Answer to Question #49624 in Economics of Enterprise for ObiJuru

Question

Why is a hospital bill so hard to understand? Why doesn’t a hospital just post a list of prices like most businesses?

Answer 1

Hospital bills contain lots of codes and descriptions that may be hard for you to understand. That's because medical billing systems are primarily set up to facilitate payment from insurance companies and government programs like Medicare and Medicaid. These payers require bills to be submitted and formatted using specific diagnosis, treatment and supply codes or the bills won't get paid. On one hand, this benefits patients because it makes the claims and billing process easier for their insurance companies and reduces the likelihood of rejected claims. On the other hand, it's hard for patients to understand the exact charges on the bill and what they mean.