After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn’t know

The analysis of Peter Drier’s neck surgery case raises a critical question about our medical bills. From the article “After Surgery, Surprise $117,000 Medical Bill From Doctor He didn’t know”, that patients may be charged in full amount under a situation that any treatment procedures involved out-of-network providers. This non-negotiable hefty fees, usually, is the incentive that drives physicians to involve those providers. Although the unexpected charges have become the major complaint from patients and health insurance commissioners are trying to limit patients’ liability, unremitting lobbies from health care industry hamper the efforts from insurers.

Furthermore, from the article, the phenomenon can even take many forms. For example, it is not uncommon that a surgery needs a fully trained assistant or a nurse, who would not cause extra charge, but inform patients about extra services while they were lying on bed in the operation room is not common. In Mr. Drier’s case, he was billed of $117,000 by an “assistant surgeon” whom he did not recall meeting, since he could not recognize all people in white outwears will be charged for what kinds of services.

The out-of-network rates drive unexpected medical costs. It would be astonishing that bills from out-of-network services are much higher than in-network doctors. The figure below may give readers some sense about their rates.

Sometimes insurers have to pay the bills from the perspective of protecting their customers, and their compromises encourage the phenomenon. Patients are just not in a good position to bargain with hospitals, like Steve Brill wrote from his “$190,000 surgery” that no one could consider economics or policies of health care while enduring their pains and people just consider about the quality of health care they received.

Ultimately, most people would be surprised about the bills after their surgery have been done. One possible way to mitigate this phenomenon has been discussed in the follow up article “Can a Computer Replace Your Doctor?” Despite the present situation that people still run the healthcare industry, the innovation of artificial intelligence and technologies will re-shape our way to access medical care. I have learned, from these two articles, that potential improvement of technologies might be a good way to eludes “traditional” unexpected cases, but more importantly we need more systematic regulations on our healthcare industry to make our bill transparently. This crux is worth to discuss further in-depth in our class through the semester.

Source: After Surgery, Surprise $117,000 Medical Bill From Doctor He Didn't Know

The $2.7 Trillion Medical Bill : Colonoscopies Explain Why U.S. Leads the World in Health Expenditures

Source : NewYork Times

The write-up is based on the case study “Paying till it hurts” and exemplifies colonoscopy for explaining the reasons behind high healthcare costs in the United States. We first talk about the American health care system exorbitant prices and some of the reasons behind the high price anomaly. Going ahead, we elicit the how colonoscopy has become the tritest screening procedure in the last 15 years. In the concluding comments, we try and figure out the reason behind the increase in the price of colonoscopies and why the general principle of economies of scale does not work in the health care industry.

American healthcare industry generates a revenue of 2.7 trillion dollars every year. Even though, the Healthcare system is known for providing high-quality services to those in their old age most of this expenditure comes from the exorbitant prices of the procedures and medication that are not directed towards healing the old. Instead, these repeat procedures and medication are an ill effect of the preventive care methodology that is pervasive in the American healthcare system. The American populace has a mindset that the more they pay, the better services they get. The mindset might be true for other industries but has not fared well in Healthcare. Even though, people in America pay more for healthcare service than any other developed country the services and healthcare provided are still not observed at the same quality as other developed countries. Foremost, the reason behind the exorbitant pricing is the fact that Healthcare is considered a free market in the United States. In all other countries healthcare is considered as a commodity, and hence the prices are capped. Thus, making services cheaper and affordable.

A case in point for the high priced services and overuse of procedures is a colonoscopy. A procedure that was deemed effective by researchers for deducing early symptoms of colon cancer. In the last 15 years, the umber of colonoscopies conducted has risen to 10 million generating a revenue of $ 10 billion. Many heath associations have tried to inform patients and providers about the unnecessary use of the procedure when other cheaper and easier to implement procedures, for deducting colon cancer, exist in the market. A colonoscopy might not even be the most effective way of detecting colon cancer as it has never been directly compared to other procedures that are present in the market.

The number of colonoscopies conducted has increased by 50% from 2003 to 2009. An increase in this proportion, in any commodity market, would have created economies of scale, leading to a decrease in the price of the commodity. Instead, the price of colonoscopy has skyrocketed, like all other procedures people in America, pay more for a colonoscopy than anywhere else in the world. Even the most expensive colonoscopies around the world cost a few $100 in the US the minimum price for undergoing a colonoscopy is around $1000.

A major reason for the high price of colonoscopy in the US is that the price for colonoscopy like any other procedure is set by negotiations between provider and insurer and the insurer, with none of them having the patient's interest in mind. Another reason for the increase in price is that colonoscopies are now conducted in surgical centers, where providers can charge an extra service fee.

