Hospitals Dismiss Significance Of Chargemaster Prices?

Victor Lustig

“Percentage of savings fees is the greatest fraud foisted upon consumers since Victor Lustig sold the Eiffel Tower in 1925.  To earn 24% of an inflated, arbitrary number that no one ever pays is better than robbing a bank.”

By William Rusteberg

Hospitals dismiss the significance of chargemaster prices? (See link to article below). That is purposely misleading. Chargemaster prices are extremely significant giving rise to a billion dollar business for intermediaries such as insurance companies, audit firms, law firms, claim re-pricers, third party administrators, insurance brokers and consultants.

The scheme is tied up in “savings” to be realized through the difference between arbitrary and unreasonable chargemaster prices and what is actually paid. The quantative differential can be enormous.

Percentage of savings fees is the greatest fraud foisted upon consumers since victor Lustig sold the Eiffel Tower in 1925.

It is clear to all that chargemaster rates are “totally around the bends.” No one will disagree with that. Yet many ancillary industries, given rise by our current health care delivery system including managed care companies, audit firms, third party administrators and others depend on chargemaster pricing without which they could not survive.

If the average differential between chargemaster pricing and the actual price paid is 50-80%, there is a lot of “money” contained in the “spread” to be earned. Many PPO networks, for example, will charge 30% of savings for out-of-network claims (30% of 80% is 24%). To earn 24% of an inflated, arbitrary number that no one ever pays is better than robbing a bank.

The intermediary class of the American health care delivery system benefit from higher chargemaster rates along with higher discounts. The higher the “cost” and the greater the “discount”, the more they earn. Stockholders bet their investment on that. A look back on BUCA stock prices since the ACA proves this point. The ACA’s minimum loss ratio mandate would make Lustig blush.

A well-oiled conspiracy requires sharing.  Commonly formed side-agreements plan sponsors never see are forged between willing partners behind closed doors, driving up health care costs disguised as “medical inflation”.

Thus, hospital chargemasters have fueled the fortunes of many health care intermediaries. And the scheme continues.

http://www.fiercehealthfinance.com/story/hospitals-dismiss-significance-chargemaster-prices/2013-02-25

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