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| DATE | 2021-02-12 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] The healthcare economy scam that screws everyone
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https://www.wsj.com/articles/how-much-does-a-c-section-cost-at-one-hospital-anywhere-from-6-241-to-60-584-11613051137?mod=hp_lead_pos5
wsj.com
How Much Does a C-Section Cost? At One Hospital, Anywhere From $6,241 to
$60,584.
Anna Wilde Mathews, Tom McGinty and Melanie Evans
16-20 minutes
When a woman gets a caesarean section at the gleaming new Van Ness
location of Sutter Health’s California Pacific Medical Center, the price
might be $6,241. Or $29,257. Or $38,264. It could even go as high as
$60,584.
The rate the hospital charges depends on the insurance plan covering the
birth. At the bottom end of the scale is a local health plan that serves
largely Medicaid recipients. At the top are prices for women whose plans
don’t have the San Francisco hospital in their insurers’ network.
The nation’s roughly 6,000 hospitals have begun to reveal the secret
rates they negotiate with insurers for a range of procedures. The data
offer the first full look inside the confidential deals that set
healthcare rates for insurers and employers covering more than 175
million Americans. The submissions also illuminate how widely prices
vary—even for the same procedure, performed in the same
facility—depending on who is paying.
“It is shining a light on the insanity of U.S. healthcare pricing,” said
Niall Brennan, chief executive of the Health Care Cost Institute, a
nonprofit that analyzes medical costs. “It’s at the center of the
affordability crisis in American healthcare.”
Under a Trump administration rule that took effect in January, nearly
all hospitals must make their prices public, a move the industry sued to
block. Courts rejected hospitals’ arguments that their prices should
remain under wraps. Healthcare economists say these rates are a major
driver of U.S. medical costs, the highest in the world, and they are
largely paid by American companies and workers.
Other industries sometimes charge different amounts to different
customers—a manufacturer may offer a volume discount, for instance, and
huge retailers like Walmart Inc. will often pay less for the products
they stock than local stores do. But the ranges revealed in the Sutter
data show how extreme the variation can be in medical services, said
Gerard Anderson, a healthcare economist at Johns Hopkins University.
“These price differentials are unique to the healthcare and hospital
industry,” he said, and are partly tied to the secrecy around the rates,
which has prevented competitors from knowing what others were paying.
The negotiated prices affect consumers directly—through out-of-pocket
charges like deductibles—and indirectly, by pushing up premiums for
health coverage. Total U.S. expenditures on private health insurance
have increased 50% in the past decade through 2019, according to federal
figures.
A Wall Street Journal analysis of data from Sutter Health, a Northern
California system with 24 hospitals, found ranges that were sometimes
extreme. With its sizable network and 2019 revenue around $13 billion,
Sutter is known for market clout that drew an antitrust suit from the
state’s attorney general in 2018. Sutter has since tentatively agreed to
pay $575 million to settle the case without admitting wrongdoing.
A Sutter hospital in Modesto, Calif., revealed rates for one billing
code representing complex cardiac procedures in fragile patients that
varied from $89,752 to $515,697, depending on the insurance plan.
The hospital’s discounted cash price for those who pay for the service
out of their own pockets: $325,703. Sutter said the actual cash price
varies by patient, and that most uninsured patients would qualify for
charity care and pay nothing.
Sutter Medical Center in Sacramento, Calif. The state’s attorney general
launched an antitrust case in 2018.
Photo: Rich Pedroncelli/Associated Press
Procedures under the code aren’t performed often at the hospital, the
Sutter spokeswoman said. Eight patients received them there last year.
“We enter into negotiations with every health-insurance company or payer
in good faith and with the end goal of providing access to quality,
affordable care for patients,” said Sutter Chief Financial Officer Brian
Dean.
The California system’s pricing spread for the procedures reviewed by
the Journal are likely at the upper end, but similar patterns will be
found at many hospitals around the country, said Alan Muney, a former
Cigna Corp. executive. “This is probably typical of what you’re going to
see across big delivery systems,” he said.
Prices paid by private insurers in the nation’s $1.2 trillion hospital
sector are often far higher than the amounts paid to hospitals by the
Medicare program, which are set by the government. Plans offered by
insurers under Medicare or Medicaid often get rates tied to those
mandated prices.
For commercial plans that aren’t backed by the government, which include
employer coverage, insurers negotiate confidential contracts for what
they and their clients pay.
