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Forcing Hospitals to Fess Up

Terry H. Schwadron

Nov. 24, 2019

As promised a couple of months ago, the Trump administration has gone ahead with a new health spending policy that, amazingly, is pro-consumer, for once putting Donald Trump and progressives on the same side.

The measure required that hospitals publicly disclose prices, including discounted prices they negotiate with various insurance companies, for a range of medical services, surgeries and hospital stays.

The background is that hospitals say one thing about prices, if forced, but negotiate with insurance companies over projected volumes and the like. And, the hospital would have to own up to costs that get tagged on for out-of-network services, like anesthetics and x-rays, among others.

The idea is that a better-informed consumer can go shopping for hospital services.

The federal rule is to take place in 2021, and would also require that insurers allow patients to get advance estimates of their out-of-pocket expenses.

Trump naturally took a star turn at the White House, undoubtedly happy to have something to announce that was not impeachment-oriented, as contributing to lower health care services for Americans who are “getting ripped off” by hospitals, a sentiment his most fervent progressive political foes would welcome.

Prices Vary

Now, it turns out that hospital prices for particular services do vary a lot, even in the same city. Nationally, the variance can be vast. But the germ here is that hospitals actually keep their actual costs secret, treating arrangements with negotiating insurance companies as proprietary. And thus, they are threatening to take the new provision to court to keep them as closed as they have been.

My question is how all this is supposed to work.

I needed a hip operation. With my normal health insurance, I went to my doctor, got a referral to an orthopedic surgeon, settled on a plan the operation, got it approved by the insurer and went through with the surgery — at the hospital where the doctor has arrangements to work. My concern, naturally, was on the doctors involved, on the nature of the surgery, on the required time for physical therapy and recovery — knowing that I had medical insurance for hospitalization.

Where in that process is the shopping supposed to happen? I know that people shop for a doctor to find someone in whom they have confidence, or whose personal medical style matters, or who give the most understandable medical advice. But once I had the doctor, there was no choice about the hospital — as a patient, you go where the doctor has admitting privileges.

Is the notion that I compare hospital prices as if comparing retail costs for headphones and pick one by price. Then what? Call them for a list of hip surgeons and likewise go shopping? What happened to the medical referral process here? When I asked my primary physician for a referral, it was based on his expertise about surgical colleagues, not hospital prices.

I’ve had other medical needs over time, from cancer treatments and radiation to less serious health outcomes. In thinking about it, in each case, I chose the doctor, not the hospital. The hospital involved was a requirement of the medical office.

Plus, as you are schlepping from one doctor’s office to the next, perhaps in search of second medical opinions, you are sick or in medical need.

I absolutely agree that we need this kind of change in hospital cost transparency, as well as openness in pricing for prescription drugs, doctors’ fees and medical supplies. We ought to know what we’re paying for, and we shouldn’t be surprised at what the costs finally turn out to be.

But How to Use It?

But I do think we ought to know how best to use such a law. Currently, hospitals will tell you what the bill is for services — after the operation and hospitalization are ended. This proposal suggests we will learn the cost information ahead of time. But I doubt whether the hospital knows ahead of time whether the radiologist is in or out of your particular insurance network.

The legal challenges from the hospitals are not new. The pharmaceutical companies successfully (to date) fought a similar administration regulation to list prices for any drugs they advertise to consumers on television.

Just for nothing, I shared with the hip surgeon after the (successful) operation what the insurers told me the operation had cost, though my out of pocket costs were negligible, and joking that I would expect an invite to the yacht he would now be able to buy. He laughed with me, and assured that the listed costs were vastly more than what actually would accrue to his office, noting that hospital negotiated rates reflect a fantasy.

These details alone show the complexities of trying to come up with a health access system that works for all and that doesn’t end up simultaneously bankrupting the country.

In the meantime, my health improved immediately upon recognizing that my government, for a change, was actually trying to help consumers rather than undercutting the entire health care system.

Make America Healthy Again.


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Journalist, musician, community volunteer

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