Why An Insurance Company Paid $83 For A Cloth Sling

James Dichter, a 59-year-old consultant from Massachusetts, recently had elbow surgery and went home with a sling that cost his insurance company $83. His co-pay was $25, but he found a similar sling online for a mere $7 dollars. He filed complaints with government agencies, the supplier, his insurance company, even with Massachusetts Senator John Kerry's office.

Company Defends Price

He also called Liz Kowalczyk of the Boston Globe.

She started looking into why Dichter's insurer had paid SurgiCare, a Waltham, Massachusetts medical equipment supplier, so much for the sling, which is made of two thin cloth panels sewn together and a shoulder strap.

SurgiCare told the Boston Globe that their price was fair because the company provides services that an online retailer doesn't.

A 'Little Understood Corner' Of Health Care

Kowalczyk writes that there are no simple answers for medical equipment costs, what she calls a “little-understood corner of the health care system.”

Prices for medical equipment (from glucose monitors to wheelchairs) are based on prices set by Medicare, the federal insurance program for the elderly. These costs amount to $37-billion in medical spending annually in the U.S. But, Kowalczyk writes, a lot of that is wasteful spending for Medicare:

Medicare has struggled for a decade to implement competitive bidding as a way to combat overpayment, but the industry has lobbied hard against these changes. And because payments to hospitals and doctors account for a much larger chunk of health care spending, private insurers generally have not focused as acutely on the cost of medical equipment.