Two-year-old Brigland Pfeffer was playing with his sibs in their San Diego backyard when he was bitten by a rattlesnake.
Ouch! His was one of the
7,000-8,000 venomous snakebites that occur in the U.S. each year. The
N.Y. Times reported a surge in the venomous snake population in Southern California
18 years ago, and 20% of all such snakebites occur in that state. So young Brigland's close encounter may have been a surprise, but it was far from a shock.
The shock came when the bills for Brigland's treatment started rolling in. As reported by Kaiser Family Foundation in this morning's on-line Health News, the final bills totaled "$297,461, which included two ambulance rides, an emergency room visit, and a couple of days in pediatric intensive care. Antivenom alone accounts for $213,278.80 of the total bill."
Despite the 2021 passage of the No Surprises Act, there are a few surprises in the final bills:
- The Pfeffer's health insurer paid a large chunk of these bills, but refused payment of a second ambulance ride that took Brigland from Palomar Health's ER Rady Children's Hospital where he was admitted to the pediatric ICU:
Pfeffer said she received a letter this summer indicating they owe an additional $11,300 for Brigland’s care. While the landmark No Surprises Act protects patients from many out-of-network bills in emergencies, the law controversially exempted bills for ground ambulances.
- Experts who reviewed the hospitals' bills described the charges for antivenom "eye-popping." The "Freakonomics" podcast ran a story on the high costs for antivenom in July of this year. KFF's report provides a useful summary of the story behind the charges. The first clue is in the two hospitals' different charges per vial of the serum:
Palomar [Medical Center Escondido], where emergency staffers treated Brigland, charged $9,574.60 per vial, for a total of $95,746 for the starting dose of 10 vials of Anavip.
Rady, the largest children’s hospital on the West Coast, charged $5,876.64 for each vial. For the 20 vials Brigland received there, the total was $117,532.80. [emphasis added]
What explains the difference?
One explanation is that hospitals mark up products to balance overhead costs and generate revenue. . . .
For instance, Medicare . . . pays about $2,000 for a vial of [the antivenom] Anavip . On average . . . that is the price hospitals pay for it.
Leslie Boyer, a doctor and toxicology researcher, helped found a group that was instrumental in developing Anavip, as well as the other available snake antivenom, CroFab, which dominated the market for decades. In 2015, she published an editorial in the American Journal of Medicine breaking down the “true” cost of antivenom.
Boyer's editorial is well worth reading.
Using cost data collected from factory supervisors, animal managers, hospital pharmacists and other sources, Boyer developed a model for a hypothetical antivenom, at a final cost of $14,624 per vial. She found the cost of venom, included in that total, was just 2 cents. Manufacturing accounted for $9 of the $14,624 total. [emphasis added]
More than 70% of the price tag — $10,250 — is attributable to hospital markups, her research showed.
And then there's the surcharge for legal expenses:
Anavip entered the market in 2018 as the only competitor to CroFab. But its makers settled a patent infringement lawsuit with CroFab’s maker, requiring the makers of Anavip to pay royalties until 2028.
Anavip debuted at a retail price of $1,220 per vial. Boyer noted that the price later rose to cover the manufacturers’ millions of dollars in legal costs.
The reporting on snake antivenom -- from manufacture to treatment to the inevitable legal costs -- gives us a snapshot of the best and the worst features of our healthcare system.
- Best. Brigland's hand, arm, and possibly life were saved because a relatively rare medication was available at two local hospitals, including a pediatric facility, via a healthcare infrastructure (including 9-1-1, emergency transportation with a treatment team on-board). We have a healthcare delivery system (for those who can acess it) that is among the best in the world [cite].
- Not the best. Many if not most rattlesnake bites occur in rural settings far from the world-class doctors and hospitals in a city like San Diego. In a word, the excellence we are so proud of (and pay so much to maintain) is, in geographical terms, spotty.
- Worst. The cost of Brigland's treatment exceeded the median price of a home in 16 states and was close to the median home price in 5 or 6 more. Most of that was for the antivenom medication and most of the charge for that was due to hospital mark-ups. As one commenter told KFF, hospital charges -- thousands of which reside in their chargemasters -- are largely fictitious and are neither regulated nor controlled by any public or private body. As the National Academy for State Healthcare Policy blogged in 2020:
[T]he chargemaster rates hospitals use are nearly meaningless*. . . .
Hospital chargemaster rates are the equivalent of Manufacturers Suggested Retail Price or MSRP in car buying markets. They are little more than the price a seller would ideally like to charge a consumer. Hospitals set their own chargemaster rates – there is no legal requirement or set formula a hospital must follow when establishing the basis between chargemaster rates and costs. As a result, chargemaster rates are unlikely to be accurate reflections of actual hospital expenses.
Recently, The Montana Office of the Commissioner of Securities and Insurance examined the ratio between 10 acute hospitals’ expenses and chargemaster rates.
The state concluded that what the hospitals listed as chargemaster rates for all payers would cover between 192 to 384 percent of the hospitals’ actual costs.
A hospital may also change chargemaster rates at any time – prior notification is not always required – and mark-ups on hospital-purchased services and supplies like durable medical equipment are not disclosed. All of these features make it difficult for public and private payers to use chargemaster rates as a way to establish relevant prices to pay to hospitals. Hospitals instead negotiate discounts off their chargemaster rates with individual and group plans.
In fact, almost no one actually pays the publicized chargemaster rates. The vast majority of health care consumers are represented by a payer of some kind, such as a commercial health insurance company, Medicaid, or Medicare. Commercial insurers negotiate the actual prices they pay during the process of contracting with providers. Medicare and Medicaid establish their own payment levels independent of hospitals’ chargemaster lists – Medicare through the federal government and Medicaid through state governments.
* But chargemaster prices aren't entirely meaningless:
The cruel irony of the chargemaster is that the uninsured are the most likely to be billed chargemaster rates because they are not represented by a payer.
Our healthcare "system," which daily provides the kind of excellent care Brigland received, seems to thrive on financial chaos. Despite the No Surprises Act, the costs of care are higher than any other industrialized country, often unpredictable, subject to substantial variations from institution to institution even within a single city, and frequently unfair.
For Brigland's parents, this episode of care cost them $7,200 (their out-of-pocket maximum) plus $11,300 for that second ambulance ride that their insurer refused to pay. One not-so-minor irony: At the end of the transcript of the Freakonomics podcast about the high cost of antivenom, there was one comment. It ended with this sentence: "Oh, and if you get bitten in Australia, anti-venom is free because we have universal health care! :-)" Ouch, indeed.