Advances in Technology Driving Up Costs

In the article, "Even Small Medical Advances Can Mean Big Jumps in Bills", I learned that it is extremely expensive to be sick and especially so if you're diagnosed with Type 1 diabetes. Diabetic patients need an array of treatment supplies including insulin, test strips, an insulin pump, disposable tubing, batteries, and lancets and there are very few suppliers in the market. Few suppliers and a constant need for treatment allow drug companies to drive their prices up.

Initially, treatment for diabetes was relatively cheap because patients were expected to tightly control their diets and check their insulin levels. However, the introduction of the insulin pump gave patients more dietary freedom and made it easier to control blood sugar. Diabetics can purchase some components of the pump at low to no costs, but additional necessary supplies can be expensive. For example, test strips can be $1.50 at the pharmacy, but cost only pennies to make.

Other countries cover all costs associated with treatments of chronic diseases, including diabetes. In countries with this system, prices are negotiated so that the price of treatments is a fraction of what drug companies charge in the United States. Britain and Germany are just two examples of countries where governments heavily negotiate diabetic supply prices. Margins for these drug and equipment companies may be low, but the burden is mitigated for the chronically ill patient.

In all, I learned that treating Type 1 and Type 2 diabetes cost the United States nearly $200 billion dollars in 2012, which was equivalent to around 7% of the entire U.S. health care bill. Furthermore, companies are continuing to release new models and are developing add-ons that can only be used with that specific brand or model. Like Apple customers, diabetics are urged to purchase new materials because they no longer have access to past models. As a whole, consumer's out-of-pocket costs continue to rise. Although patients may experience health benefits by purchasing new diabetes products, they are definitely experiencing greater financial hardships. This was extremely disheartening to me because, as an Economics major, I've been taught that more technology should lower costs in the long run. Drug and equipment companies may be able to use revenues for more research and development, but prices are set too high and patients that are sick, through no fault of their own, are being punished.

Price of prevention

An interesting take on how Vaccines once considered a poor business prospect has seen rising costs. The articles aligns with the cost conundrum in Healthcare, similar to the different cases of the Paying Till It Hurts series, focuses on how "Prevention is better than cure" has been capitalized. A simple example to understand the magnitude of increase in cost - over the last 3 decades, the co-pay involved for an individual until the age of 18 has risen from $100 to $2,200.

The article offers three perspectives -

• Care Providers through the eyes of Dr. Lindsay Irvin
• The society being represented by the Farris family
• And the viewpoint of vaccines with Prevnar, pneumonococcal vaccine from Pfizer

Touching briefly on the first two perspectives, the increased costs of vaccines have made it difficult to both providers and the public. Many physicians have stopped administering immunizations due to losses incurred involving the expensive vaccines. This leads to a stress on the public, where vaccination is mandated for children entering schools, and families find it difficult to locate the few practitioners who still administer vaccines.

Finally the story of Prenvar gives an overview of the cost conundrum. Though components of the vaccine do not change, the price continue to rise through the years for no apparent reason. There are pointers which are offered as an explanation by pharmaceuticals organization which include the investment into the R&D, larger clinical trial requirement, requirement of approval of FDA and another federal committee - Advisory Committee on Immunization Practices, and reviews which paint, if not biased, an uneven positive economic benefits of the vaccine. Nonetheless the justification of high price does not justify the continued soaring cost.

A personal opinion, probably harsher that this case presents, I would say that the profit mongering pharmaceutical industry need to look beyond the cost vs. benefit proposition and see the effect on the both Care Providers and the public.

This opinion is vindicated partially by the follow-up article on the availability of Crucial Vaccines. From elimination of Smallpox and control of Polio to business case for vaccine entry into a particular shows the skewed trajectory of our progress. The article captures the hurdles presented by the US healthcare system for vaccine entry from other countries. 2010 - 2013 breakout of a particular strain of Meningitis with vaccine availability only outside the US, led to CDC and FDA to introspect its process. The expensive and at times politically challenged nature of drug approval has allowed to pharmaceutical industry to flourish outside the US.

It is time that the healthcare industry, not with respect to vaccine alone, realize the impending the financial stress on the society driven by the soaring costs of medicine.

American Way of Birth, Costliest in the World

Source: New York Times

Contributors: Shivani Patel & Henry Roden

Article Review

This article addressed the soaring costs of giving birth in the US. The article followed several expectant couples battling America's broken healthcare system. Many healthcare policies and providers do not include maternity care in their coverage plans, leaving millions of Americans with enormous hospital bills after the birth of a child. Renee Martin, an expectant mother from the article, discussed that she was more concerned whether an epidural anesthesia was a more cost-effective option to a birthing tub instead of which option would fit her needs.

