Payments, pricing info, paperwork may contribute to costs, confusion

The way doctors, hospitals and other health care providers are paid creates a so-called "perverse incentive" to order more and more medical services, even when those services do not contribute to better health, according to researchers for Dartmouth's Atlas of Health, CNN's investigations unit reports. The report explores a lawsuit filed against a physician-owned hospital in McAllen, Texas, by one of the physician-owners. The suit says the hospital barred the doctor from seeing patients there after he complained about the hospital's business practices, which include performing unnecessary tests on neonatal patients, he says. Some of the tests drive up costs and increase the hospitals earnings, but do nothing for the patients, the doctor told CNN. The hospital denies all allegations and an official said, "insists that it is patient care, not profit-making procedures, that is the secret of the hospital's success" (Hyde and Griffin, 2/10).

Another possible problem with medical payments is that they can make it very difficult for patients to find the best price for elective medical procedures. The Akron Beacon Journal reports that one Ohio couple attempted to find a better deal on a cardiac stress test but found hospital representatives couldn't always tell them in advance what the charges would be. "Unlike comparing the price of a new car or refrigerator, health-care consumers are discovering it can be nearly impossible to comparison shop." Online tools provided by insurers and state laws help with some common procedures, but do not illuminate the prices for others (Powell, 2/11).

But, consumers aren't the only ones who sometimes struggle to get information. Insurance trade groups will announce a pilot program in New Jersey they hope will curb health spending by reducing their industry's administrative costs, The New York Times reports. "The effort is aimed at one of the most vexing problems in the nation's insurance system: hospitals and doctors spend enormous amounts of time and money trying to determine whether a patient has coverage or why a claim was denied. Tens of billions of dollars each year are said to be wasted because of such administrative inefficiency." A single Web site will guide 700 providers to insurance information about their patients under the pilot (Abelson, 2/10).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.