Generally, insurers win better rates if they can steer more patients to
the hospital, according to former insurance executives. Insurers with
more market share tend generally to achieve more favorable pricing, and
they may also get price breaks for plans that push patients to a
particular hospital system, often by limiting the number of its rivals
included in their networks.
Hospitals, for their part, set prices that can have little bearing on
the actual cost or value of a service. They often operate without
knowing the cost of procedures, unlike other industries that closely
track and manage expenses, said David Cutler, an economist at Harvard
University who studies healthcare spending. Hospitals instead set prices
based on their own targets for overall margins and according to what the
market will pay, he said.
Hospitals typically rely on privately insured patients for their
margins. One study looked at the profits of more than 2,800 hospitals
over a decade and found hospitals that boosted margins didn’t cut costs,
but instead raised revenue by increasing the rates they charged to
commercial insurers. Other studies found hospitals under revenue
pressure do manage costs more tightly to protect margins, but where
hospitals have market power, they raise prices.
Economists say price increases can also reflect investment to boost
quality and technology gains, but also warn numerous studies have found
quality is no better or worse at high-price hospitals. “We have not
found evidence that price is a great signal for quality,” said Michael
Chernew, the Leonard D. Schaeffer Professor of Health Care Policy at
Harvard Medical School.
Despite the Trump administration regulation mandating the pricing
disclosures by Jan. 1, some of the largest hospital operators, including
CommonSpirit Health and HCA Healthcare Inc., and prominent regional
systems, such as Mayo Clinic and NewYork-Presbyterian, haven’t fully
unveiled their prices.
Under the federal transparency requirement, hospitals must publish the
rates they charge specific insurers for 300 common services considered
“shoppable” in a way consumers can easily access. They are also required
to offer pricing data on all their services online in a format that can
be read by a machine. Insurers are supposed to make similar disclosures,
with mandates phased in starting next year.
Share your thoughts
Will knowing the prices hospitals charge change the way you access
health care? What other outcomes do you see coming from the release of
this data? Join the conversation below.
CommonSpirit said it has been focused on the pandemic and is “diligently
working” to compile the information. An HCA Healthcare spokesman said it
“will continue to post information as our teams work through additional
contracts.” Mayo Clinic said it planned to post negotiated rates by the
spring. NewYork-Presbyterian said in a statement that it “will be
working to improve and regularly update what is posted including a
definition of terms and a cost calculator.”
At least one hospital owner, Texas-based Christus Health, said on its
website that it didn’t plan to publish its negotiated rates “because it
provides something that will only be useful for our competitors.” A
spokeswoman for the nonprofit, which includes 50 hospitals, said it was
offering a tool so consumers could look up pricing on 300 services, and
also is providing data on prices paid by Medicare and Medicaid plans.
Revealing the negotiated rates “will not accurately inform patients of
out-of-pocket costs, but rather will lead to confusion and encourage
anticompetitive behavior,” a Christus spokeswoman said.
The penalties for failing to meet the pricing-disclosure requirements,
as much as $300 a day for each hospital, may not be high enough to force
large hospital systems into compliance, said Amanda Starc, an associate
professor at Northwestern University’s Kellogg School of Management.
Nurses make their rounds at Christus Santa Rosa Hospital in New
Braunfels, Texas.
Photo: Mikala Compton/Associated Press
A spokesman for the Centers for Medicare and Medicaid Services, which
issued the pricing-transparency rule, said it is auditing a sample of
hospitals for compliance and investigating complaints. The agency hasn’t
offered any extensions of the Jan. 1 deadline.
In the short term, the newly revealed rates may have limited impact on
consumers. Those with coverage would likely still need to check with
their insurers to know what they could owe for services.
But insurers and hospitals are expected to look closely. Employers, too,
will tap the new data, using it to help choose which hospitals to use
and to negotiate with insurers, said Elizabeth Mitchell, chief executive
of the Purchaser Business Group on Health, which represents major employers.
To illuminate the market dynamics, The Wall Street Journal downloaded
Sutter’s data on pricing of 300 common services. The Journal’s analysis
focused on seven of those services, which were linked to billing codes
known as a Diagnostic Related Services, or DRGs. Medicare uses DRGs to
establish payment rates that are based on the average hospital resources
used to treat patients in a given diagnostic group.
For the DRGs analyzed by the Journal, Sutter said the commercial and
government-backed plan rates are typically straightforward figures.
However, the rates listed for out-of-network use and cash payment, which
are derived in a different way, can vary based on an individual
patient’s circumstances, Sutter said.
