Trump proposes forcing hospitals to disclose discount rates with insurers
wsj.com
wsj.com
Small and medium size practices have very few guarantees about how much they will get reimbursed for a procedure and the patient has no idea how much they will pay. It's truly insane.
Is anyone honestly trying to solve those problems right now?
This is not true.
"There's a requirement to share how much a consumer needs to pay before procedures are done"
This is not true.
If I go in for a procedure at a medium sized specialist clinic they are going to take the fee schedule for this CPT, discount by my 20% expected contribution (or whatever), and then hope that the insurer pays them > 50% of the remainder.
A lot of the time my insurer will, but not always. Bigger systems negotiate their own fees and many doctors at larger clinics only track RVUs for each procedure (specifically because the clinics realize that paying based on insurance payout isn't fair or scalable, in that way RVU allocations act as a pool). But overall it's not a transparent system for the majority of people working within in.
Also, it is true that thier is a requirement for estimates. Granted, insurance companies can turn down procedures - but like I said, if it's a competent diagnosis than it works out.
But you can just ignore all the words in my post to be dramatic, that's fine.
I recently visited an Emergency Room and the whole process behind is really obscure.
Like for example, I got a bill from the health care provider for an owed amount and one letter from the insurance company saying that I owed the healthcare provider another different amount. They are not even close.
The whole experience in the ER was pretty fast and high quality but I feel they did a bunch of extra blood work and stuff just for the sake of getting more money out of the insurance and not necessarily because it was needed.
The way I see it the healthcare system in the US is just designed to squeeze as much as possible from the carriers and viceversa but without thinking too much who is the actual liable party which happens to be the sick individual.
I think this is how we ended up with a super expensive healthcare system that bankrupts people. All parties involved (insurance carriers, healthcare providers, healthcare product suppliers, pharmaceutical companies, doctors) think that the opposing party in any transaction is swimming in money so they optimize for squeezing the shit out of the other. That’s how you end up with ridiculous bill items like $1500 dollars for a simple fluids IV.
I'm not entirely sure if it would have the intended effect of reducing costs, but it would definitely add more transparency.
OODA Health already has some major partnerships/investments from providers and payers. https://www.ooda-health.com/
Lumedic was acquired last year by Providence St. Joseph, a large hospital system. https://lumedic.io/
Most likely it will make hospitals less likely to allow any single price to be negotiated too low.
Consider that when negotiating a basket of goods, the buyer and seller may agree on a low price for item A and a high price for item B based on their own preferences, but this does not mean that they cared specifically about item A or B since the negotiation was over the basket.
We see this all the time whenever products and services are bundled. The negotiation may result in some prices being lowered, but overall the seller has a lot of knobs to adjust to make the buyer happy.
So all this will do is modify the negotiation slightly and possibly provoke some sensational headlines in the near term.
So, the short is, yes, transparency would help.
This explains why prices are some services surprisingly high, while others are more normal. We've all heard about the $100+ cup of Advil line item in a bill. I never had thought about health care pricing before in this context.
I'm sure both the hospital and the insurance come into the negotiation with existing datasets about the frequency of goods/services are billed for. The hospital knows what it will receive in aggregate from the hospital given a set of line item prices for all of its offered goods/services; conversely, the insurance company would have a rough sense of what they'd be paying.
You get the short end of the stick if you end up consuming a proportionally higher amount of goods/services that were negotiated arbitrarily high price end.
There are lots of procedures where consumers have time to shop around. Presently, nobody is incentivized to compete on (or advise to) price. With transparency, that changes.
I'd estimate this is 1% of healthcare spending.
The follow up with my doctor during weekday hours was $70.
My insurance covered only $2800 of the $11,800 (what they considered reasonable). I have a $7900 deductible.
Since they were out-of-network, the hospital could have billed me for the entire amount (balance billing).
Happily they reduced the charge to $1000.00
In the end you're happy to pay $1000 for a 6 hour stay...
Anywhere else in the world if they tried asking $1000 for that they'd get laughed out of the room, $11,800? Heads would roll.
My care included a tetanus shot, intravenous liquids and antibiotics.
So yes, I considered the $1000 reasonable.
The ER doctor and radiologist were in-network so I paid the insurance negotiated price.
All-in-all, the dog bite cost me $5000. The ambulance was $1800.
For that money you can get a week's care at a premium private hospital in Europe.
An emergency ambulance costs 100 euro.
I think America has been with an extortionate health care system for so long you guys are starting to consider it 'reasonable'
It isn't.
