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An Insured Woman Was Hit With $20,000 in Surprise Bills After a Trip to a San Francisco Emergency Room. The Prices Were Set by the City.

Blame the city Board of Supervisors for unusually high hospital bills.

Ingram Publishing/NewscomIngram Publishing/NewscomLast year, 24-year-old Nina Dang broke her arm in a bike riding accident in the city of San Francisco. After someone who saw the accident called the hospital, an ambulance picked her up and took her to Zuckerberg San Francisco General Hospital, where doctors performed several tests, put her arm in a splint, and provided her with pain medication, then sent her on her way.

Not long afterwards, she received a bill for $24,074.50. Dang carried health insurance—but the emergency room was out of network, and her insurer would only pay $3,830.79, the rate it considered reasonable for the services she received. She owed more than $20,000.

The twist is that the emergency room is out of network for every single insurer, meaning that even people with gold-plated health insurance who ended up there could be stuck with large medical bills.

At first glance, this story, originally reported by Sarah Kliff of Vox as part of a sharply researched ongoing series about high emergency room bills, might sound like a straightforward tale of dubious billing practices designed to take advantage of people in need. As it turns out, however, it is also a story about government price controls, because the unusually high prices charged by Zuckerberg General were set by the San Francisco Board of Supervisors.

Although Kliff didn't mention it in her piece, she noted in a Twitter follow-up that the rates Dang was charged were explicitly determined by the city via an ordinance designed to "determine and fix the proper reasonable amounts to be charged" to people receiving a variety of medical services, from coronary care ($18,424 last year, $19,714 for the 2018-19 fiscal year), to baby observation ($6,408 last year, $6,857 at present), to "reproduction of documents" ($2 last year, and $2 this year).

The San Francisco ordinance is not nearly as thorough a list of medical incidents as, say, the ICD-10 codes put forth by the Centers for Medicare and Medicaid Services—which differentiates between medical problems such as being "sucked into a jet engine" or being involved in an "accident while knitting or crocheting"—but it is fairly comprehensive in laying out different types of potential treatments and the "proper reasonable amounts" that hospitals must charge for them.

The city, in other words, deserves considerable blame for Dang's medical bill. As Kliff wrote on Twitter, "If you're a San Fancisco resident frustrated with how Zuckerberg General is billing, a lot of your frustration should really rest with the city board of supervisors."

I think that's right. But the deeper problem isn't that the rates are too high. It's that the government is setting the prices to begin with. Attempts to mandate prices for medical care almost always lead to headaches and unintended consequences.

Through the 1970s and early 1980s, for example, many states maintained some sort of rate-setting system for hospitals, essentially demanding uniform pricing overseen by the state. The pricing formulas, however, ended up being confusing and inscrutable, even to the state officials in charge of them; large hospitals manipulated the systems for their own gain, and small hospitals responded by demanding that they be paid higher rates. Medicare has struggled for decades to determine proper reimbursement rates, and found that providers often manipulate the system in order to maximize payments, leading to new payment systems and new distortions.

The problem with government-set prices is that they are not really prices; they are based on bureaucratic whims, not the subtle back and forth between supply and demand, which can exist in a world without explicit negotiations, and yes, even in the case of emergency services, where arrangements can be made in advance and pricing models can be developed to account for the possibility of a medical emergency which makes bargaining or shopping around impossible. But a system in which bureaucrats determine prices makes it difficult (if not impossible) for those models to succeed.

The prevalence of employer-sponsored private insurance contributes to this difficulty, but that too is an artifact of a longstanding federal tax policy that privileges employer benefits, artificially lowering the price of health coverage.

The lack of real market pricing isn't the only problem with American health care, but it's a big one, and it affects nearly every aspect of the system, distorting incentives for providers, administrators, and payers, often at the expense of the sick. It also creates incentives for poor medical care and practice, because health care providers—or at least the administrators who organize the systems in which they work—end up serving third-party payers rather than the individual humans whose treatment should be paramount. In Dang's case, the hospital's justification is that it has to make up for the cost of serving the poor and needy through other patients (like her), which is essentially a way of saying that safety net programs pay so little that hospitals have to come up with ways to extract maximum revenue from everyone else.

Dang may well have been taken by a scammy hospital practice. But she was also served rather poorly by government-set prices that ensured her bill would be as unaffordably high as it is.

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  • Fist of Etiquette||

    ...she received a bill for $24,074.50.

    Dang.

  • TwelveInchPianist||

    I see what you did there.

