[NYT] Why Hospitals and Health Insurers Didn’t Want You to See Their Prices

Why Hospitals and Health Insurers Didn’t Want You to See Their Prices - The New York Times (nytimes.com)

This year, the federal government ordered hospitals to begin publishing a prized secret: a complete list of the prices they negotiate with private insurers.

The insurers’ trade association had called the rule unconstitutional and said it would “undermine competitive negotiations.” Four hospital associations jointly sued the government to block it, and appealed when they lost.

They lost again, and seven months later, many hospitals are simply ignoring the requirement and posting nothing.

But data from the hospitals that have complied hints at why the powerful industries wanted this information to remain hidden.

It shows hospitals are charging patients wildly different amounts for the same basic services: procedures as simple as an X-ray or a pregnancy test.

And it provides numerous examples of major health insurers — some of the world’s largest companies, with billions in annual profits — negotiating surprisingly unfavorable rates for their customers. In many cases, insured patients are getting prices that are higher than they would if they pretended to have no coverage at all.

Until now, consumers had no way to know before they got the bill what prices they and their insurers would be paying. Some insurance companies have refused to provide the information when asked by patients and the employers that hired the companies to provide coverage.

This secrecy has allowed hospitals to tell patients that they are getting “steep” discounts, while still charging them many times what a public program like Medicare is willing to pay.

And it has left insurers with little incentive to negotiate well.

...

The requirement to publish prices is a rare bipartisan effort: a Trump-era initiative that the Biden administration supports. But the data has been difficult to draw meaning from, especially for consumers.

The New York Times partnered with two University of Maryland-Baltimore County researchers, Morgan Henderson and Morgane Mouslim, to turn the files into a database that showed how much basic medical care costs at 60 major hospitals.

The data doesn’t yet show any insurer always getting the best or worst prices. Small health plans with seemingly little leverage are sometimes out-negotiating the five insurers that dominate the U.S. market. And a single insurer can have a half-dozen different prices within the same facility, based on which plan was chosen at open enrollment, and whether it was bought as an individual or through work.

But the disclosures already upend the basic math that employers and customers have been using when they try to get a good deal.

People carefully weighing two plans — choosing a higher monthly cost or a larger deductible — have no idea that they may also be picking a much worse price when they later need care.

Even for simple procedures, the difference can be thousands of dollars, enough to erase any potential savings.

It’s not as if employers can share that information at open enrollment: They generally don’t know either.

“It’s not just individual patients who are in the dark,” said Martin Gaynor, a Carnegie Mellon economist who studies health pricing. “Employers are in the dark. Governments are in the dark. It’s just astonishing how deeply ignorant we are about these prices.”

...

The worrying thing is that the third party you’re paying to negotiate on your behalf isn’t doing as well as you would on your own,” said Zack Cooper, an economist at Yale who studies health care pricing.

‘They don’t want their secrets out there’
Employers are the largest purchasers of health insurance and would benefit the most from lower prices. But most select plans without knowing what they and their workers will pay.

To find out what the prices are, they would need to solicit bids for a new plan, which can frustrate employees who don’t want to switch providers.

It also requires the employers to hire lawyers and consultants, at a cost of about $50,000, estimated Nathan Cooper, who manages health benefits for a union chapter that represents Colorado sheet metal and air-conditioning workers.

“If you want the prices, you have to spend to get them,” he said.

...

The new price data is often published in hard-to-use formats designed for data scientists and professional researchers. Many are larger than the full text of the Encyclopaedia Britannica.

And most hospitals haven’t posted all of it. The potential penalty from the federal government is minimal, with a maximum of $109,500 per year. Big hospitals make tens of thousands of times as much as that; N.Y.U. Langone, a system of five inpatient hospitals that have not complied, reported $5 billion in revenue in 2019, according to its tax forms.

As of July, the Centers for Medicare and Medicaid Services had sent nearly 170 warning letters to noncompliant hospitals but had not yet levied any fines.

Catherine Howden, a spokeswoman for the agency, said it expected “hospitals to comply with these legal requirements, and will enforce these rules.”

She added that hospitals that do not post prices within 90 days of a warning letter “may be sent a second warning letter.”

The agency plans to increase the fines next year to as much as $2 million annually for large hospitals, it announced in July.

 

2017 data on admin cost: 812B. $2497 per capita. 34.2% of national health expenditures is for admin cost. That's a whole boat load of waste.

Now, that's just admin cost. What this new info shows is that we have a much more serious issue with pricing than we thought. At least what I thought. Pretty crazy that non-insured that pay OOP pay less than insured who has insurer negotiating price on their behave. The differences in health care price charged to consumer between insurance plans from the same insurer at the same hospital is up to 2-3x. Not sure how you even begin to explain that.

 

I thanked him privately when he issued the EO (was it an EO?) in 2019. The murderous monster did a very good thing here.