re: How Corrupt Is Our Healthcare System?

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Who the frick comes up with the pricing for medical procedures?

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Sorry it took so long, on call tonight.

Pricing or payment? 2 different things

Payment is set by Medicare. Every year they figure out how many RVUs (relative value unit) every procedure will be. The amount of RVUs is usually relatively flat, so some things increase, others decrease. They also figure out their budget for the year, and therefore the amount you get per RVU. There are multipliers for a host of things, like region, within a facility or outside a facility, malpractice...

For instance, if the building is in New Orleans, then there’s a multiplier of like 1.1, where the rest of the state is 0.9. They then take the work RVU, add the facility RVU, and the liability RVU to get the RVU total, then do the multiplier.

Every other insurance company bases their reimbursement on Medicare. Many will be a percentage above, others like Medicaid and Tricare are a percentage lower.

Pricing is made by the hospital/clinic/provider, etc. to cover the cost of equipment, overhead (nurses and other staff, as well as utilities, malpractice), space, and so on. But ultimately it is based on the set rates by the government.

Going back to my gallbladder surgery example from earlier. BCBS pays $1400, United pays $1200, Medicare pays $1000, and Medicaid pays $800 (numbers are made up). I’ll charge $2000 to make sure I cover the upper end, but ultimately they’ll allow what the contract says the payment is. So for BCBS, they’ll/you’ll pay a total of $1400, and I eat the rest.

Now, the cost for the hospital will be different, it’s usually around $30,000 to go to sleep and have the OR for an hour. Then you add in anesthesia services. So in total, a gallbladder surgery, with 1 day of hospital stay will cost you and your insurance $40-50k.

And going back to the earlier post again, the actual surgeons percentage of your total cost is 3.5%. And yet we’re made out as the reason healthcare costs are so high.