As a health care revenue cycle consultant, I don’t consider myself a hospital advocate, a patient advocate, or even a health care advocate. I take on each of those roles from time to time, but I actually consider myself an information advocate. I try to remain fair and balanced while giving out information that’s true (or at least should be), no matter which way it goes.

by Anh Nguyễn Duy
from Pixabay

There are lots of stories on TV and in newspapers and magazines that paint this picture of evil hospitals and their billing practices. I’m here to tell you that most of the time it has nothing to do with billing, so get that one out of your mind. These practices that are considered evil are nothing of the sort; most of the time anyway. They follow standard business practices, and I say some because, unfortunately, health care is a much different animal than other businesses.

Here are 5 things you should know about hospital charges; they’re relatively short explanations. If you have any further questions, feel free to ask me in the comments area.

1. Billing departments aren’t responsible for hospital charges.

There isn’t a single billing department in the country responsible for charges. People in billing see very few bills these days, as everything is electronic.

Who’s responsible for charges? Believe it or not, that part is dicey. Adding charges onto a bill is the duty of the department providing the service. Verifying prices of services… that one’s up in the air. Since most hospitals don’t have what’s called a charge master coordinator, the belief is that each department or the person in charge of billing should be handling it.

This piece is messy, as it’s dangerous for a hospital not to have someone responsible for this on at least a yearly basis; that’s why I consult in this area. However, for this particular point, all you need to know is it’s not the responsibility of the billing people; don’t take it out on them.

2. Hospital departments are responsible for hospital charges.

As I mentioned above, this is true but only for selecting the services they performed. Almost no hospital department directors actually puts dollar amounts on a service, though some do get to recommend a figure.

Unfortunately, pricing isn’t the only thing that comes under the purview of hospital charges. There’s descriptions, different types of codes, charge creation and deletion, and a host of other things that someone needs to be doing. This includes oversight on departments weighed down with nonbillable supplies that try to create packages that they can bill to patients because they think price is what’s important rather than “important”. I’ll mention more about this at point #4.

3. Hospital charges aren’t all over-excessive.

Like every other business, hospitals mark up their charges. Also like other businesses, costs have a lot to do with how things are priced. For instance, the costs of services in New York City are going to be way more than the cost of services in Oswego, NY. The costs for larger hospitals are going to be more than the cost of services in smaller hospitals; that’s just the way things go.

Unlike other businesses, hospitals almost never get paid what they charge for. With negotiated services along with Medicare and Medicaid, sometimes hospitals actually get paid less than 50% of negotiated rates (or mandatory rates for Medicare and Medicaid), regardless of the costs and prices of a service. The same goes for large payors like Blue Cross, though they’ll pay more than the other two above… sometimes.

by by cor gaasbeek
from Pixabay

Also, for the overwhelming majority of services, hospitals provide services before being paid, without the guarantee that they’ll get paid by anyone, insurance or patient. Yet, they can only pass so much of their losses onto patients, unlike other businesses. If you’re self pay you might be in a bit of a jam, but luckily you can request a payment plan (you can also request a reduction of your bill; all public hospitals offer this if you qualify for it).

4. Hospitals don’t intentionally charge people for services and supplies they didn’t receive.

At least 99.99% of all hospitals are doing the best they can. Sometimes they don’t get it right, which is what allows people like me to have a consulting career. If you saw some of the processes for capturing charges you’d understand why sometimes it’s difficult for people who aren’t adept at financial processes to get it right.

Remember the thing I mentioned above regarding nonbillable supplies? This, along with pharmaceuticals, are the areas of most concern for patients.

Nonbillable supplies are those that are bought in bulk because they can be used for a lot of patients, inpatient and outpatient. Their costs are supposed to be built into procedures, but sometimes this information is unknown or hasn’t been thought of properly. Instead, some departments will put a bunch of things together, call it a set or bundle or package, mis-code the item (unintentionally… I hope…) and charge it to consumers and insurance companies.

The same type of thing goes for pharmaceuticals. Not the expensive things, but things like aspirin and Tylenol. They’re actually unbillable, but if coded properly they can be added to a bill that goes to the insurance company; they shouldn’t bother but some private hospitals do it anyway. The price they come up with is usually based on the crate and not the specific item. That’s why you’ll sometimes see aspirin on a bill for $800. No one’s trying to take advantage of you; they just don’t understand math all that well.

The last thing is that these days medical charts and charge sheets are scrutinized better to make sure people aren’t being charged for services they didn’t receive. Nobody’s perfect though, so it’s possible to get a bill with something on it that you didn’t have or receive. If there’s ever anything on your bill you don’t understand, feel free to call the billing office; if they’re trained well they’ll help you find your answers.

5. Hospital charges have nothing to do with hospital profitability.

Once again, this is where things differ between hospitals and other businesses. Since hospitals don’t really get paid by almost anyone for what they actually charge for services, hospitals rely more on activity numbers than anything else. A profitable hospital will reach its inpatient and surgery numbers each year; the charge amounts just help to quantify it in some manner.

The smart hospitals are learning how to maximize outpatient services, since more patients are outpatient than inpatient. That’s why we’ve gotten to the place where you can have something like back surgery or a knee replacement and be home by lunch time, as opposed to sitting in a hospital bed for a week.

I think that’s a good start without overwhelming anyone. Let me know if there’s more that you wish to know.

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