  • Juice||

    Zuckerberg San Francisco General Hospital

    Dang, I didn't know he had gotten that rich and powerful.

  • RabbitHead||

    When you buy naming rights to a city, do you also get to prepend your name to the sports franchises?

  • a ab abc abcd abcde abcdef ahf||

    One doesn't know whether to laugh and point at the poor poor proggie hoisted be her own petard, or to laugh and point at the other poor poor proggies who have been and will continue to be hoisted by their own petards.

    One only has so many fingers.

  • MatthewSlyfield||

    Laugh and point in the general direction of California, that should cover it. If you live in California, you have no reason to be laughing at this.

  • Csaba||

    I wish all of San Francsico had one face so I could laugh in it.

  • Ray McKigney||

    $24K? She got off easy.

  • RabbitHead||

    The bike probably got left behind and vultured too.

  • $park¥ The Misanthrope||

    I didn't really need a reason to not go to San Francisco, but thanks for providing one anyway.

  • Brandybuck||

    When I was a kid and broke an arm, my dad paid the doctor out of cash that was in his wallet. When my cast broke because I was a kid and was rambunctious, my aunt the nurse just picked up a couple of rolls of plaster from work and fixed it.

    What's the point of the story? Dunno. But my dad sure as hell didn't pay $20,000 or the equivalent to a hospital. We went to GP's office and he fixed it on the spot. Who the hell needs an ambulance for a broken arm? If it's not a compound fracture it's pointless. If you're dumb city folk just call Uber. If you're not, call your cousin Bubba to drive you. Simple.

  • Trainer||

    Same here and we were project poor. We always had access to decent health care that my mom could pay for. It wasn't until the beginning of Medicaid when hospitals stopped taking charity cases that things started to get out of hand.

  • retiredfire||

    One of the worst things Reagan signed was EMTALA, which said the poor must get free ER care and the hospital had to pick up the tab.
    That means the unfortunate slobs, who can afford it, get hit with paying for all the freeloaders.
    You can bet SF General Hospital - as it used to be called - gets lots of freeloaders.
    It is probably why most insurance doesn't consider SFGH as in-plan.

  • DarrenM||

    I live in San Diego My son broke his wrist. I drove him to the emergency room, so no ambulance. The bill was $7500 total, but insurance contracted for about half that and paid it. I just paid the $200 co-payment. Over $20K for this is criminal.

  • Agammamon||

    And if it weren't San Francisco she'd not have paid that much either.

    Broken arms - except compound fractures requiring surgery - rarely hit 5k elsewhere. I can see a bone set in an emergency room (vice an 'ambulatory care center', an emergency room for non-life-threatening emergencies) hitting the 3ish k the insurance company paid out but 24k? That's insane unless they had to rebuild the arm.

  • postlarval||

    I'll bet AIDS patients get EVERY PENNY covered in the butthole called San Francisco.

  • Bubba Jones||

    This is standard practice.

    On the advice of our pediatrician, we took our daughter to an urgent care clinic for an IV. They assured us that they "take" our insurance.

    Well, yes, but they are out of network (for one of the largest insurance providers) and after getting a couple thousand from the insurance company, they balance billed us for a few hundred more. For an IV.

  • juris imprudent||

    I absolutely love that Bubba commented immediately after his name was invoked.

  • Sevo||

    The SF gov't carries more of a burden for this than the article claims:
    SF spends $250M/year to attract bums to live here. And SF is trying to double that.
    Ignoring the bullshit claim that we can save money by spending more on bums, here's what bums cost in medical terms:
    https://www.centerforhealthjournalism.
    org/resources/lessons/million-dollar-
    homeless-patient
    "Angelo Solis is a chronic alcoholic in his late 60s who was homeless for many years in Solano County, California. Solis frequently passed out drunk in public, and police brought him to the hospital emergency room. There, doctors often admitted him to treat his multiple chronic health problems and so he could detoxify safely."
    Angelo's medical bills were nearly $1M in two years, and thank you, Ms. Dang for covering his costs.
    You might speak with your supervisor about issues other than price-fixing next time you get a chance.

  • juris imprudent||

    You can't put a price on the contribution to SF's urban character of those fine citizens.

  • buybuydandavis||

    So much fecal enrichment!

  • LiborCon||

    I've always dreamed of quitting my job, living on the streets, shitting in public and drinking myself to death but it seemed unobtainable. But now, for the cost of a bus ticket, I can move to San Francisco and live my dream. And it comes with free medical care.

