$126,000 Hospital Bill and Medicare

This story was originally posted in 2011.

My client was shocked by his $126,000 hospital bill.

When you spend the night in the hospital, you would assume you had been “admitted” to the hospital – but you could be wrong.  And this definition of your status could cost you thousands of dollars if your Medicare Advantage plan has a 20% co-pay for “outpatient surgery”.

I met last week with a man who went to Northwest Hospital to have stents put in his coronary arteries. Ralph spent about 24 hours in the hospital and he was  in a bed, in a room, overnight. So you would think he had been “admitted” to the hospital.

Ralph gave me copies of his bill from Northwest Hospital that showed his 24-hour stay cost $126,241.67!!!!

The biggest charge was $13,148 for “cardiology” services – and this charge was repeated 5 times on the bill.  I’m figuring he got five stents. The bill included a $3,049.01 charge for an “observation room”. And this “observation room” charge is why Ralph got burned.

Ralph didn’t have to pay that hospital bill.

The good news for Ralph, who is 86 years old, is that his Medicare Advantage plan had to pay only $14,093.04 of the $126,241.67 hospital bill. This is because Medicare sets the price for each service, and $14,093.04 was the total of “approved” charges associated with Ralph’s 24-hour hospital stay – or rather, his observation stay.

The $126,241 bill is a made up number – unless you don’t have insurance. Then this outrageous number is your starting point for negotiating how much you will pay for the medical care you received. This story is really about Ralph’s Medicare Advantage plan.

The bad news for Ralph is that his Medicare Advantage plan requires him to pay 20% for “outpatient surgery”, so he had to pay $2,814.48.

Medicare Advantage plans have a set co-pay for in-patient hospital care, which is $295 per day (days 1-5) in Ralph’s plan. So I would have thought his bill would be $590. But because the bill says he was in an “observation room”, Ralph had to pay a lot more.

Something to consider with Medicare Advantage:

What is the charge for “outpatient surgery” in your plan, or the plan you are considering joining? Most plans have a set fee of $150, $175, or $275 dollars for outpatient surgery or services. But Ralph’s plan says he must pay 20% for any outpatient surgery or diagnostic tests.  So he is stuck with a big bill because of how his Medicare Advantage plan is designed – and because Northwest Hospital never admitted him.