankruptcies were filed in 2007. Medical bankruptcy accounted for 62% of personal bankruptcies filed in 2007, with a national average of $26,971 included in bankruptcy filings, for each uninsured person, and $17,749 for each insured person.

If half of the filers were insured and half were not, then the total discharged debt is just under $25 Billion for 2007 alone, not including those who did NOT file bankruptcy and did not pay the medical bill.

Industry estimates are that 66-90% of charged-off medical bills are not included in any bankruptcy filings. This would bring the total to between $75 billion and $250 billion in medical receiveables written off by healthcare providers in the US, in 2007 alone.

These writeoffs gave $25 billion to $83.3 billion to the healthcare providers, directly from the federal government- no billing, no negotiating, no oversight, no customer service to have to bother with. The present system might be considered the wost government-paid health care system in the world.

This ripoff bilks everyone, in favor of the institutional health care provider and the insurance company which typically owns it.

3 comments:

  1. This scam was made possible in large part by the exemption to the federal anti-trust laws enjoyed by the insurance industry. This exemption is the only way they are able to umbrella the price fixing and discrimination practiced. It's how they write off bogus invoices and get the cash from the government.

    On October 20, 2009 McCarran-Furgoson was repealed, largely at the hands of Nevada's Senator Harry Reid. What was born in Vegas died in Vegas. It will be interesting to see how the health insurance insustry, and its lapdog, the health insuranc provider networks, are able to defent the overcharging after this change. Let's stay tuned.

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  2. Born in Vegas, Died in Vegas: http://healthcare.zdnet.com/?p=2840

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  3. This is why we should choose the hospitals that we should trust in order for us to ensure that they will not fool us when it comes to our hospital billing.

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