  • Johnimo||

    Doesn't really sound like too much fun; you'll have more fun doing anything productive. Write hip poetry.

  • KiwiDude||

    If Friso didn't have all those bums who whould shit on the street?

    You? Those fat cats in Washington? Don't make me laugh.

  • buybuydandavis||

    That's why Reason was right to support Hillary over Drumpf. She did her part to shit on America.
    https://goo.gl/VAmGt3

  • Jerryskids||

    But the deeper problem isn't that the rates are too high. It's that the government is setting the prices to begin with. Attempts to mandate prices for medical care almost always lead to headaches and unintended consequences.

    See, this is why we need free healthcare. Paying for a basic human right is morally wrong, doctors and hospitals should never be allowed to charge for their services and under a government-run healthcare system, quality healthcare would be priceless and unavailable at any cost.

  • Hank Phillips||

    Good point. Huge difference between men with guns setting prices and men with guns deciding who gets to offer services as an oligopsony.

  • postlarval||

    Healthcare is not a right. In a society where everyone contributes, taking care of yourself so you don't need as much healthcare should be an obligation.

    Instead we have a society of fat pigs who expect the healthcare system to bail them out of their self-imposed situation.

  • Sometimes a Great Notion||

    My takeaway from all this is Zuckerburg's hospital sucks as bad as Facebook. Now I caution against assigning causation because of correlation but I also remember his foray into the NJ Public School system was a complete disaster. Has he ever accomplished anything worthwhile?

  • Echospinner||

    All he did was give them money for equipment when they finished building the new hospital. So they stuck his name on it.

    It is the only level 1 trauma center in San Francisco and a teaching hospital. So I would expect them to be a money loser requiring subsidy. Where I live the equivalent hospital is actually owned by the county.

    Something not right about the ED not being part of any networks. That bill just does not add up even with the couple of CT scans they did.

    They are playing shenanigans with the billing.

  • Juice||

    So they stuck his name on it.

    Oh shit, I thought it was just a coincidence.

  • Fairbanks||

    I don't know anything about how health insurers determine their networks, but it seems as though the insurance industry there knows that this facility charges way too much as a matter of course.

  • Echospinner||

    My understanding is the insurance company gives you a set of rates they will pay for each procedure code. You agree to accept that. If there is a bill where they do not pay some of it because of copay or deductible you can only charge for the difference up to the agreed discounted rate.

    The advantage for the doctors group or hospital is all of the people enrolled in Medical Mutual or whatever are now potential patients who may choose to come to you.

    The thing is the ER doesn't count on referrals or preplanned choices. So they figure they will take what they get from insurance and bill whatever they want. They can't do this with Medicaid or Medicare so the people with private insurance get hosed.

    Her insurance paid something but they likely based it on their discount rate they pay in network.

    Ironic because the first Blue Cross insurance plan was an agreement between a hospital in Texas and a teachers union. It was simple. In exchange for a monthly fee the hospital, Baylor I think, would never send you a bill.

  • juris imprudent||

    Just when you think California has hit peak stupid.

  • mjs_28s||

    "—but the emergency room was out of network"

    ???

    Where live insurance is going to cover ER visits the same regardless of where you go.

    Why is hers so different? When you need an ER it isn't like you have the time or ability to make a bunch of phone calls first, thus the insurance companies will (where I live) cover all ER the same. Once you are stabilized and able to be move though is when you need to have yourself moved to an in network hospital for the rest of your stay (assuming you are not walking out of the ER after treatment.)

  • Bubba Jones||

    In Texas, ERs are not required to disclose that they are out of network. It is total bullshit.

  • JeremyR||

    What's the proof that without government setting prices, it would be cheaper? It's more likely it would be even more expensive

  • RabbitHead||

    Not just stupid but like actually having a negative IQ. You are the black hole where intelligence is drained from the discussion.

  • Longtobefree||

    If you have the math savvy, and know how to use a spreadsheet program, look up the cost trends for general medical procedures (regulated by governments and covered/controlled by insurance rules) and lasik eye surgeries (NOT regulated or covered by most insurances) over the last few years.

    Hint: Government bad, capitalism good.

  • Chipper Jones||

    Shocked that the original Vox piece didn't mention the costs being set by the government.

