Hospitals post their charges: almost indecipherable, but important!

The recent Trump administration order to have hospitals post their prices has been widely covered in the media, along with both headlines and articles that make it clear that these prices list are far from…clear! For example, Robert Pear’s article in the NY Times on January 13, 2019, titled “Hospitals Must Now Post Prices. But It May Take a Brain Surgeon to Decipher Them” , starts:

‘Vanderbilt University Medical Center, responding to a new Trump administration order to begin posting all hospital prices, listed a charge of $42,569 for a cardiology procedure described as “HC PTC CLOS PAT DUCT ART.”

Baptist Health in Miami helpfully told consumers that an “Embolza Protect 5.5” would cost them $9,818 while a “Visceral selective angio rad” runs a mere $5,538.’

The Arizona Star piece on Tucson hospitals had a more moderate title, “Hospitals post prices, but public can find it confusing”, but made the same points. As a physician (if not a brain surgeon!) I think I can figure out what most of these mean, but the point that they are making is that they are hard for almost everyone to understand. The reason, of course, is that they have simply posted online their “chargemasters”, the price list that they supply to insurers (including Medicare and Medicaid), which are based on the nationally used “procedure codes”; these are numbers which identify different treatments that are abbreviated as above. So, the charge at Baptist for a radiologist injecting dye into an artery supplying your intestines is only a little over $5,000, while Vanderbilt charges over $42,000 to do a surgical procedure to close a shunt artery in your heart that is vital to fetal circulation but normally closes spontaneously after birth. The question is, what does all this mean? And what are you and I supposed to do with this information?

Elisabeth Rosenthal, the emergency room physician turned NY Times reporter turned editor of Kaiser Health News, is more optimistic in her Times Op-Ed on January 22, 2019, “Donald Trump did something right”. She acknowledges the opacity of the posted charges to most people, but says it is a great step forward, because they are accessible, at least to those who are academic experts, and can be compared, both one hospital to another (“Maybe, just maybe, a hospital will think twice before charging a $6,000 “operating room fee” for a routine colonoscopy if its competitor down the street is listing its price at $1,000”), and to alternative treatments (“With access to list prices on your phone, you could reject the $300 sling in the emergency room and instead order one for one-tenth of the price on Amazon.”) Obviously, these would not be easily available on your phone now, but her hope and expectation is that third parties will develop apps that will take this nearly impenetrable information and make it easily accessible to people, as apps such as GoodRx® have done for drug prices. She emphasizes the magnitude of this change, since before now these prices have been closely-guarded secrets.

Rosenthal makes a number of other important points that illustrate the fact that this system is not only opaque, but deeply morally corrupt. Hospitals are run as businesses, to make money, even when they are ostensibly “non-profit”. Their CEOs and other executives are mostly businessmen, CPAs and MBAs – even when they are physicians, which sometimes happens, they are usually also MBAs – and are hired for their ability to run a money-making operation that happens to sell health care. And sell it, to your insurance company, at what often seems like deeply discounted prices because they are based on absurdly inflated chargemasters. “You don’t really want to change your charges if you have a Saudi sheikh come in with a suitcase full of cash who’s going to pay full charges,” says one CEO. More important, it allows them to reach agreements with insurers to pay a lot less than the official “price”, which in turn allows those insurance companies to brag to you about how much money they saved you. Rosenthal notes this is farcical, raising prices to make you think that you got a discount (‘If a supposedly $1,000 TV is “on sale” for $80, it’s not really a discount. It’s an absurd list price’), and that it emulates practices in other arenas, such as airlines overestimating their flight times to make it seem like they have a better on-time percent.

At a higher level, Rosenthal points out what is wrong is that these inflated charges do make a difference. Your co-pays and deductibles, if you are insured, are based upon the amount that your insurer pays, so that if they have agreed to pay only 20% of the listed charge, $200 for the TV set instead of $1000, you still may pay more than if you bought it for $80 cash. And certainly more than if the insurer were paying 20% of the old list price, say $500. You pay. You always pay. (See, for example, how insulin manufacturers and insurance companies and pharmacy benefit managers, each following their own profit incentives, have made insulin – a life saving treatment for millions of people with diabetes – often unaffordable: Danielle Ofri, “The Insulin Wars”.)

And, of course, there is the nasty little glitch that it is the most vulnerable and most needy, those who are uninsured as well as sick, and often poor, that get charged the full list price, the $1000 for the TV, or the ostensible “uninsured discount”:

When Wanda Wickizer had a brain hemorrhage in 2013, a Virginia hospital billed her $286,000 after a 20 percent “uninsured” discount on a hospital bill of $357,000 — the list price, according to chargemaster charges. Medicare would have paid less than $100,000 for her treatment.

Wait. Medicare? Medicare would have paid a quarter of their list price and a third of what this uninsured person got billed with the “discount”? Yes. And that is a place to start. Hospitals – or the third-party app developers that will let you see these prices on your phone – should be required to list the Medicare-approved payment right next to what they will charge you, or your insurer. That would measurably increase the “light of day”.

Of course, some doctors and hospitals do not want to accept Medicare for this reason – they can charge more money to insurance companies, who pass it on to you in premiums (in addition to your co-pays and deductibles) while claiming to be saving you money. There is a solution to this also, although Rosenthal does not mention it. It is to have everyone in the same insurance program, a single payer, an improved and expanded Medicare for All. This would set the rates and pay them, without co-pays or deductibles for necessary services. Everyone in the same plan would mean that the better educated, wealthier, and generally more empowered would ensure that it worked for them – and thus would work for everyone else, middle-class, poor, and even homeless.

Yes, hospitals and other service providers (physicians, nursing homes, etc.) and drug companies and insurance companies would make less profit. I’m sure that your heart goes out to them (maybe the next requirement could be the posting of the salaries of the C-suite executives at hospitals…). But, after all, what the health care system should be run for, and is run for in every other developed country, is the health of the people, not the profit of corporations.

Amazing, huh? And it could be that way here!