My hernia operation shows weirdness of hospital billing

I've been meaning to share what my May 6 hernia operation at Salem Hospital cost, because this shows how strange health care billing can be.

But I'd been putting this off -- until I was spurred into blog post action by a story in today's Statesman Journal, "Salem Hospital lacks pricing transparency, new report says."

Now, what I've shared below doesn't have anything directly to do with pricing transparency, but indirectly it does.

I'm on Medicare. My insurance company is Regence MedAdvantage.

Here's what the Medicare billing statement showed for my hernia operation. I combined the line items into categories, not that I totally understand what is included in each.

Description	Billed by Salem Health	Approved by Regence MedAdvantage	What I paid
Surgeon	378	174	40
EKG	219	80	10
Blood test	92	0	0
Covid test	160	55	0
Anesthesiologist	1,875	343	0
Operation-endoscope	1,554	667	0
Operation-Salem Health	21,972	6,413	300
Total	26,250	7,732	350

 

The main things that leapt out at me are how expensive a routine outpatient operation is, and the big difference between what Salem Health billed and what Regence MedAdvantage approved/paid.

Salem Health billed $26,250. Regence MedAdvantage paid $7,732. I paid $350.

Given this huge difference between what was billed and what my insurance paid, it's difficult for me to understand how more transparency in pricing would help people who have insurance.

Is the price what Salem Health bills insurance, what is approved by the insurance company, or something else?

Plus, when someone with good insurance, like me on Medicare, pays so little out of pocket, there's very little motivation to care about how much health care costs.

From what I've learned, the amount Medicare will pay for hospital services guarantees a decent profit for the hospital, though I'm sure Salem Health administrators would disagree. 

Intuitively, what Regence MedAdvantage approved for my hernia operation seems about right. I was at the hospital for about six hours. The operation went smoothly. Hernia repairs are common.

It doesn't seem like an outpatient hernia operation should cost $26,250. Instead, $7,732 seems about right. 

What this shows is how complicated our screwed-up health care system is. I'm a big proponent of Medicare for All, or some other form of universal health coverage for everybody in the United States.

Moving from private insurance to Medicare has been great. No regrets at all about embracing "socialized medicine," as many Republicans term Medicare, even though almost everybody on Medicare loves it.

Comments

[Wayne Baum]

My guess is the Salem Hospital's charges are the healthcare equivalent of "suggested retail price" of a car - An amount that proposes a starting point for negotiations to begin...and no question your insurance provider has negotiated a steep discount (likewise other insurance groups the hospital recognizes for payment). The individual consumer has no means of examining these private business arrangements so like you said Brian, we are out of the loop, and even if individuals cared more about who pays what, we have no practical means of "shopping around".

[Carole Smith]

Another weird bill. We are renovating a duplex, turned the water completely off at the meter but for two months I recieved a bill from city of Salem for $82.00. didn't use a drip of water. . . Is $82.00 the suggested retail price of no-water in Salem now. Going dry sure costs alot. . .