  • n00bdragon||

    This article pretends otherwise but the cost of emergency services is probably one of the few legitimate spaces of local government. If the hospital were entirely private and just happened to put a 24k price tag on an arm cast what would this article say then? Would the exact same outrageous billing scheme be okay because a private entity did it? The issue here isn't that public officials are setting prices. The part that gets people mad is the fact that you can't reasonably comparison shop for hospital care while you're lying on a bike trail with a broken arm. I would bet heavily that neither Ms. Dang nor the bystander who called for help had any idea how expensive Zuckerberg General was and even if tasked with finding that out in a calmer and more lucid setting would find that task daunting at best. Allowing a city to set prices for emergency services is a fine and acceptable solution to that problem. San Francisco has clearly failed in that duty, but not because it shouldn't be doing it.

  • Lawn Darts||

    I once was having a Sunday (of course) dental emergency in San Francisco. I walked in to a local ER to ask if they had any oral surgeons on call. They said no. While they were looking up a referral for me, they took my blood pressure. (Their idea, not mine) Bill: $500. Imagine walking into a clothing store and asking if they have socks. They say "No, but the place next door does. That will be $50." The entire problem with the medical industry is that it is not part of any rational market at all.

  • Fairbanks||

    Your analogy fails. If the clothing store had no socks but they suggested you buy a tie pin, that would be analogous. And if the tie pin cost $500 and you never asked how much it cost before buying it that's on you. Unless I have no alternative and it's an emergency I always ask the price of medical services beforehand.

  • Hank Phillips||

    Something similar happened when my wife's dizzy spell led to the nearest hospital in North Austin, Texas. They made us wait outside for nearly an hour. Finally she was hustled in already feeling better, 3 questions were asked over the space of fifteen minutes. The bill was $4000, or $266 a minute. I took down names and took these to the bureaucracy that licenses these extortionists to practice medicine. Next thing you know they called us to settle for a mere $1200 an hour for doing nothing. Licensed cartels are best dealt with by discussing legal action with the bureaucrats selling the licenses.

  • Earth Skeptic||

    To play devil's advocate (or personal physician), why did you go to the ER? Were you looking for an expert opinion? How much expertise did you want, and what was it worth to you?

  • Nardz||

    Did she at least get an abortion while you were there?

  • DrZ||

    Always remember that un-elected bureaucrats know more than the market knows. For that matter, bureaucrats know more than a wild goose knows which is saying a lot.

  • DrZ||

    One cash-only surgical center charges $4455 for a simple fracture.
    https://surgerycenterok.com/pricing/

  • Echospinner||

    Less for a closed reduction and casting which would be what they did. $1975.

    But they are collecting every cent. The hospital only collects a fraction of what they charge.

    What those docs in Oklahoma are doing I wish them well but the net result is just cost shifting to the hospitals.

  • Earth Skeptic||

    According to an NPR piece I heard today, ZSFC General has two core missions:

    - Serve all the (poor) people, regardless of ability to pay.

    - Maintain the only Level 1 Trauma Center in the city.

    Both of these just might add to operating costs.

    And assuming the socialists in SFC are not running the hospital (or the city) to make a profit, I would guess the hospital breaks even at best.

    So the econotards struggle to figure out how a budget works, and the whole "dollars in--dollars out" does not compute.

  • Echospinner||

    They are also a UCSF teaching hospital so there are costs with that.

  • Sedona Vortex Hunter||

    they are? General is associated with UCSF? How long has this been this case? I don't recall it being so..I am not saying you are wrong, its quite possible that I just don't remember correctly or its changed maybe since I lived there..

    reason I ask is because I grew up there and lived in UCSF student housing while my mom was in med school and I thought general was separate, although my mother did seem to sometimes be working there, so maybe I just remember wrong.

    I remember my mom always reminding me when I got to be a teenager that if I was ever in a car accident or some other such emergency that I request the ambulance take me to general because of the trauma unit. It was sort of necessary to tell a person that because (at the time at least and perhaps still) it was in a sort of bad and dingy part of town that one might try to otherwise avoid.

  • Bill Poser||

    What is the law regarding such bills? When a patient is brought in to the ER, he or she typically has no choice as to which hospital to go to or what services to receive. There is no contract between the patient and the hospital. In the absence of a contract, what the hospital is owed is determined by quantum meruit, is it not? What obligates the patient to pay exorbitant rates he or she has not agreed to?

  • Echospinner||

    One reason why the economics are distorted. Not a box of cornflakes.

    Nothing would have happened that she did not agree to. But not like she really had much choice.

  • buybuydandavis||

    She probably had to sign something the moment she entered the hospital.

    As a matter of law, such contracts are likely unconscionable and therefore unenforceable.

    As a matter of power, I expect that the courts enforce them.