A conventional delivery in the United States can cost upwards of $9,000 while Cesarean deliveries can cost up to $15,000, sometimes more. A conventional birth in the US is almost double the cost in Switzerland for a conventional birth, and almost triple the cost compared to a conventional birth in France. Like the "Chargemaster" discussed last class, each test performed or treatment related to "maternity care" can be associated with a cost or charge.

For instance, simple blood typing required for each delivery costs hundreds of dollars, while a splash of gentian violet, a disinfectant on the umbilical cord costs $20 (Walgreens price per bottle is ~$3). This case from the New York Times demonstrates, highlights, and illustrates the skyrocketing cost of maternity health care, pushing couples to ask the question "How much is that going to cost?".

Reflection & Analysis

This article highlighted our flawed healthcare system and demonstrated that even if you try to beat the system like Dr. Duane, who had some of the best insurance money can buy, she still had an uphill battle with her insurance company.

In a follow-up article, Dr. Duane highlights her frustrations with her medical insurance when she became pregnant with her second son, Ellis. I found that this article highlighted one of the fundamental issues with our healthcare system which is the "Chargemaster." This type of list gives hospitals a new revenue stream with every supply or treatment, costing  more and more each year.

The Cost Conundrum - EpiPen

The topic of EpiPen was brought up in class (Jan 25). I had the opportunity to do critical analysis on Mylan Pharmaceuticals over the 16 weeks last semester, and I wanted to offer a brief overview of the widely criticized pricing issue. 

A key insight to the problem is similar to what was suggested in the Steven Brill article - middlemen are responsible for the high costs of healthcare. Eliminate the middlemen and Healthcare would become inexpensive.

Mylan had the same challenge with EpiPen. Though the marked price by Mylan was just $274 per pack, customers had the pay more than twice that amount because of all the middlemen costs involved. Mylan has overcome this challenge by eliminating the middlemen, and offering the EpiPen directly at the $300 list price to consumers.

Take a simple breakdown of the pricing issue below. Middlemen are the cause of expensive US Healthcare System. Eliminating them is key to reducing the costs. Do ponder over it and feel free to comment. I'll add interesting perspectives from time to time on this topic.

- Ben.

Student Industry Networking Event - Feb 07

Hey Everyone!

Check out the upcoming event (Feb 07th) organized by the Biotechnology Industry Organization of Southern Arizona (BIOSA) and the BIO5 Institute, which connects UA graduate and undergraduate students in the life sciences, engineering, and business to internships and jobs in the Arizona bio-industry.

RSVP is mandatory - RSVP Now. For more details, please visit the website - BIO5 Institute.

- Ben.

The Soaring Cost of a Simple Breath

Drug prices are rising especially for critical Asthma drugs, as covered by the New York Times.

What makes this article stick out in my mind is the graphic that compares the price of lifesaving Asthma medications in the United States to other countries. For example, $250 in the US can buy you two Qvar inhalers, while in Greece for the same amount of money you can get 37. Another example is what $250 can buy you of Colcrys pills, 51 in the US, which doesn't seem like all that bad of a number, until you see that for the same $250 you could have had 9,153 pills in Saudi Arabia. Users of these drugs have no choice but to pay the exorbitant prices because they simply want to be able to breathe comfortably.

The article tells the story of John Aravosis, who picks up inhalers while on vacation in Paris because it's the only way he's able to not skip or scrimp on dosage, like many other Asthma patients are forced to. The demand for these drugs is inelastic, people can skip or scrimp, but it's at the risk of having an attack that might land them in an emergency room. Generics are almost impossible to make because of the patents on the delivery methods and formulas. The FDA also finds it hard to approve the new formulas because it's hard to see the effects deep in someone's lungs. The US has incredibly high prices on potentially life-saving Asthma drugs, which needs to change.

A follow up article focuses on helping consumers shop smarter for their medications. It focuses on websites like goodrx.com where consumers can see local prescription prices and coupons for them. For example, the author of this article looked up her inflammatory medication and saw that instead of $20 with her insurance she could get it at Target for $4.  A similar website is medibid.com which allows physicians to bid on a patients procedure, hoping to get the business with their lower rate. For example, the Weber family was quoted $14,000 for a knee surgery in Tennessee, so they took to MediBid and ended up paying on $3,700 in nearby Virginia. There are now ways for consumers to not be totally taken advantage of by the healthcare system, and hopefully this is just the beginning.