The Billing Syndicate: Exposing America's Healthcare Cartel

If you recognize the logo on your card, you are their profit.

In an era where transparency in healthcare is still more slogan than policy, the jumble of medical billing and insurance negotiations remains a bewildering puzzle to Americans.  Recent discussions and investigations by mainstream media have begun to peel back the layers of this onion, revealing the interplay between insurers, intermediaries, and healthcare providers.  I applaud the New York Times for tackling the issue in this morning’s Sunday edition.  Insurance Companies Reap Hidden Fees as Patients Get Unexpected Bills. And here. It was a laudable effort – but much more is needed.  Among the revelations, the practices surrounding out-of-network charge negotiations and reference-based pricing (RBP) stand out for their complexity. 

At the heart of this system are entities like MultiPlan, which negotiate out-of-network charges on behalf of insurers.  They operate within a framework that ostensibly aims to save money for employers by lowering the costs of medical bills.  However, the methodology for achieving these savings is where the waters muddy.  Intermediaries charge a fee based on the savings they negotiate or a percentage of the billed charges, often without a cap on these fees.  This has led to situations where companies can save millions at the expense of an opaque system that enriches these intermediaries to a staggering degree. 

I’ve seen cases whereby the original, inflated, fictitious charge of $1 million is negated down to $75,000.  However, the “savings” entity charged 12% of billed charges.  Hence, they collected $120,000 on the same surgery on which the hospital was ultimately paid $75,000.  Sure, the combined price tag of $195,000 is a much better deal for the employer or insurer than the $1,000,000 original price tag.  But it is still a bold scam. 

This model has evolved into a healthcare cartel, with rules designed to profit those at the top of the financial food chain.  The comparison to a mobbed-up operation is not made lightly.  The BUCA (Blues, United Healthcare, Cigna, and Aetna) Government-Hospital Chain Complex overcharges so brazenly that intermediaries can extract enormous profits under the guise of cost-saving while the government can systematically underpay for the same services via the Medicaid program.  This systemic exploitation of billing practices highlights the chasm between the rhetoric of patient care and the reality of American healthcare.   

A sidebar on Medicare and Medicaid:  I’ve had numerous hospital and medical group clients over the years.  Overwhelmingly, the Chief Financial Officers at those entities explain that they can, in fact, make money on Medicare reimbursements.  It may require belt-tightening and efficiency enhancements, but it is fundamentally possible.  It is Medicaid, which, depending on your state and locality, regularly pays 20% less than Medicare, where financial stability becomes nearly impossible. 

In a recent article by economist, Dr. John C. Goodman, he shared the following, which I thought was a succinct and impactful summary of Medicaid in America: 

It doesn’t take too much imagination to understand that if you give money to impersonal bureaucracies, it is more likely to be spent in ways that benefit bureaucrats rather than in ways that benefit poor families.

Studies show that Medicaid enrollees value Medicaid as little as 20 cents on the dollar. That means that they would in principle sell their Medicaid insurance if you offered a cash payment equal to as little as one fifth of the program’s actual cost. …

Medicaid insurance causes people to increase their emergency room visits by 40 percent.

I’ve come to realize that if you recognize the logo on your insurance card, you are their profit, and you are being fleeced.  It really is that simple. 

The out-of-network or RBP without caps savings scheme is akin to a leaky roof repair service that charges based on potential rather than actual damage.  They bill you on how much water could have gotten in.  In a more just system, such practices would be unthinkable.  Yet, in healthcare, they are not only accepted but normalized.  While some players in the out-of-network negotiation or RBP sphere do place a per-claim cap on their fees, others operate with virtually no limits, raising questions about ethics and fairness in healthcare billing. 

Interestingly, MultiPlan's subsidiary, HST, is noted for not engaging in this practice of uncapped fees, suggesting a path towards more equitable billing practices.  Yet, this is the exception rather than the rule in a system rife with conflicts of interest and perverse incentives. 

The impact of these practices extends beyond the financial.  They contribute to a system where patients and employers are left navigating a maze with moving walls, uncertain of the true cost of healthcare services.  The opacity of billing and the complexity of insurance negotiations serve to disempower those the system is supposed to serve.

Calls for reform have grown louder, demanding transparency, fairness, and a system that prioritizes patient care over profit.  However, the path to change is fraught with obstacles, from entrenched interests to the sheer complexity of unraveling the current billing practices.  Achieving meaningful reform will require a concerted effort from policymakers, industry stakeholders, and the public.

The spotlight on these practices by mainstream media is a step in the right direction, offering a glimpse into the inner workings of a system in desperate need of overhaul.  Yet, shedding light on the issue is only the beginning.  The challenge lies in translating this awareness into action, dismantling the healthcare cartel, and building a system that is transparent, fair, and truly centered on patient care.

How do you do it?  You opt out.  Employers have the power to say no to the sham of national carriers and build a truly free, partially self-funded health plan with direct contracts with doctors, hospitals, and prepaid options for planned surgeries.  We then use reference-based pricing for those extensive out-of-network procedures, and we pay a more than reasonable 120% to 200% of Medicare’s reimbursement rate to those providers and facilities, allowing them to make a fair and transparent profit as opposed to the 250% to 900% extorted from you by those logos you recognize. 

They are the largest lobby in the U.S. 

Healthcare is the largest employer in the U.S. 

Politicians bend the knew whenever they dangle their millions. 

Your only chance is to minimize what you buy from them and eventually buy nothing. 

#HRA

#HSA

#ReferenceBasedPricing

#DirectPrimaryCare

#NoSpreadPBMs

#CashPayServices

#MedicalTourism

#NoPrivateEquity