Let me put it another way. You can fly from America to Europe three times for $1800.
I want a single payer system.
What is needed is real competition in the health care sector - because at the moment the whole thing in America is a coalition/monopoly between insurance, pharma and health care companies with the sole intent of giving you no choice but to pay and say thank you.
The supposed evil sole individual human you postulate as the source of dire evil is not the problem usually, rather the evil collective corporation or other organization calls the shots when we see these sorts of industry wide systematic abuses.
Also, emergency last minute round trip flights to Europe are absolutely not $600 as you claim.
Also no wonder healthcare is so expensive in the US - you're actually arguing for it...
https://www.google.com/flights?lite=0#flt=/m/02_286./m/056_y...
The fact that you're paying 100 Euro for the trip means is subsidized. Which is great, and it should be, but don't pretend 100 Euro is a reasonable price if you're actually paying for it.
Using an average wage in the US to be double of Europe I'd say $200 for an ambulance ride in the US is a reasonable price.
Also an ambulance ride is like 20-30mins tops and within a day there can easily be 4-5 calls in a larger city - that's more than enough to be profitable.
2 x EMTs @ $2,000 = $4,000 / month
1 x $100,000 amublance amortized over 3 years = $3,000 / month
150 gallons gas (150 miles per day @ 30mpg) x $2.50 = $375 / month
Callcenter = $500 / month
Overheads = $1000 / month
Supplies = $1000 / month
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Total cost = $10,000 / monthThe omission of things like liability insurance is curious, as well.
(And they are all employed by the state [NHS], the state self-insures for liability, just like it self-insures for the ambulance’s car insurance.)
For a fun little exercise, look up the average salary of an EMT.
When I did it on the side, six years ago, starting salary was $9.60/hr. (Thankfully I was doing it for experience, not a living).
You also seem to be arguing that Europe healthcare is cheaper and therefore better, even though it obviously is not that simple (I'm sure you know it isn't that simple. That's just how your reply comes across). For example, if I get cancer I would much rather be in the United States, despite the problems with their health care system, simply because I have a higher chance of living.
From your source: "Around 40% of cancer cases could be prevented by reducing exposure to cancer risk factors including diet, nutrition and physical activity".
Americans live a lifestyle (fast food, less walking) that leads to a much higher risk of cancer than Europeans, the difference in mortality rate is mostly explained by this.
Another way of thinking about this, looking at your data, do you really think Australia has the worst hospitals in the world because they have the highest cancer rate?
Under ACA Bronze, the worst plan, his copay should have been 40%.
Is it your assertion that $7,900 is 40% of $11,800?
A minimum value ACA plan must have > 60% AV and cover the essential health benefits. The coinsurance % is irrelevant so long as it meets those requirements.
It'll matter for little urgent care shops staffed by a handful of people. City hospitals will laugh at $109,572 per year.
Well, it's a step in the right direction.
"If the hospital fails to respond to CMS’ request to submit a corrective action plan or comply with the requirements of a corrective action plan, CMS may impose a civil monetary penalty on the hospital not in excess of $300 per day, and publicize these penalties on a CMS website."
I guess a "name and shame" strategy could lead to increased public awareness, and later to political pressure, which in time would translate into political action. At least that's how democracy is supposed to work.
Separately, the public is asked for feedback on the proposed rule until 27-Sept-2019. Not sure how this works, but I guess a grassroots movement could result in an increase in this diminutive fine.
[1]https://www.cms.gov/newsroom/fact-sheets/cy-2020-medicare-ho...
No, it's about the salary of a nurse. The cost (salary + benefits + overhead) of a nurse is much higher.
Of course this depends on the location and the type of nurse. I'm not in California, the most expensive place to get a nurse, where the average salary of a Registered Nurse is actually $102,700. Other states have salaries that are half of that. Even for the national average, a Licensed Practical Nurse is only getting $48,251.
Allowing a factor of 2 for benefits and overhead, nurses generally cost about $100,000.
At the least, healthcare companies could reduce a huge amount of labor tied up in billing and insurance could do the same for labor tied up in fighting claims
In the context of healthcare, using the current Medicare system as a proxy. Yes, it mostly works. CMS sets prices, generally based on what things should cost with a reasonable margin, and in general Medicare patients are receiving quality care.
Beyond that I don’t have much knowledge. I’m sure you’re referencing some examples of fixed corn prices and how it resulted in shortages or something like that. Which may be valid.
