(p. A1) 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.
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(p. A14) Customers judge insurance plans based on whether their preferred doctors and hospitals are covered, making it hard for an insurer to walk away from a bad deal. The insurer also may not have a strong motivation to, given that the more that is spent on care, the more an insurance company can earn.
Federal regulations limit insurers’ profits to a percentage of the amount they spend on care. And in some plans involving large employers, insurers are not even using their own money. The employers pay the medical bills, and give insurers a cut of the costs in exchange for administering the plan.
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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.”
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Health economists think of insurers as essentially buying in bulk, using their large membership to get better deals. Some were startled to see numerous instances in which insurers pay more than the cash rate.
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“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.
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(p. A15) Hospitals and insurers can also hide behind the contracts they’ve signed, which often prohibit them from revealing their rates.
“We had gag orders in all our contracts,” said Richard Stephenson, who worked for the Blue Cross Blue Shield Association from 2006 until 2017 and now runs a medical price transparency start-up, Redu Health. (The association says those clauses have become less common.)
Mr. Stephenson oversaw a team that made sure the gag orders were being followed. He said he thought insurers were “scared to death” that if the data came out, angry hospitals or doctors might leave their networks.
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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.
For the full story, see:
(Note: the online version of the story has the date Aug. 22, 2021, and has the title “Hospitals and Insurers Didn’t Want You to See These Prices. Here’s Why.”)