New York Times
2 April 2001

Medical Fees Are Often Higher for Patients Without
Insurance

By GINA KOLATA~~When patients go to Dr. Stephen
Brenner, an internal medicine specialist, for a
routine exam, their bills can vary by 45 percent. The
uninsured pay the most and patients with insurance
plans are charged the least.

It is not his doing, said Dr. Brenner, who practices
in New Haven. He explains that it is because health
insurance companies insist on hefty discounts. "It's a
take it or leave it situation for doctors," Dr.
Brenner said. But he said he knew that the insured
paid much less than their share. For the insured, he
said, "it's almost like getting a BMW or Mercedes at
half price."

Other doctors cite more extreme price disparities. A
New York gynecologist says he gets $25 for a routine
exam for a woman insured by Group Health Insurance and
charges $175 for the same exam for a woman without
insurance.

"It's horribly ironic," said Paul Menzel, a professor
of philosophy at Pacific Lutheran University in
Tacoma, Wash. The care of the poor once was supported
by the wealthy and the insured, but now the opposite
is happening, he said. "It is the people who are most
provided for, not the people who are least provided
for, who get the benefit of cost-shifting," Professor
Menzel said.

In a medical emergency, uninsured people can get care,
even if they walk away from their bills. But if it is
not an emergency, doctors and hospitals may insist on
payment, often requiring a deposit in advance. As a
result, some uninsured people struggle for years to
pay medical bills and others put off seeing a doctor
until minor problems become major ones.

Some health policy experts like Uwe Reinhardt, an
economics professor at Princeton University, see the
situation as "brutal and inhumane." But, Professor
Reinhardt said, doctors and hospitals are trapped in
it.

Despite the discounts they have negotiated, some large
insurance companies have had their own financial
troubles lately. For example, Aetna, the nation's
largest health insurer, reported in January that its
fourth quarter earnings had declined by 65 percent.

Mark Pauly, a professor of health care systems at the
Wharton School of the University of Pennsylvania, said
there was no real villain. "I don't think it's exactly
good versus evil," he said, "it's just business." The
problem crept up on them, doctors and hospital
administrators say, after they began agreeing to slash
their prices for health insurers in return for a
steady flow of patients. Then they found themselves
scrambling to maintain their cash flow.

They found an answer with patients outside the managed
care system, like those with fee-for-service plans in
which the patients pay their own bills and are
reimbursed by an insurance company. But the uninsured
also are outside the system, and have no one to
negotiate for them. So they end up charged the higher
prices, too.

Most patients paying the full fare have no idea that
their bill may be many times that of the people next
to them in the doctor's waiting room. And, in
interviews, many doctors said they did not offer
patients information on pricing disparities, however
much they might agonize over the inequities of the
system.

While this may not be a problem for people who can
afford fee-for- service plans, which typically are far
more expensive than other health insurance, it can be
devastating for the uninsured.

"If you're a partner in a law firm you can afford to
pay more than your legal secretary can," said Dr.
Darcy Hansen, an internist in private practice in
Washington. "But," she said, "it's the uninsured who
really falter."

Dr. Hansen said the pattern began about 10 or 15 years
ago when she started negotiating with managed care
companies. "I thought it was the wave of the future,"
she said. "I have a lot of poor patients, a lot of
single moms who don't have a huge income. I thought
that if they could pay $5 for an office visit they
were more likely to come in than if they have to pay a
$400 or $500 bill," she said, referring to the
co-payment, the amount a patient might have to pay
when a managed care company covers virtually the
entire bill.

"Then the fees slowly ratcheted down," Dr. Hansen
said.

In the meantime, she said, with fewer and fewer
patients who pay the full rates, she has no choice but
to keep prices for those patients high. Her take-home
income, she said, is half that of two or three years
ago.

Individual doctors are not the only ones in difficult
straits. Hospital administrators say the same sequence
of events happened to them, with often devastating
effects.

The administrators said their problems began about a
decade ago when insurance companies offered to make
their hospitals "preferred providers," meaning that
patients insured by the companies would go to those
hospitals en masse, if the hospitals slashed their
prices.