    The medical mafia is a shakedown racket. Hospital prices are set at ridiculous amounts, and you're expected to negotiate your way out of them. The deal you get depends on how much you got and how hard you can and will fight.

  • The Heresiarch||

    If there is a third party involved the hospital would have a statutory lien against that recovery (but even then, the amount of the lien could be disputed).

    Since this is an accident and there's no third-party recovery, they would go after her directly. Almost always there is no written contract, so the claim would either be implied contract or quantum meruit. I've defeated these liens before by simply telling the hospital (or the collection company), "You have no judgment. Therefore, fuck you, my client's not paying a penny." They can't collect without that judgment, and nine times out of ten they won't sue to get that judgment.

  • tommhan||

    So the intent of hospital and government is to just destroy your life.

  • Curly4||

    Someone should check into just much the San Francisco Board of Supervisors get form the hospital and maybe from other hospitals also. It sounds like a pretty good money making racket to me.

  • Intelligent Mr Toad||

    Why doesn't this kind of thing happen in France?

    nytimes.com/2019/01/02/opinion/ [REMOVE THE CARRIAGE RETURN AND THIS CAPS BIT]
    france-united-states-universal-health-care.html

  • Sedona Vortex Hunter||

    I never pay these balance bills, they say they take my insurance then they can deal with what my insurance pays them. I always ask first, before I am treated. I have been sent to collections, but I am not paying 4500 dollars for a imatrex script, sorry.

    Also, I like to balance bill them back. I send them a letter that says the processing fee for me having to deal with an after care balance bill is 448,000 dollars, and that I am happy to deduct my leftover bill from the fee and begin a payment plan for them if needed.

    Seems just as legitimate. Just because you are a 'company' or 'business' does not mean you are the only one who is capable of making up crazy prices to charge the fact. I can do it too.

  • Sedona Vortex Hunter||

    "making up crazy prices to charge the fact AFTER the fact", I meant to type

  • Happy Chandler||

    The city and county set the prices for the public hospital. Duh. Who else would set them? The Board of Supervisors represent the owners.

    There are other emergency rooms in San Francisco. She had the choice of which to go to. The city doesn't set prices for CPMC or St. Mary's or the others. The free market would suggest that unless a patient required level 1 trauma, they would avoid SF General. Why do people still do there?

    The free market does not work for Health Care.

  • chipper me timbers||

    Hard to know for sure, since there is no free market for health care in the USA

    Also, why do you capitalize Health Care?

  • Doug Heffernan||

    Why does this Zuck hospital not participate "in-network" with a single insurance plan?

    That sort of circumstance would seem to have already caused thousands of stories like this one.

    And if even those with gold-plated insurance (probably a lot of people in this area) might suffer huge out-of-pocket expense, those rich folks are the type to raise a huge and politically powerful stink about it.

    This Zuck hospital shouldn't be able to take the insurance payout if they are unwilling to accept it as payment in full. The insurers should hold back any payment until the amount to settle the account is determined by agreement.

  • Dread Pirate Roberts||

    Clearly, it was the patient's fault. She should have made sure to tell the ambulance driver to take her somewhere that her insurance would cover.

  • Dread Pirate Roberts||

    Stories like this are a feature, not a bug. San Francisco politicians hate the middle class. They won't let up until everyone is a billionaire or a hobo.

  • CreamPuff||

    I've now read several articles on this situation and not a single one of them makes any reference to SF's "universal healthcare" for any resident who can't otherwise obtain/afford health insurance (Healthy San Francisco) and whether Zuck's hospital accepts that program's reimbursement rates as payment in full.
    Isn't this situation exactly the sort of scary story proponents of national universal healthcare share to further their cause?

  • Uncle Jay||

    Only $20,000?
    Hopefully she had Obamacare so the price can go up to at least $125,000 and can't choose her doctor.
    That way she can thank the government for their wonderful job they did and the low price she incurred.

  • Echospinner||

    Rethinking this.

    Look at the photos of her and then "after surgery". The article mentions a head and cervical spine CT.

    Her mechanism of injury was bicycle vs motor vehicle brought in by EMS.

    She is a trauma patient by definition.

    By chance she showed up in a major trauma center. Blue team this is your patient.

    I hope she has a fully functional pain free arm for the rest of her days. Her injury was severe enough to require emergent closed reduction and following surgery.

    I have seen other articles here based on vox. They are misleading.

    Market systems are messy. She can negotiate this down
    .

  • House Painter Columbus OH||

    I took down names and took these to the bureaucracy that licenses these extortionists to practice medicine.

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