Thus, we look at our high insurance premiums and rail loudly against our emergency room bill or other hospital costs, all the while wondering why things have progressed to this point and longing for the “good old days” when things weren’t this bad.
It appears that this is not a new problem.
In 1993, Nightline was a popular staple on late-night TV. The host of the ABC News magazine, Ted Koppel, was a popular and trusted resource for Americans looking for the backstory on the issues of the day. And 20 years ago this month, November 12, 1993, Nightline aired a segment entitled “The Anatomy of a Hospital Bill.”
The program coincided with a photo spread in the December 1993 issue of LIFE depicting all the individuals and jobs involved directly or indirectly and either actively involved or in a support position - from the most to the least - in a typical bypass operation. The number is 98 persons, and it goes all the way from the chief surgeon performing the procedure to the plumbers and electrical staff who keep the lights on in the building. Hospitals, it was reported, extrapolate all those costs on down in one form or another to the patient.
According to the official transcript of the show, Nightline built the program around William Webb, a retired teacher who entered Georgetown University Medical Center (GUMC) on July 27 of that year for open heart surgery. The final bill for the procedure was just under $64,000 for the surgery and a 10-day stay in the hospital. But that was in 1993.
In 2013 dollars the er charges would be substantially higher.
The program, according to the transcript, provides remarkable witness to the inner workings of such a procedure. But it also provides insight into what happens after the invoice goes out. As for hospital overcharging, read on…
In the interview, Dr. Robert Wallace is identified as Chief of Surgery for GUMC at the time.
“Our fees are really determined by what goes on by insurance companies. We don’t say that this operation is worth so much and put a figure on it and expect to collect that,” he said in the program, according to the official transcript.
The final bill for the patient’s 10-day stay in the hospital, including the operation, was $63,589, as invoiced by GUMC. However, as Nightline revealed later in the program, only about half of that bill was ultimately paid.
The program producers convened Koppel in a roundtable discussion with the Chief of Surgery who performed the operation, together with the then-COO of GUMC and a representative of Blue Cross/Blue Shield, which was the patient’s insurer.
In the discussion, it was revealed that about $10,000 was paid to the doctors involved. The original bill was about $18,000. What’s more, of the roughly $41,000 in fees charged by the hospital, the insurer paid $23,000. The patient, Webb, revealed he paid about $400 out of his own pocket for various things not covered by his insurer.
KOPPEL: “Thirty-three thousand out of $63,000. We now have, at least in my head, a mysterious floating figure of 30,000 missing dollars. You billed for them, you itemized where all that money came from, you submitted that $63,000 bill to Blue Cross/Blue Shield. They paid back $33,000. What happened to that other $30,000?”
The answer provided was a combination of numbers, bargaining and negotiation power likened to visiting a car dealership and almost never paying the sticker price - with even better deals for fleet sales. Nelson Ford, then Chief Operating Officer for GUMC, said “We have the same published prices for every patient, and some pay more and some pay less.”
It was also suggested that were a health insurer to pay the “full sticker price” of hospital procedures or emergency room costs, premiums would be much higher than they are now for both the insured and any employer that pays a portion of an employer-sponsored plan. Thus, insurers negotiate on a regular basis and rarely pay full freight for anything.
KOPPEL: “I’m joined now by Mr. Webb, who is dressed somewhat differently than he was the last time he was in here. And you look very well…”
Mr. WEBB: “Thank you.”
KOPPEL: “…so obviously the surgery was successful.”
Mr. WEBB: “Oh, yes.”
KOPPEL: “Worth every penny of $63,000?”
Mr. WEBB: “Oh, I can’t believe that, but you know, I do, I do.”
KOPPEL: “Do you have any idea what the discrepancy is between what the hospital
billed and what Blue Cross paid?”
Mr. WEBB: “I think I’ve gotten an idea of that, yes, and it’s quite a differential.”
KOPPEL: “Yeah. I mean, they billed $63,000, they get reimbursed $30,000.”
Mr. WEBB: “Is that right?”
KOPPEL: “You’d almost think they’d be coming after you for the other 30 grand.”
Mr. WEBB: “That’s what I was afraid of.”
KOPPEL: “Yeah. But they don’t.”
Mr. WEBB: “No, they don’t.”
KOPPEL: “How much have you had to pay of that bill?”
Mr. WEBB: “Actually, about - something close to about $400.”
KOPPEL: “Four hundred dollars.”
Mr. WEBB: “Yeah.”
READ MORE EMERGENCY ROOM CHARGES LEGAL NEWS
Mr. WEBB: “Things are incredibly high, I think, when I looked at some of the items on there. But I think I understand the reason for that, and I realize the hospital has to pick up on a lot of people who come in who do not have insurance…they’re under - or not insured at all - and so the hospital has to pick that up.”
KOPPEL: “What would you think of someone who actually had to come into a hospital and pay the bill?”
Mr. WEBB: “I think very few people could do it. You know, would, in fact, come into a hospital. But that leaves a lot of other unanswered questions…”
November 12, 1993. Hospital overcharging. High emergency room costs. Hardly a new issue…