Oh, what a tangled web we weave ...

• Author: Eck, Alieta
• Position: Medicine & Health

NOTHING could be more confusing than fees charged by hospitals and doctors. There are many reasons why hospitals would like to keep it that way. I remember sitting in a hospital staff meeting and hearing about negotiations to merge two hospitals that were about a mile apart. The argument was that bigger is better, and a merger would put the hospitals in a greater "bargaining position" to get higher fees. I recall thinking that monopolies are not a good thing for the consumers, and that competition drives prices down--but this was not about patients, who are the real consumers. It was about the ability to strong-arm higher fees from the largest payers, insurance companies and government programs. Patients merely were pawns to be moved around by powerful interests. Something seemed awry in our houses of mercy.

One big reason that patients are paying more for medical care is Preferred Provider Organization Networks (PPOs). Patients assume that choosing an "in-network" doctor will provide VIP status, getting higher quality and better rates. However, the opposite often is true. Physicians join PPOs to get a better payment rate--definitely more than they charge cash-paying patients. If patients have high-deductible insurance and have to pay the final bill anyway, they are guaranteed to pay more than they would have without the insurance--some value for those high premiums.

PPOs often pay their doctors two to three times what Medicare pays, but it still looks like a significant discount on the explanation of benefits because the chargemaster or sticker price for services is inflated astronomically.

So, why would insurance companies want premiums to go up? That is an easy one--they get to keep more money. In a real competitive market, patients would shy away from more costly plans but, if they all seem to rise in tandem, consumer choice simply means choosing which logo should go on the insurance card. This is what happened when ObamaCare insisted on telling insurance companies what they had to cover--from mammograms to colonoscopies to sex-change operations. Since they could not charge more for offering better quality, the obvious incentive was to offer less, say by excluding the best cancer centers from the network.

Then, in the name of cost savings, the Patient Protection and Affordable Care Act created entities called "Accountable Care Organizations." In the ACO, the payment comes in at the top and trickles down to patient care. Theoretically...