Chargemasters Costing Americans Essay Example
Chargemasters Costing Americans Essay Example

Chargemasters Costing Americans Essay Example

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  • Pages: 4 (1088 words)
  • Published: May 29, 2017
  • Type: Case Study
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The charge-master is a comprehensive record of charges for procedures and supplies utilized in hospitals, with a significant influence on healthcare payment systems in the United States. It determines the costs of medical services for every American. Usually, each U.S. hospital has its own charge-master that undergoes regular updates, occasionally even multiple times per year (Reinhardt, 2013).

There is no standardized approach for updating charge-masters. Various hospitals employ different methods, such as uniformly raising all prices or separately updating prices and procedures with varying percentages. This inconsistency makes it difficult to ascertain the overall percentage increase in a hospital's prices. In general, this process appears peculiar and lacks external regulations, resembling a kind of madness in pricing services and supplies.

Hospitals have historically kept their charge-masters, price lists for healthcare services, as confidential information (Reinhardt, 2013). These li


sts determine prices based on factors such as healthcare expenses, market demand, and the necessity for profitability to support facility investments.

In an e-mail to the Huffington Post, Robert Laszewski, a former health insurance executive and President of Health Policy and Strategy Associates based in Alexandria, Va., highlighted that hospitals have started raising their prices in anticipation of negotiating prices with private insurance companies. This was also driven by their aim to maintain their revenue streams. Laszewski further noted that prices have consistently increased over the years to the extent that they are no longer justifiable, with charge-masters becoming increasingly detached from reality (Huff Post Business, 2013).

The healthcare system in the United States exhibits inconsistency, with diverse prices for crucial medical services across states, regions, and hospitals. These variations seem to lack a clear rationale as hospitals charge significantly disparate amount

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for identical medical procedures. The New York area specifically demonstrates this incongruity when it comes to treating chronic obstructive pulmonary disease (COPD).

In 2013, the Huff Post Business reported that Bayonne Hospital Center in New Jersey charges $99,689.00 per patient for treating a specific disease, while Lincoln Medical and Mental Health in the Bronx only charges $7,044.00 per patient for the same disease. The mentioned database provides detailed information on the charges imposed by most hospitals in the U.S for the top 100 common inpatient procedures billed to Medicare. It includes claims files from fiscal year 2011 and covers 163,065 individual recorded charges at 3,337 hospitals located in 306 metropolitan areas.

Hospitals have tried to downplay the significance of charge-masters, but the act of charging different prices to different payers for the same healthcare services and goods is considered price discrimination. Although not explicitly declared illegal under the Sherman Antitrust Act and the Robinson-Patman Act, this practice comes very close to being so.

There are important and widespread variations in costs that have a significant impact on the rising expenditure of healthcare. These variations affect the amount paid by each person with health insurance. The expenses covered by private health insurance companies for services and medical care determine this cost, which is subsequently transferred to consumers through increased premium costs, deductibles, and co-payments.

This practice places a greater burden on the approximately 49 million uninsured individuals in America. Only these patients are likely to observe the genuine prices indicated on official price lists or charge-masters on their invoices. These elevated prices impact nearly all healthcare seekers, resulting in inefficiencies within our system due to the presence of inconsistent prices.


the fact that unexpected health bills are the main cause of financial ruin for many American families, hospitals continue to increase their prices for the services they offer. These prices are not based on actual cost or supply and demand, but on a fee scale that hospitals choose. This disregard for their role in inflating insurance and medical care costs has serious and often devastating consequences for the market they are supposed to serve.

Hospitals assert that the prices listed on their charge-masters are not crucial for American citizens as patients do not bear the complete published price. This is applicable to both insured and uninsured individuals, as hospitals accept negotiated payments from insurance companies and offer discounts to those without coverage. Nevertheless, in reality, private insurance companies frequently determine their reimbursements based on these prices, resulting in higher service costs compared to government programs like Medicare and Medicaid. Consequently, this leads to elevated health insurance expenses for individuals and families.

The uninsured are required to pay the complete or partially discounted list price for services, resulting in them paying more than others (Huff Post Business, 2013). However, according to Robert Huckman from Harvard Business School, when hospitals do not receive sufficient revenue from one source, they make up for it by charging self-pay patients - usually those without insurance - the full list price.

Despite receiving significant discounts, individuals who are unable to afford healthcare still end up paying higher prices compared to the government or insurance companies. Lazewski, in his email, acknowledges the charge-master as complete nonsense. However, the prices stated on the charge-master have a significant impact on uninsured individuals who receive hefty bills

and are driven into financial ruin. This primarily affects uninsured Americans who have limited financial resources (Huff Post Business, 2013).

Critics who argue that the charge-master does not affect healthcare expenses because the actual prices are never paid are ignoring the cost of "uncompensated care" resulting from uninsured individuals. Although uninsured patients constitute a smaller percentage of the overall population, estimated at 48 million by the Kaiser Family Foundation, they still significantly contribute to the financial strain associated with uncompensated care, which amounted to approximately $41 billion in 2011.

Even though the national healthcare expenditure of $41 billion is relatively small compared to the total amount of $3 trillion, it holds significance for all individuals as we ultimately bear the cost through negotiated prices for care. The accessibility of this information publicly reveals a troubling issue in the healthcare system of the United States: medical providers establish prices in seemingly irrational manners with minimal supervision and lacking any market motivation to decrease them. They claim that since no one truly pays the official rates, there exists no necessity for price reduction (Munro, 2013).

The pricing of hospitals is not determined by supply, demand, or the actual costs of care, technology, or pharmaceuticals. This arbitrary pricing has led to numerous Americans receiving unexpected healthcare bills and suffering financial devastation. Even those who can afford it question why healthcare prices in the U.S. are higher compared to other countries despite not necessarily receiving better quality care or improved health outcomes (Huff Post Business, 2013). I believe that attaining affordable and high-quality healthcare for all Americans will be a major achievement in the future.

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