The Conversation - The formula behind doctors' bills

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If you live in Alabama and need a routine medical checkup, your doctor will bill you $86.90. But if you live in Alaska or San Francisco, the bill for a 20- to 29-minute appointment jumps to $118.36 and $107.99, respectively. Curious as to how physicians arrive at those figures?

There is, in fact, a simple formula that determines exactly what doctors and surgeons are allowed to charge for every type of procedure imaginable – from a flu shot or appendectomy to a hip replacement or heart surgery. But that’s where the simplicity ends. Coming up with those price tags is a “highly technical process involving secretive committee meetings, doctor surveys and federal regulations,” writes Simon F. Haeder, an associate professor of public health at Texas A&M University.

Haeder explains the history of how doctors get paid for their services and demystifies the complex process behind a fifth of U.S. health care spending.

Also today:

Bryan Keogh

Senior Editor, Economy + Business

The price physicians charge for every surgery, checkup or other procedure has a precise formula behind it. Morsa Images/DigitalVision via Getty Images

How much for an amputation or checkup? It takes a complex formula and a committee of doctors to set the price for every possible health care procedure

Simon F. Haeder, Texas A&M University

A health policy researcher explains how doctors determine their pay rates, and the system that lets them do it.

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