On Jan. 1, a part of the Affordable Care Act went into effect after President Donald Trump ordered that hospitals must publish on their websites the list prices for everything they provide. And pharmaceutical companies must disclose the list prices of drugs in ads.
The drug companies are foolishly fighting to overturn this rule in court. Meanwhile the lists of unintelligible abbreviations and nonnegotiated prices the hospitals never really get paid aren’t very helpful to a prospective patient trying to price-shop.
The rules were a start, though, to try to pierce the armor of an impenetrable system of medical pricing that leaves patients and their families unprepared, confused and disheartened. But it became clear that more needed to be done.
So two weeks ago, Trump signed another executive order that could bring far more clarity. It is intended to force insurance companies, doctors and hospitals to make public what different types of patients actually pay for drugs and services. These amounts, subject to intense negotiations between insurance companies and providers, always have been veiled in secrecy, and the industry will fight to keep it that way. And because Trump’s executive order instructed regulators to develop their own rules, rather than mandating specifics, lobbyists for the insurance industry and advocates for doctors and hospitals could persuade regulators to water down the requirements.
The administration must make sure that doesn’t happen.
Industry advocates for health care providers and drug companies say pricing is incredibly difficult to explain because at any hospital, customers of each health care insurer pay different rates, and members of different plans from the same insurer can, too.
A study by the Minnesota Department of Public Health last year looked at the rates for types of patients at four Minneapolis hospitals for several procedures. It showed shocking disparities from facility to facility and from patient to patient at each facility. The most expensive hospital, for instance, charged an average of $23,428 for an appendectomy, but it charged $6,666 to its most preferred patients and $35,484 to its least preferred ones. The cheapest hospital charged an average of $10,090, but charged $7,327 to its most preferred patients and $14,381 to its least preferred patients.
That means the facility that was most expensive, on average, had the lowest cost as its most preferred rate. Treatment costs can vary dramatically depending on whether the patient is in or out of network, while uninsured customers are quoted yet another set of fantastically high rates that experts say are usually negotiated down with uninsured patients individually, or written off because the patients cannot pay.
The charge those four hospitals received for the same spinal-fusion surgery procedure varied from $12,326 to $80,797 depending on which facility patients used, whether they had insurance, and what plan they used.
On Long Island, the hospitals posted incomprehensible lists of the highest charge for each offering. There is no uniformity in describing services and each hospital includes a disclaimer like this one from Nassau University Medical Center: “It is important to note that the listed charge amounts are generally not what a patient may pay for services.” St. Catherine of Siena Medical Center lists an “HC Amputation Toe” for $8,853. Stony Brook University Hospital lists only a “partial removal of toe” for both $6,317 and $6,298. Nassau University Medical Center has a “partial removal of toe” for $7,670, but its separate Medicare price list, the payer for so many NUMC patients, lists only an “upper limb and toe removal” for $107,736.90. And a search of Long Island Jewish Medical Center’s price list does not turn up a single use of the words “toe,” “amputation” or “removal.”
Medical professionals and drug and insurance companies argue that medical pricing is complicated, and it’s true. It’s also true that the complexity springs from a dysfunctional industry that often benefits from confusion and ignorance on the part of its customers. That’s why it fights to keep that confusion and ignorance in place. There is no reasonable justification in a well-managed industry for the pricing of one procedure to vary sevenfold. And it’s likely that the more transparency bought to bear on the industry, the more the prices will have to conform to some sort of reasonable standard.
Now more than ever, with so many insurance plans carrying high deductibles that force patients to pay for many services out their health savings accounts or their pockets until they hit spending limits, knowing what care will cost before they arrange for it is crucial. Accurate publicly available pricing also would help customers and businesses decide which insurance carriers to contract with, and help people choose doctors they can afford who have privileges at reasonably priced hospitals.
Trump has been persistent on this issue, in the face of extreme resistance from the health care industry. Perhaps, if he keeps on fighting to introduce as much sunlight as possible into medical pricing, the worst practices will fade away.