It sounded workable - volume in exchange for a
discount. But soon the insurers discovered that their
patients wanted a choice of providers. So instead of
sending all their patients to one hospital, insurers
offered choices. The hospitals were left with the low
prices and without the steady stream of patients.

The next step was for hospitals to compete by offering
even lower prices to insurers, not so much to get
business but to avoid losing it.

Hospitals that tried to hold the line lost business.
Then their revenues dried up. "Now the spiral gets
deeper," said James D. Shelton, the chairman and chief
executive of Triad Hospitals Inc., a chain of
for-profit hospitals and surgery centers.

Mr. Shelton said that he knew the uninsured had been
victims of this situation. But, he said, what are
hospitals supposed to do?

"There's a limit to what these people can pay," Mr.
Shelton said. "But what is the greater good - if the
hospital goes bankrupt and it's the only provider in
the community or if you try to collect every bill you
can within reason and the person goes bankrupt?"

At New York-Presbyterian Hospital in New York, Dr.
Herbert Pardes, the president and chief executive,
said that so few patients were paying undiscounted
rates and the discounted rates were so low that it was
becoming increasingly difficult to provide free care
for poor people who could not pay.

"I like the fact that we help people who are poor,"
Dr. Pardes said. But, he said, the financial pressures
on his hospital are so great that "the last thing we
want is to get a reputation as the place to go for
somebody who's poor."

He recently got a call from a friend at another
hospital who had a poor, uninsured patient who needed
an expensive treatment. Dr. Pardes's friend said his
hospital could not afford to do it. Could New York-
Presbyterian take it on? Dr. Pardes' staff members
advised him to say no, that they already were
accepting too many charity cases.

"I'm left as the final decision maker," Dr. Pardes
said. "I told them to do it. Then I put the phone down
and I started to cry."

"It is a real ethical and personal dilemma for me,"
Dr. Pardes said.

Kenneth E. Thorpe, the chairman of the department of
health policy and management at Emory University's
School of Public Health, said he thought he knew about
health care prices and the differences between what
could be negotiated and what individuals might be
charged.

Then his sister-in-law, who is 22 and without health
insurance, was hit by a car as she walked along a road
in California. She suffered a head injury so severe
that she was in a coma. Her medical bills soared to
more than $500,000. Yet the man who hit her had no job
and no assets and less than $20,000 in insurance, so
suing him would not help.

She was covered under an uninsured motorist clause in
her father's car insurance policy. Soon her lawyers
started negotiating prices for her medical care. The
insurance company's cap was $300,000 and the lawyers,
working on a contingency basis, would get a third of
whatever the insurance company paid.

"Lo and behold, they got the rate down so that it fit
below the cap," Professor Thorpe said. The medical
charges were reduced to $200,000. That meant that the
lawyers got their maximum amount, $100,000, and the
insurance company paid its full amount, $300,000.

Professor Thorpe said he was startled by how arbitrary
medical pricing seemed to be. "It was a real
eye-opener," he said.

Irene Wielawski, who studied local efforts to provide
care for the uninsured under a grant from the Robert
Wood Johnson Foundation described pricing disparities
in a recent issue of the journal Health Affairs.

When Ms. Wielawski's son needed a hernia operation,
she wrote, her insurance company, Aetna, paid
$3,509.50 for a surgeon, the surgical suite, a
pediatrician, laboratory tests and an X-ray. But an
uninsured Sacramento carpenter she was following as
part of her research also needed a hernia operation.
Hospital officials told him that the surgeon's bill
alone would be $3,000 to $5,000 and that he needed to
make a down payment of $1,500. Unable to pay, he put
off the operation for a year until a charity project
paid for it.

"That happens everywhere," said Dr. Guy Clifton, the
chief of neurosurgery at the University of Texas-
Houston Medical School. "If it's not an emergency and
you can't pay for it, you don't get care."




__________________________________________________
Do You Yahoo!?
Get email at your own domain with Yahoo! Mail.
http://personal.mail.yahoo.com/?.refer=text