The Center for Medicare and Medicaid Services directed healthcare systems to disclose the negotiated (actual) rates insurance companies pay for certain services effective Jan. 1. The American Hospital Association sued to thwart the execution, but the judicial system refused to stop implementing it.
Aside from the hospitals’ legal argument about their contracts with insurance companies, their argument was that patients really didn’t care what the insurance companies paid the providers. They only dealt with their costs after the deductible and co-payment.
That’s probably true to some extent. However, the majority of all payments to health systems come from employers’ health plans and those with high-deductible plans. These groups take care of the total cost and become the first direct beneficiaries of transparency.
There are basically two different purchasing groups for health care. One includes patients facing an emergency who do not have the time or resources to make health care purchasing decisions, and patients with very complex care needs rely on the health system to ensure they receive adequate care at high levels Quality receive reasonable pricing.
A third-party attorney who is familiar with the local hospitals and doctors could ensure they are receiving quality treatment. Lawyers could be embedded in groups of first responders. Price transparency provides cost information.
With appropriate quality information, the lawyer can help the patient to find their way around the provider environment. When someone needs an emergency room for an accident or traumatic health condition, having the closest facility with the ability to handle the situation is the deciding factor. In emergency situations and in the context of complex care, price transparency will soon be discovered by first aiders and lawyers. When this is combined with quality data, convenience, and technical ability to provide emergency and complex care and then inform the public, it will provide the incentive for groups of providers to deliver value.
The other group are patients who have the time to make a decision about who to use for elective surgery, imaging, and chronic disease management in primary care. Companies can incentivize their employees to use the lower-cost, higher-quality facilities.
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Individuals with high deductible plans can choose providers based on cost, quality, and convenience. Why pay double for an MRI or knee replacement when quality and comfort are the same? Even with trauma and complex care, employers can encourage employees to use facilities that offer the best value.
Not much has been done in South Carolina to conform to the spirit and intent of the new federal regulation.
In a recent Deloitte survey, only a third of nationwide hospital systems met the requirements. However, there is cost information recently released by Healthcare Dive. At California Pacific Medical Center Van Ness, the price of a specific joint replacement ranges from $ 22,865 to $ 101,571. In Chicago, the price ranges from $ 4,613 to $ 50,680. In New York, the range was between $ 14,202 and $ 45,387. At Florida Health Shands in Gainesville, the price ranged from $ 8,114 to $ 66,734.
These prices represent the highest and lowest fees that insurance companies pay for the same common replacement procedure. Same facility, same surgeon, insane price difference. There is no reason to believe that we will see anything else in South Carolina’s health systems.
With prices published, corporate health plans and high-deductible policyholders can use this information to make material changes to the way they purchase health benefits. Another point: private groups of doctors do not have to publish their tariffs, although some do.
Studies have shown that outpatient surgery centers run by private doctors are paid around 40% less for outpatient operations than for health systems. The same surgeon again, the same quality result, lower costs. The more transparency we have, the better our system becomes.
James H. Suddeth Jr. is the past chairman of Palmetto Richland Hospital and vice chairman of Palmetto Health, now Prisma Midlands, and CEO of Suddeth Healthcare Solutions.