A long overdue health care improvement

The special interests who’ve long manipulated our health care prices in secret may soon be exposed.

The Trump administration is sounding out the medical industry on requiring hospitals, doctors and other health-care providers to publicly disclose the secretly negotiated prices they charge insurance companies for services, a move that would expose for the first time the actual cost of care.

. . .

The administration’s vision—which would possibly include fines for noncompliance—is to arm patients with information needed to make health-care decisions much like shopping for other consumer services. Rates potentially could be posted on public websites, where consumers would check the negotiated price of a service before they pick a provider. That, in turn, could lead to lower copays or deductibles.

. . .

The prices charged for health care vary widely depending on whether a provider is in or out of the patient’s insurance network and on the insurer’s undisclosed price agreements with hospitals.

Employers and patients are often unable to see which hospital systems and doctor’s offices are driving prices upward. Some health-care economists argue that the secrecy is a factor in why the U.S. spends more per resident on health care than any other developed nation.

Fully forcing the rates into the open could change the dynamics of the health market. Employers and patients, given clearer comparisons, might change their habits—though consumers often show limited inclination to shop for health-care services, even when they face significant costs under high-deductible health plans.

“You can’t shop for care if you don’t know what the prices are,” said HHS’s Mr. Rucker.

Once publicly available, patients may have the benefit of third-party technology companies aggregating the price data and building shopping tools that show the negotiated costs for services charged by various hospitals and providers.

Out-of-network doctors could try to compete with in-network negotiated rates. Health systems that charge higher negotiated rates could lose business if they don’t match competitors’ rates or justify the reasons for their steeper costs. Employers could press their insurers to include hospitals with lower negotiated rates in their networks.

Hospitals are likely to push for insurers to be under the same transparency rules and be required to release the negotiated discounts they pay for patient care.

There’s more at the link.

I’m all in favor of this move.  I’ve seen the ridiculous disparity between “official” hospital prices for services versus what my medical insurance actually pays, and I’m not impressed – particularly because uninsured patients are being forced to pay the “official” prices, whereas those of us with insurance are getting off with charges many times lower.  I’ve also been able to compare industry standard prices for procedures with those charged by the Surgery Center of Oklahoma, which is a cash-up-front establishment that posts its prices on the Web for all to see.  I’ve found many cases where SCO charges more than ten times less than an equivalent procedure at a hospital!

This, plus removing the restriction on importing drugs from other countries (thereby undercutting the ruinous prices their manufacturers charge in the heavily-restricted US market), will go a long way towards reducing our medical costs.  Bring it!

Peter

7 comments

  1. If there was ever a body to goon up a simple thing it is both the high court and Congress. They could screw up a 1 man parade. I wouldn’t expect any relief soon.

  2. I agree. I once spent the night in the hospital after presenting to the emergency room with an abnormal heart rhythm. The bill came several weeks later, and it was $12,800. I went in to the billing department and presented my insurance information, and the price went down to $1,800. That means after my $1,500 copay for an ER visit, the insurance company only paid $300.

    I believe that the industry does this to scare people into thinking that they need insurance to avoid crushing debt from an unforeseen illness.

  3. One interaction I’m curious to see with this.

    The “insurers” who demand on threat of bankrupting you the steepest discounts are Medicare and Medicaid. This also has the effect of further driving up the initial charges.

  4. The medical billing business needs transparency. It’s a great first step.
    Hospitals jack up their rates, just so insurance companies can claim a steep discount.

    New medicine is expensive because it costs billions in research to bring it to market, and then they only have a few years to make a profit on it. (Plus the whole price gouging by the insurance companies bit.) No profit, no new medicines. The USA does the drug research for the entire world – and we pay for that, while other countries make inexpensive knockoffs, ignoring international patent law, forcing our prices even higher.

  5. Doomed to failure. I work in a hospital. No one knows what any particular service ‘costs’. When I give a patient a tylenol, how much should be billed? A few cents for the pill itself? How much for the doctor who prescribed it? How much tacked on for me, the nurse, to go get it and give it?
    It’s worse than that. All costs have to be accounted for. How much did that hospital bed cost? How about the cleaning service? The turkey sandwiches? All the fancy gizmos like cat scanners and MRI machines?
    All those costs get spread out and tacked onto some odd place on the bill.
    It’s like when you get your car repaired. $30 for a part and a couple hundred for the service fees. How can the consumer know if the service fees are legit, and how much they should be? No way to know, really.
    All the hospital administration knows is a vague estimate of how much they have to spend each year to keep the place running. Somehow they have to recoup that amount from patients, so they add prices on here and there, hoping it evens out in the end.
    That Cat scan that costs $1000 here and $5000 some other hospital? They just decided to make their money in different places. There is no practical way to price hospital services.

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