Sucking You Dry

| Tue Oct. 6, 2009 2:06 PM EDT

I've written a bit lately about how banks make a lot of money by exploiting complexity and confusion.  This works all the way from the small (overdraft fees) to the huge (weird credit derivatives that no one really understands).  Apparently the healthcare industry, which was never exactly a model of straight talk and plain speaking in the first place, is taking lessons.  No longer content to simply bill for procedures, they've started including a separate "facility fee" for every visit:

One billing consultant has estimated that the fees could generate an additional $30,000 annually per physician for hospitals.

Critics [...] regard the fees as disguised price increases that ratchet up the cost of care at a time consumers can least afford it. Many say that facility fees underscore the urgent need for transparency in pricing for medical services and exemplify the relentless cost-shifting that is driving more Americans into medical debt and bankruptcy. It is common for facility fees to be applied to an insurance plan's hospital deductible, which can be thousands of dollars higher than a physician deductible.

...."It's like a barber saying, 'That'll be $20 for a haircut and $10 for sitting in my chair,' " said Wisconsin state Rep. Chuck Benedict, a Democrat and retired neurologist from Beloit. Benedict's bill to require hospitals to post notices about the fees and furnish upfront cost estimates was defeated in 2007; he has introduced a similar bill this year. Legislation has also been proposed in New Hampshire.

How do they get away with this? You'll be unsurprised to learn that it's all due to a weird loophole inserted in federal legislation a few years back:

[Facility fees are] the result of an obscure change in Medicare rules that occurred nearly a decade ago. Called "provider-based billing," it allows hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill separately for the facility as well as for physician services. Because hospitals that bill Medicare beneficiaries this way must do so for all other patients, facility fees affect patients of all ages. Doctors' offices owned by physicians and freestanding clinics are not permitted to charge them.

And how do you find out if the the clinic you're going to is allowed to assess the fee?  Good luck!  The short answer is that you probably can't.

Anyway, you all know what I'm going to say next, don't you?  So I'll say it: the American public is flat out nuts to put up with this.  It's not as if France and Sweden have solved all the world's healthcare problems or anything, but at least they've solved this one.  If you need medical care in those countries, you just go to your doctor and get it.  No games, no tricks, no hidden fees.  Why anyone would prefer our fantastically expensive, jury-rigged, insecure, and maddeningly complex system to theirs is beyond me.