by ageitgey | 2025-10-28 17:48:32+00:00
> I'd be interested to hear from a charge coding expert about Claude's analysis here and if it was accurate or not. There's also some free mixing of "medicare" v.s. "insurance" which often have very different billing rates. The author says they don't want to pay more than insurance would pay - but insurance pays a lot more than medicare in most cases.

I'm a cofounder of Turquoise Health and this is all we do, all day. Our purpose is to make it really easy to know the entire, all-in, upfront cost of a complex healthcare encounter under any insurance plan. You can see upfront bills for many procedures paid by various healthcare plans on our website.

The information posted in the thread is generally correct. Hospitals have fictional list prices and they on average only expect to collect ~30% of that list price from commercial insurance plans. For Medicare patients, they collect around 15%. The amount the user finally settled for was ~15% of the billed amount, so it all checks out.

The reason for fictional list prices (like everything in US healthcare) is historical, but that doesn't make it any more logical. Many hospital insurance contracts are written as "insurer will pay X% of hospital's billed charges for Y treatment" where X% is a number like 30. No one is 'supposed' to pay anywhere near the list price. Yes, this is a terrible way to do things. Yes, there are shenanigans with logging expected price reductions are 'charity' for tax purposes. But there isn't a single bad guy here. The whole system that is a mess on all sides.

Part of the problem is that the US healthcare billing system is incredibly complex. Billing is as granular as possible. It's like paying for a burger at a restaurant by paying for separate line items like the sesame seeds on the bun, the flour in the bun, the employee time to set the bun on the burger, the level of experience of the bun-setter (was it a Dr. Bun Setter or an RN bun setter?), etc. But like the user said, some of these granular charges get rolled up into a fixed rate for the main service.

However, the roll-up rules are different for every insurance contract. So saying the hospital 'billed them twice' is only maybe true. The answer would be different based on the patient's specific insurance plan and how that insurance company negotiated it. Hospitals often have little idea how much they will get paid to do X service before it happens. They just bill the insurance company and see what comes back. When a patient comes in without insurance, they don't know how to estimate the bill since there is no insurance agreement to follow. So they start from the imaginary list prices and send the patient an astronomically high bill, expecting it to be negotiated down. In some areas, there are now laws like 'you can't charge an uninsured patient more than your highest negotiated insurance rate' but these are not universal.

If you find yourself in this situation, there are good charities like 'Dollar For' that can help patients negotiate this bill down for you. We are trying to address this complexity with software and have made a lot of progress, but there is much more to do. The government has legislation (the No Surprises Act) that requires hospitals to provide upfront estimates and enter mediation if the bill varies more than $400 from that amount. But some parts of the law don't have an enforcement date set yet, which we hope changes soon.