The lack of transparency in the healthcare industry, particularly in hospitals, is leading to a failure in the system. The issue of transparency was brought up in a recent Republican presidential debate, with one candidate highlighting the need for transparency across the entire healthcare ecosystem. The current healthcare delivery system relies on a fee-for-service payment model, which creates perverse incentives for stakeholders to game the system for financial gain. Hospitals and health systems have been resistant to reforms, such as the hospital price transparency rule, which requires them to publicly post their prices for certain services. However, many hospitals have failed to comply with this rule, and enforcement has been inconsistent. The lack of transparency in healthcare costs is a major problem, as patients have no idea what a medical intervention or test will cost or if they even need it. Greater transparency is necessary for any meaningful reform in the healthcare industry.
Commercial reimbursement is another challenge faced by hospitals and health systems. Private insurers often pay significantly higher rates than governmental payers, but their cost-control tactics can be disruptive. Providers have experienced delays in payment, with about one-third of claims submitted to commercial payers remaining unpaid for more than 90 days in the first three months of 2023. This puts a strain on hospitals and health systems, who rely on commercial reimbursement to supplement the money they lose from governmental payers. The disparity between reimbursement rates from different payers adds to the complexity of the healthcare system and contributes to rising healthcare costs.
The impact of employers on hospitals and healthcare costs is also a significant factor. Corporate giants have the power to demand and scrutinize healthcare services, potentially putting pressure on hospitals to lower their prices. Employers may seek to negotiate lower rates with hospitals and health systems, further challenging their financial stability. The squeeze on hospitals from employers could potentially lead to a shift in the healthcare landscape, forcing hospitals to reevaluate their pricing strategies and find ways to become more cost-effective.
Revenue is crucial for healthcare businesses to make money. Profit is made when revenues exceed expenses. In healthcare, revenue is controlled more by the government than by consumers. Healthcare businesses must treat policymakers as customers to influence government policies and maximize revenue. This system does not serve consumers' best interests.
PatientRightsAdvocate.org has launched a new tool called the Hospital Price Files Finder, which allows users to search for hospital pricing files by state and region. The tool aims to increase transparency in healthcare pricing and help consumers compare prices and choose the best options. The organization hopes that the tool will also expedite enforcement of the law requiring hospitals to publish pricing files. The tool has received positive feedback from organizations such as the 32BJ Health Fund, which sees it as a valuable resource for tracking and fighting waste, fraud, and abuse in healthcare. PatientRightsAdvocate.org is a national healthcare price transparency organization dedicated to advocating for systemwide transparency.
Employers that sponsor health plans are beginning to have more options for comparing prices they pay to hospitals as more organizations ramp up data services that at times show large cost variations for medical treatments. Hospital pricing data is increasingly available for employers' with health plans to evaluate. Employers and unions that run health plans may be able to use the information to try to negotiate lower rates. Patient Rights Advocate provides free price data for nearly all of the more than 6,000 hospitals in the US. The organization pointed to prices for an injection of cancer drug Rituximab at Rush University Medical Center in Chicago that ranged from $899.33 to $9,260.13. Being able to easily compare prices will protect health plans from billing errors and fraud by hospitals and insurers. A hospital price transparency rule requires hospitals to make their standard charges public, including posted prices, charges negotiated between hospitals and insurers, and discounted cash prices. Organizations like Patients Rights Advocate along with data service companies have cleaned up and posted data collected from hospitals complying with the rule, making pricing databases searchable for employers and patients. Employers need to be able to demonstrate to health regulators that they’ve compared prices of services with other networks in their area. Data analysis is necessary for employers, because the data collected by the federal government is “not in a usable format for them.” Health insurers have posted pricing data pertaining to about 90% of the people they cover in the US. Employers can use price transparency data to choose better cost options for their employees.
The Lower Costs More Transparency Act, recently passed by the House of Representatives, aims to address critical issues in America's health care system. It includes measures for payment equalization, price transparency, and funding for health programs. The bill targets hospital outpatient payments, pharmacy benefit manager practices, and health care price transparency. It also pushes for greater price transparency, bans spread pricing by pharmacy benefit managers, and requires public pricing by hospitals and insurers. The package provides guidance to generic drugmakers and aims to increase competition in the pharmaceutical industry. While the bill is unlikely to pass the Senate as it stands, it represents an important step towards reforming America's health care system. The government has also implemented other initiatives to assist Americans during the pandemic, such as the Michigan Homeowner Assistance Fund and COVID-19 economic relief efforts.
Assistant Professor of Economics Ben Chartock has received $250,000 from a nonprofit to support research on lowering healthcare costs and ensuring price transparency. Private health insurers negotiate coverage costs directly with providers, resulting in highly variable prices. Recent federal legislation requires hospitals and insurers to disclose pricing information, but many are providing incomplete or incomprehensible data. Chartock emphasizes the importance of informed consumerism and businesses leveraging their purchasing power to demand accurate and accessible information. He teaches undergraduate and graduate courses on health economics and engages students in discussions about healthcare price transparency. Slowing healthcare spending growth requires harnessing market forces and understanding the role of economics in shaping an equitable and efficient healthcare system.
In conclusion, the lack of transparency in healthcare costs, the challenges of commercial reimbursement, the impact of employers on hospitals, and the control of revenue by the government are all contributing to the need for reform in the healthcare industry. Greater transparency is necessary to empower patients and enable them to make informed decisions about their healthcare. Hospitals and health systems must navigate the complexities of reimbursement from different payers while also addressing the demands of employers. The collision course of US healthcare delivery and the lack of price transparency in hospitals requires comprehensive solutions to ensure a sustainable and equitable healthcare system.