Thursday, November 29, 2007
You Only Think You Have Health Insurance
There is an interesting - and cautionary - story in the Wall Street Journal today concerning patients with health insurance who can still face huge medical bills after hospitalization (there is a link to the article at wsj.com but you have to be an online subscriber to read it).
The story focuses on one such patient who spent five months being hospitalized for a massive staph infection that nearly killed him. He endured septic shock, endocarditis of one of his heart valves (which had to be replaced) and the removal of his pacemaker (which was "encased in bacteria" per the article). He then went into cardiac arrest during a session of physical therapy and required implantation of a defibrillator. His medical bills totaled more than $2.7 million, only $1.5 million of which was covered by his insurance... because that was the lifetime cap on his policy.
"Lifetime cap" means what it sounds like: the policy won't pay more than X amount of benefits during your lifetime. At 1.5 million dollars, this patient's policy was actually relatively generous: many policies these days have caps of $1 million or less. The article quotes an employee-benefits consulting firm, The Segal Company, as saying that average health-plan caps have not changed since the 1970's (they were $1 million then, and they're still $1 million today).
The patient and his wife began investigating the individual charges on their bill and found - surprise - that they were massively padded. Example: they were charged $791 for compression stockings, which can be purchased for under $20 on the Internet (again per the article). This is standard procedure among all hospitals, including the ones where I work, because no insurance plan (or Medicare/Medicaid) will pay a bill at face value. All bills are massively discounted, up to 60%. Hospitals fight back by upping their individual charges to inflate the bill, hoping to recoup what they were owed in the first place. This is all fine and good unless the patient is paying cash and has no insurance coverage.
Fortunately this story has a happy ending: earlier this week the hospital called the patient interviewed in the article, told him he qualified for their charity care plan and wrote off his entire bill - this of course after dunning the patient multiple times through phone calls, and after the Journal started investigating. The moral here, I guess, is to beware of catastrophic illness: you may outlive your insurance coverage. And check your policy.