The Best American Magazine Writing 2014 by The American Society of Magazine Editors

Author:The American Society of Magazine Editors
Language: eng
Format: epub
Tags: LAN008000, Language Arts and Disciplines/Journalism, LCO010000, Literary Collections/Essays
Publisher: Columbia University Press
Published: 2014-12-01T16:00:00+00:00

Mercy’s Bargain

When Pat Palmer, the medical-billing specialist who advises Steve H.’s union, was given the Mercy bill to deal with, she prepared a tally of about $4,000 worth of line items that she thought represented the most egregious charges, such as the surgical gown, the blanket warmer, and the marking pen. She restricted her list to those she thought were plainly not allowable. “I didn’t dispute nearly all of them,” she says. “Because then they get their backs up.”

The hospital quickly conceded those items. For the remaining $83,000, Palmer invoked a 40 percent discount off chargemaster rates that Mercy allows for smaller insurance providers like the union. That cut the bill to about $50,000, for which the insurance company owed 80 percent, or about $40,000. That left Steve H. with a $10,000 bill.

Sean Recchi wasn’t as fortunate. His bill—which included not only the aggressively marked-up charge of $13,702 for the Rituxan cancer drug but also the usual array of chargemaster fees for basics like generic Tylenol, blood tests, and simple supplies—had one item not found on any other bill I examined: MD Anderson’s charge of $7 each for “ALCOHOL PREP PAD.” This is a little square of cotton used to apply alcohol to an injection. A box of 200 can be bought online for $1.91.

We have seen that to the extent that most hospital administrators defend such chargemaster rates at all, they maintain that they are just starting points for a negotiation. But patients don’t typically know they are in a negotiation when they enter the hospital, nor do hospitals let them know that. And in any case, at MD Anderson, the Recchis were made to pay every penny of the chargemaster bill up front because their insurance was deemed inadequate. That left Penne, the hospital spokeswoman, with only this defense for the most blatantly abusive charges for items like the alcohol squares: “It is difficult to compare a retail store charge for a common product with a cancer center that provides the item as part of its highly specialized and personalized care,” she wrote in an e-mail. Yet the hospital also charges for that “specialized and personalized” care through, among other items, its $1,791-a-day room charge.

Before MD Anderson marked up Recchi’s Rituxan to $13,702, the profit taking was equally aggressive, and equally routine, at the beginning of the supply chain—at the drug company. Rituxan is a prime product of Biogen Idec, a company with $5.5 billion in annual sales. Its CEO, George Scangos, was paid $11,331,441 in 2011, a 20 percent boost over his 2010 income. Rituxan is made and sold by Biogen Idec in partnership with Genentech, a South San Francisco–based biotechnology pioneer. Genentech brags about Rituxan on its website, as did Roche, Genentech’s $45 billion parent, in its latest annual report. And in an Investor Day presentation last September, Roche CEO Severin Schwann stressed that his company is able to keep prices and margins high because of its focus on “medically differentiated therapies.” Rituxan, a cancer wonder drug, certainly meets that test.

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