The
Affordable Care Act and state laws like NC 843 include requirements
for medical providers to make prices transparent. At both the
Federal and state level, however, there has been very little if any
enforcement. Many of the medical providers that have published a list of
prices, like the one you may have seen on the hospital waiting room wall, know
that the actual costs won’t resemble any on that list. The two most common
reasons given by providers for the wide cost variances are: case mix,
severity of disease state and comorbidities require individual treatment
plans that are patient specific and therefore vary from normative published
prices. Secondly, providers say that your insurance company/health plan
administrator pays negotiated fees most of which are hopefully less than the
published prices.
At
the consumer level, those of us that would like to shop for competitive medical
pricing and good medical encounter outcomes do have some transparency tools
like Health Care Blue Book and MediBid, for example, which can cut through some
of the provider pricing fog. These tools are for certain elective
procedures only and may require travel. With a narrow application and an
appeal to a limited group of shopping mavens, changing consumer behavior with
these transparency tools is producing modest results.
Employers
are implementing strategies to help employees become better health care
consumers through education and consumer engagement programs. As almost
everyone knows changing behavior is not only challenging but may be counter intuitive. During an employee engagement meeting, one employee famously
asked “you expect me to ask what it costs when I’m bent over double”.
Unlike
any other product or service that we purchase, we may not learn the cost
of a health care encounter like a hospital stay, until two or three weeks after
the transaction. The cost opacity of health care in our country is
defeating our best efforts to be good consumers. Last and worst of all is
that the powerful influencers engaged in the commerce of health care oppose
transparency. Hospitals, legacy insurance companies including Blue Cross
and national consulting firms command the status quo for the benefit of
their bottom lines.
So,
what can we do? A group of early adopters, independent benefit administrators
like Corporate Benefits Service, began paying medical providers at a rate
higher than 67% of their other payers. The payments are based on a universally
well known schedule- Medicare. Two thirds of a hospital’s revenues come
from the Centers for Medicare and Medicaid. The early adopters are
exploding the myth that hospitals can not breakeven or earn a surplus on Medicare
payments alone. The hospital executive’s mantra that we have to cost shift,
charging much much more to the private sector because payments from the
government are too low is just not true for most hospital systems.
It
is a win win. We get transparency because everyone can have access to a
Medicare pricing schedule and we achieve competitive, affordable consumer
pricing. The hospitals get paid 140% of Medicare. 40% more than
they get from 67% of their payments.
The
head wind from the custodians of the status quo is quite strong. The
early adopters need grass root support, an Arab Spring for transparency and cost
competitiveness through Medicare cost plus pricing. Please give us your
thoughts.
