What can $124,597 do for you?

Over the last few months, I've been commenting about the recently-passed healthcare reform bill and the impact that it could potentially have in the market. I'd like to step back now on this post and share just what NCN has been doing over the last few years to address the bills that are coming in today, and what we are doing today to solve the escalating costs of healthcare.  We recently received a bill for $196,597 for a particular facility in Texas. Once we received it, we utilized our cost-based methodology to reprice the claim:

• compare the claim to national cost databases
• benchmark against like claims and facilities
• adjust for severity
• add an appropriate margin for the provider

The claim was repriced to $72,000, and the facility agreed to accept this amount. When I saw this, I immediately said "what could I buy for $124,597?"  Listed below are a few items:

1. Starter home in the Texas market
2. Fund a non-profit and its administrative staff for a year
3. iPads for the whole freshman class at a small liberal arts college
4. 13,000 pairs of shoes for needy children
5. 35,714 gallons of milk

I'm being somewhat facetious about what you could do with this money, but I think it highlights again how irrational our healthcare system is today. To take a bill of $196,597, look at benchmarks, severity adjust, and work with the facility to have them negotiate down to $72,000, there is something wrong within the system. In order to bend the curve on cost increases, we must get back to a rational approach of how to look at facility charges.

At NCN, we are passionate about looking at things from a cost-up perspective and allowing an adequate margin for that provider to make money and deliver the necessary care. It does not make sense at all to look at things from a billed charge basis. As we've shown above, billed charges are irrelevant in the discussion. We firmly believe that any claim that comes in today should never be viewed from a billed charge basis. Charges are irrelevant, inflated and have no correlation to actually what it's costing to deliver care. Nothing will change until we look at things from what they're costing, and building a margin that is acceptable to the provider, to the payer and to the consumer. Only then will we ever be successful in truly having healthcare reform. In all other areas of commerce in the United State this is true, except for healthcare. That must change.