All of Sutter’s hospitals showed significant spreads in their negotiated
prices on the seven inpatient procedures, though the largest variations
in dollar values came with the priciest types of care. One example is
the Modesto hospital cardiac code, which is for cardiac-valve and other
major procedures involving catheterization, performed on patients with
risk factors.
Seven insurers pay the lowest negotiated rate, $89,752, for their
Medicare plans. The lowest price for a commercial-insurance plan, the
type offered to employers, is $197,900. At the top end, the charge is
$515,697 for patients whose health plans don’t have the hospital in-network.
For hip- and knee replacements, Medicaid and Medicare plans paid the
lowest prices at the Modesto hospital, $3,264 and $16,349, respectively.
The lowest price paid by a commercial insurer totaled $51,895. The
highest rate reached $81,617, again for patients whose insurance didn’t
include the Modesto hospital in-network.
The rates paid by Medicaid and Medicare plans generally don’t cover
costs, a Sutter spokeswoman said.
Around the country, hospitals have bought up rivals and tied in doctor
groups and other types of healthcare. That has given them huge leverage
in rate negotiations with insurers, according to researchers and
health-insurance executives.
Research suggests hospital prices rise with consolidation, healthcare
economists said. The hospital industry has said its mergers aim to add
efficiency and improve quality. One recent study found no quality gains
after deals.
Sutter’s rates are generally high compared with other hospitals,
according to prior research by the Rand Corp. think tank.
Mr. Dean, Sutter’s chief financial officer, rejected the idea that the
level of its prices or their range across health plans reflected greater
leverage for the hospital system in negotiations with payers. “The
variation in the data reflects robust competition in the markets for
commercial insurance,” he said.
Insurers give priority to some services for pricing negotiations over
others, depending on the health plan network and members covered by the
plan, he said. Plans also negotiate prices for groups of services, not
individually.
Also, a big insurer will likely have several rates for the same hospital
service among the types of plans it offers. For instance, at a Sutter
hospital in Berkeley, Calif., Anthem Inc. is paying several different
prices for a vaginal birth. Its Medicaid plan pays $6,337, according to
the Sutter data. But the rate listed for Anthem’s commercial plans is
more than double that, at $14,928.
The outside of the Sutter Health Alta Bates Herrick Campus medical
center in Berkeley, Calif.
Photo: Smith Collection/Gado/Getty Images
An Anthem spokeswoman said its contracts with hospitals “achieve sizable
overall savings for our members and employers,” and “looking at a list
of prices without the full context makes it impossible to draw
meaningful conclusions.”
C-section prices at the Van Ness location of Sutter’s California Pacific
Medical Center provide a fuller picture of the results of the
behind-the-scenes price-setting process.
As is typical, the lowest rates are for insurers’ plans under programs
such as Medicare and Medicaid. That’s the case for the $6,241 price tag
at Sutter’s Van Ness location for the Health Plan of San Mateo, a
nonprofit that mostly covers Medicaid enrollees. A spokeswoman for the
plan said it pays hospital rates mandated by the state.
There’s a significant jump from those prices to the rates paid by
commercial insurers. Among the lower of these is the $15,753 Sutter
charges its own plan, and a $16,922 rate it charges for patients covered
by a UnitedHealth Group Inc. product with a limited network of
healthcare providers.
Major national insurer Cigna is paying $29,257 for the C-section. At the
top of the scale, in some cases, Sutter is charging $60,584 for the
procedure when the hospital is out of the insurer’s network. And for
those patients who pay cash, the listed rate is $38,264.
Sutter’s Mr. Dean said that its own plan and the UnitedHealth plan help
integrate care within its system, so “we can deliver greater value at a
lower cost.”
A UnitedHealth spokesman said that its plan may have lower rates
“because we work with high-performing providers to lower healthcare
costs through improved health outcomes, data sharing, and a
more-coordinated care experience.”
A Cigna spokesman said it supports price transparency, and the limited
example examined by the Journal “is in no way indicative of value nor
cost competitiveness.”
Write to Anna Wilde Mathews at anna.mathews-at-wsj.com, Tom McGinty at
tom.mcginty-at-wsj.com and Melanie Evans at Melanie.Evans-at-wsj.com
--
So many immigrant groups have swept through our town
that Brooklyn, like Atlantis, reaches mythological
proportions in the mind of the world - RI Safir 1998
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but incompatible with living as a free human being. -RI Safir 2013
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