Now, sitting with Deirdra Young, I dove into my stacks of paper and asked her to explain it all to me. I started with that bill for CHOP’s radiology services of $71 that had been adjusted down to $56. Deirdra looked at it, then patiently explained what I now know to be the First Rule of the American Health-Care System: Insurance companies don’t pay retail.
“Your insurance plan has some kind of contractual agreement with us, where we’re going to adjust your charges by a certain amount,” she explained. So United Healthcare gets its own set of prices — prices that don’t have much to do with what’s on the bill? An X-ray isn’t $71, it’s only $56? “Right. We have contracts with different payers. And the contract may say — I’m trying to make this as simple as possible — that for this procedure, we’re going to give you a 10 percent or 20 percent discount. It varies by contract.”
This little bit of information — which maybe you knew but I didn’t — helped clear up the confusion on a number of Sarah’s bills. Her anesthesia bill was $1,326, but thanks to the discount, we only owed $1,060. The surgery bill was $3,235, but the discount knocked it down to $2,059. The more bills Deirdra and I went over, the more I started to feel proud of my insurance company: Look at you, United Healthcare, all gettin’ me a deal and shit.
I moved on to some of the statements I’d gotten from United that didn’t seem to match up to any bills from CHOP. It was then that Deirdra taught me the Second Rule of the American Health-Care System: There are a ton of bills and charges that we, as consumers, never see. For instance, Sarah’s Kobe beef bill — the $19,000 in miscellaneous services? Turns out I’d never gotten an actual bill from CHOP for that because United Healthcare was picking up the tab.
This made me feel pretty good, but out of curiosity, I asked Deirdra just exactly what those $19,000 in charges were for. She called up Sarah’s account on her computer. “All of this,” she said, turning the screen so I could see it. The charges were now broken down by 12 different “revenue codes.” For instance:
Pharmacy — General $1,978.97
Emergency Room — General $554
And while to me these charges seemed monolithic, Deirdra further explained that there was an itemized breakdown for each one. A moment later, her screen filled with line after line of charges that looked like the federal budget. I asked her if she could print it all out for me. She raised her eyebrows. “You’re not going to understand what these abbreviations are. You’re fine with that?”
“I’m fine with that,” I said. She handed over a printout, and I realized she was right. Most of the line items — 95 in all — were gibberish. Thiopental, $53.25. Endo Stapl*, $547.19. Finally I saw one I thought I could understand: Hot Pack, $36.
For the first time in the entire process, I realized, I was seeing Sarah’s actual bill. This was the full accounting of everything that had been done to my sweet little daughter.
What was truly fascinating, though, was that this list of charges was more or less useless. Of the $19,000 in miscellaneous charges, my insurance company had paid only $4,954. “It’s the contract,” Deirdra explained. In fact, while the total charges for Sarah’s stay were $28,738, United and I only paid about $12,000 ($9,136 from United, $3,233 from me). Sixty percent of the charges vanished into thin air.
Figuring out just what an insurance company pays for and what it doesn’t isn’t cheap. Physicians for a National Health Program, a group pushing for national health insurance, says paperwork and bureaucracy account for nearly a third of every dollar we spend on health care — and that streamlining the system could save nearly $400 billion per year.
At CHOP, more than 60 people work for Deirdra Young in her department. She has them divided into different groups, each one working with a different insurer, since each insurer has its own peculiar codes and ways of doing things. “In this business, you have to have a good relationship with the payers,” Deirdra said. “We meet with them every four to six weeks, and we have spreadsheets, and we look at what are the denials, is your system set up right, did something change.”
I asked: Does she ever wonder if there’s a better way to do all this? She laughed. “Some days I do say that — when I look at some of the issues we have. Can’t we just keep it simple? But I don’t think we’re there yet. It would be good if we had one system, one payer. I just don’t think we’re there.”