Friday, March 7, 2014

A perverse incentive, illustrated.

Back in November, I suffered a mental health crisis, and wound up in my local county hospital's psychiatric emergency room. I'm still dealing with the paperwork and financial fallout from that, which is a distinctly suboptimal state of affairs, but I've just realised that there is in fact a perverse incentive operating here; it's in the hospital's interests to suck at accounting.

Now I should mention that part of the delay was due to their billing the wrong insurance provider (in most US states, Blue Cross and Blue Shield are in fact one and the same, while in California they are NOT the same; I have Blue Shield insurance, they initially attempted to bill Blue Cross, and naturally got an answer of "Who's he? Never heard of him." when they provided my name. The fact that they somehow managed to overbill by two orders of magnitude, leading me to suspect a failure to hit the button that puts in a decimal point, is a mere bagatelle) but still, one might expect things to be done promptly.

Not so, unfortunately; it's more in their interests to drag things out so that the patient wants this to just be over, and stops scrutinising the bills they receive. It's also in their interest to be distinctly less than wonderful at actually connecting payments to services.

You see, once they finally managed to bill the correct insurance company, they were paid promptly. Unfortunately, their accounting system is apparently a mess; the payment for $x-100 (since for this service, I have a $100 co-pay) didn't actually get applied to the account for my services, so when they generated a bill for me it was for $x, not the $100 it should have been for. Had I not been a good boy and kept my insurers' notifications of payments made, this might have slipped by me; they'd have ended up with $2x-100, instead of $x. When x is the thick end of a grand, it becomes clear that it's very much in the hospital's interests to suck at matching up payments with accounts.

I don't have a plan to fix the broken healthcare "system" in the USA, but I very much feel that perverse incentives like that are a big part of the problem.

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