However, I think you could get creative and build some pricing models that were much more effective than a fixed price. Or, the minimum government involved way, would be to simply mandate that payors of all types are billed and pay the same amount for same services. Then the market is responsible for compliance.
Either way, the way to get ahold of healthcare is on price. The only reason Medicare for all has any legs is because Medicare is known for controlling price. But the downside is government becoming the administrator. I’m just saying there’s other ways to focus on price and the government could help through legislation.
This whole system of discounted rates is why you're pretty much forced to have insurance as a "payment intermediary," even for stuff that you'd otherwise think paying out of pocket would be reasonable for.
Which arguments are those?
On the other hand healthcare providers competing on an open market with transparent pricing would presumably actually reduce costs.
(for the record I personally just want the simplest thing that's very likely to work—single payer—rather than any complicated poke-the-market-and-pray solutions, but I think that's the idea of such a measure)
Insurance companies in the US have enormous leverage over just about every other party involved in healthcare: the patients, the providers, and the pharmaceutical manufacturers. This is even more true for medications like insulin, where there isn’t much difference in efficacy between brands. In a normal market, these companies would try to compete on price. But for insulin, price continues to rise. This is because insurance companies, and their negotiators, Pharmacy Benefit Managers (aka PBMs) have a vested interest in prices rising. PBMs make their money by negotiating prices with pharma companies to secure discounted prices for insurers, and in doing so, create the insurers’ “formularies”, which are basically the list of all the medications an insurer will cover, the prices they will pay, and the conditions that must be met. PBMs get a cut of the discount they negotiate with the pharma company. If drug A has a list price of $200, and they negotiate it down to $150 for their insurance clients, they take home x% of all the savings that are made at $50 a pop.
This creates a perverse incentive however: a PBM stands to make more from a drug that costs $300 and is negotiated down to $150 than a drug that is $200 that is negotiated down to $150, even if everything else is the same. That means you are more likely to get better insurance coverage for your drug by starting high and giving deep discounts. And for drugs like insulin, where similarities between products are so small that the only place you can compete is price, how well you are covered by insurers compared to your competitors will make or break your business.
Insurance companies themselves also love drugs with high costs that are then discounted deeply, because when they charge a patient coinsurance, it’s based on the list price, and not the price the insurer is paying. So even though they’ve negotiated the price of insulin down by over 50% with the pharma company, they are still going to charge you y% based on the full price. So if they continue to get insulin from manufacturers for $Y per unit every year, they continue to charge you 20% of a cost that continues to rise further and further away from $Y, meaning they are actually paying less and less as prices rise. They will claim to be using the reduced costs to lower premiums, but if reduced costs are only the result of increased costs for the sick, then all we’ve done is create an insurance system where the sick are subsidizing the healthy, which is entirely backwards. So now we have a system where manufacturers raise prices year after year, only to also give ever increasing discounts to insurance companies and PBMs, in hopes that it actually increases the number of patients who can afford their products (i.e. those with decent insurance). But those left holding the bag are the individuals without insurance or those with high deductible plans (which are becoming increasingly common).
It’s also important to note exactly how much power these middlemen have. It’s a common narrative that Big Pharma is able to get away with bad practices because of their power. But in reality, only a single pharmaceutical company is in the Fortune 50, and none of the insulin makers are. In contrast, 80% of the PBM market is controlled by 3 companies, 2 of which are Fortune 50, and the third is a subsidiary of United Health, which is an insurer and is also Fortune 50. In fact, 10 of the Fortune 50 companies are middlemen (insurers, PBMs, or drug distributors) in the healthcare industry.
Basically, discounting and rebates have ironically been a big driver behind increasing healthcare costs. They serve primarily to reduce insurers costs but they don’t pass those benefits to consumers, and have actually created a system that rewards high-cost healthcare.
The wider the gap between costs for insurers to pay for operation A vs for you to pay for operation A, the more value you get as a consumer get from having insurance which means the insurance company can earn more profit.
Dumb example. If it costs you a billion dollars and the insurance company a million dollars. The insurance company can comfortably charge you a premium that protects you from the billion dollar risk instead of the million dollar risk.
I would assume that, if rates were equal for both parties, insurance premiums would go up and insurance profitability would go down. If insurance profitability goes down, suddenly the insurance company is incentivized to decrease the costs of healthcare for everyone.
Right now the insurance company has the incentive to INCREASE the generic cost of healthcare and decrease for them only.
I am not an expert here.
I do like the idea though.
How about taxing suppliers on the published rate, rather than what they actually get paid? That might stop them being quite as egregious. If they charge an uninsured person more for an equivalent procedure, their tax bill will suddenly go up.
