Bizarre defense against runaway prices

Kaiser Health News profiled a small benefits consulting firm which advises its clients to not contract with local providers, and to simply not pay the billed amount. On one hand, since an individual agreed to be treated by the provider, either the individual or the relevant insurer would be liable for whatever the provider charged. That's one of the usual motivations for insurers to contract with providers (to limit their financial exposure). On the other hand, the billed amount is frequently understood as unreasonable by both industry insiders and outside observers. The actual amount that is agreed upon by providers and insurance companies (called the "allowable amount") is often a small fraction of the "list" price (also known as the chargemaster price). Surprisingly, a judge in Georgia ruled in favor of the benefits consulting firm.

Not being a lawyer, the legal arguments of the decision were a bit difficult to follow. However, the heart of the ruling seems to revolve around what is considered reasonable. It seems that since providers frequently accept much lower rates for Medicare patients, the chargemaster price can be considered unreasonable. This approach seems risky and bizarre and I'm curious as to how well this approach will hold up in other cases and in other states. Despite the legal victory, it seems that it would still be unpleasant to be a patient (who gets notified of the responsibility to pay the remainder of a large bill, and have to wait for other companies to fight it out).

It is unfortunate that the industry has evolved to such a point that even determining the amount owed is so difficult to assess. But, then again, as the consulting firm points out: "How can employee-patients consent to prices they will never see until after they've been discharged?" The dramatic rise in healthcare prices has been forcing a number of these types of conversations. Hopefully, the industry will evolve to a point where tensions like these can be resolved in a more constructive manner.