[jihoon796]

The lack of transparency is due to perverse incentives in the healthcare system stemming from overly complex legislation.

As a country, the US hasn't decided whether healthcare is a fundamental right or privilege. As a result, we constantly make political decisions that straddle the line without ever really going one way.

The biggest culprit is the "fee-for-service" model of reimbursement, where healthcare providers (physicians) are reimbursed based on the quantity of care rather than patient outcomes. Each procedure has a code (CPT) that is used to bill insurance. Billing for each of these codes is completely arbitrary and up to provider/payer negotiations. The fee-for-service model is a clear example of a perverse incentive.

Who reimburses the fee-for-service model? Either the government (Medicare/Medicaid isn't even entirely government-run, as many states rely on a for-profit Medicare Administrative Contractor) or private health insurance companies. The perverse incentives can now be seen from both the provider's side and the payer's side: hospitals and physicians negotiate to get the best reimbursement rates that they can. And of course, because these insurance companies want to make money, they make it "difficult" for providers to get paid for each procedure and will find any reasonable way to deny the claim from going through. Because of this, providers artificially raise the amount charged to the payers as high as they think they can get away with in the hopes that insurance will pay up.

Meanwhile, patients suffer greatly as there's no transparency.

[wmccullough]

I cannot divulge my sources, so take it for what it is, but in talking with people at the top of several very large private insurers (as far back as 2016) they were sick of how providers weren't healing people and bleeding them out.

I've seen evidence (firsthand) that value based care can work, but it's hard to get provider networks on board when they are the ones who aren't getting paid when readmission rates are too high.

[r00fus]

Insurers are part of the racket. At least that's how it feels from a consumer point of view.

[outside1234]

Insurers essentially get a cut of the overall revenue, so they perversely win the more overall is spent.

[Brakenshire]

> The biggest culprit is the "fee-for-service" model of reimbursement, where healthcare providers (physicians) are reimbursed based on the quantity of care rather than patient outcomes.

Charge a hospital based on patient outcomes? How would that work?

[Nasrudith]

Say getting a base ammount per problem fixed or identified to some standard say $20k for solving severe stomach ulcers with bonuses for things like not having any longterm damage, minimal patient suffering and such. It doesn't matter if they use cheap antibiotics or surgery or how many screening tests were performed in that hypothetical.

Granted there would be major devils in the details especially if it causes "underwater" patients.

[randerson]

Except not every patient can be fixed. Doctors would be incentivized not to take on really sick patients or those with mystery illnesses.

[cannabisceo]

That's exactly what would happen. In a university hospital setting it's the most experienced physician that takes on the most difficult cases.

[datavirtue]

You are way off base. The original WSJ article has links to other articles detailing how hospitals merge themselves into a monopoly that has to be accepted by the insurer. The hospital sets the prices. They also go into how these large hospital systems gobble up doctors offices and use the same leverage to increase prices and tack exhoribiant fees--just like the experience of the person you are replying to.

[_57jb]

Not off base at all. Their description of the perverse incentives was very accurate.

I had worked as an engineer and was closely aligned to the fraud division for one of the larger insurers some time ago.

[carbocation]

I mean, you are both pointing out things that exist, are happening, and are problematic.