On top of this, medical providers must disclose the full cost structure of any non-emergency service up front and get my initials, just like auto mechanics. Emergency services should be strongly regulated.
The goal here is to have price transparency where it matters: with the patient, and to prevent insurance from corrupting the market.
Abusive medical consolidation like we have in the Bay Area won’t happen, since there would be no benefit for providers to merge to improve their insurance contracts.
As evidence that this could work, look at dentistry. Every dental provider I have ever encountered can tell you, in advance, exactly what they will charge. The prices are not insane the way non-dental medical prices are. And there are no surprise bills in dentistry.
I've done it for a few childbirths with midwives and I've done it many times for dentists.
I think this used to be standard, and may relate to that whole annoyance about you being responsible for whatever charges aren't covered. When you give your insurance info to the medical provider, you're not changing who ultimately pays. The medical provider is simply offering two things: they will handle the paperwork and they will loan you the cost of the treatment until the insurance claim is processed.
Neither of which is the kind of medicine that is so badly corrupted by insurance. Try doing it for a routine non-elective procedure at almost any major hospital as you’ll have a rather different experience.
Flat pricing for all is possible and workable under single-payer.
Insurers would still have hospitals they deem to be good enough and cheap enough
It would just mean that the cheap enough part isn’t a special deal for them specifically.
I am not an expert in this area.
From CNBC: "The public comment period will be open until the end of September. If finalized, the rule would take effect in January."
So, leave a comment. Ask for something large, tied to inflation or to hospital revenue.
But this same administration is currently arguing in Federal court that the entire ACA is invalid, which means that they are also arguing that this new proposal has no legal basis.
[1] https://www.nytimes.com/2019/07/29/health/hospital-rates-ins...
How to fix it: 1. Single payer - hard to maintain equality without it, insurers are not incentivized to lower healthcare trend due to max MLR rules 2. High OOP plans for all - force consumerism, sliding scale of ded/oopm based on income so poor are inherently subsidized more than rich 3. Easier path to becoming MD - more docs, more competition 4. Higher standards for maintaining license to practice medicine - more pressure to provide high quality care 5. Transparent prices - ability to shop for healthcare like any other good, prices will naturally hit an equilibrium due to consumerism and increased competition 6. Add a steerage layer to the system for all - call med-help line or go to web/app for care - type in symptoms, it gives you options with distance/prices etc to allow people to make more informed/economical decisions 7. Better Interoperability in EHRs - easily share medical records with a new provider, reduce duplicative care and waste
Just these items would help bring trend back in line with CPI. I like this solution because everyone gives a little - providers and consumers and the insurers and brokers give a lot (but eliminating their costs alone would be a boon). The biggest risk would be the ability of a public entity to implement and enforce such a system and to keep incentives high for providers and researchers
1. For people without insurance it would possibly give them a little more bargaining power in the negotiations around bills. Right now the hospital holds all the cards, especially when it comes to "costs".
2. It would shine a little light into an area that is generically murky. A lot of people are champions of capitalism/markets being the solution for all/most problems, but market systems do not work well at all when there is a heavy information imbalance. Pretty much every theory of capitalism talks about that. Right now an enormous information imbalance pretty much sums up the U.S. healthcare system.
If you go down the street, however:
https://www.vox.com/2019/1/22/18183534/zuckerberg-san-franci...
However disclosing these practices is not enough. The end consumer has no negotiating leverage particularly if they have no insurance. The government or some big organization needs to negotiate the best price for them.
The indirect harm would be that by spending effort on something ineffective it may make it harder to do things that would be effective, by taking some of the heat off politicians on the health care cost issue.
The second step being setting caps on what health care providers can charge to those who are uninsured, or for which a particular insurer won't cover.
Instead of some ridiculous number that no one actually pays, they should only be able to charge the uninsured a maximum which is the average of what they actually receive.
If they receive, on average, $850 for an MRI then that should be the most they are legally allowed to charge someone who is uninsured. Clearly it's still profitable for them to do so at this price point, and it doesn't bankrupt the individual.
The sad part about all this is that the level of healthcare pricing transparency we all need/want must come down from the top. Are there any startups looking at this problem?
Yelp reviews for cardiologists, I can see it now: "Well, I'm still alive, so that's a plus, but he told me very rudly to cut down on salt! One star!"
That law only applies when the ultimate desired goal is different from the target. When the target is the goal then using it as a measure works perfectly.