Cash is king. That truism may hold for thrifty savers and businesses and individuals buffeted by economic uncertainty. But this realistic view also may be turned on its head for poorer, uninsured patients trying to cope with bankrupting medical bills.
That’s because hospitals — a leading driver of health care costs — gouge with their premium prices those who pay with cash, the Wall Street Journal reported.
The newspaper, working with previously secret pricing data that institutions across the country must disclose now, has given consumers yet another eye-popping view of the elasticity of hospital charges and how they punish the poor:
“Hospitals typically charge different customers different prices for the exact same service, with big discounts for some but not others. Those rates — and wide pricing differences — were confidential until Jan. 1, when a new federal rule required hospitals to make prices public. The newly public prices allow for the first time a comparison of what deep-pocketed insurers pay hospitals versus rates that hospitals set for patients who pay cash. Time and time again, the Journal’s analysis revealed, cash payers are charged among the highest prices. Patients typically pay these cash prices either because they are uninsured or because some services aren’t covered by their health plans. Hospitals generally offer financial aid, but policies vary widely and can be poorly promoted, leaving many uninsured, who are often also low-income, to struggle with unmanageable bills.”
The data the newspaper crunched showed that cruel billing practices prevail all too often for hospitals:
“The Journal’s analysis examined [costs for emergency care] … medical needs individuals often can’t skip even if they lack insurance [including] emergency-room visits, imaging scans and procedures such as an angioplasty and stenting often performed on heart-attack patients … The analysis used data compiled by Turquoise Health Co., a pricing-transparency startup. At least 44% of the country’s roughly 4,900 short-term, rural and children’s hospitals hadn’t published data that complied with the January rule as of June 18, according to Turquoise. The Journal analysis looked at the 1,550 hospitals in the Turquoise data that released both insurance and cash-payment rates.”
The reporting found these disturbing practices:
- “Hospitals routinely bill uninsured patients at their highest rates. About 21%, or 319, of the hospitals did so for the majority of the services included in the analysis. At 171 of those hospitals, the cash rate was higher than all of the rates billed to insurers, or tied for the highest rate, for every service in the analysis.”
- Comparing data coughed up by hundreds of hospitals that also included pricing information for Medicare Advantage plans, “the fees for uninsured patients were 3.6 times the average rates paid by” these programs, whose “Medicare rates are typically set by the government … and are considered a baseline for comparing prices.”
- Some dominant local and regional nonprofits “billed the uninsured at their general hospitals some of their highest prices while also setting some of the most restrictive financial-aid policies for free care nationwide.”
- Cash prices “in the 270 counties where at least two hospitals have disclosed them” had an “average spread between the lowest and highest rates for a complex emergency-room visit” of $1,852.
Mary Daniel, chief executive of ClaimMedic, which helps patients negotiate payment with hospitals, offered a terse, biting summary of institutions’ dealings with poor and uninsured patients:
“It’s really criminal, the mess that our current system is in. It is a deliberate attempt for these hospitals to gouge the uninsured.”
Nonprofit hospitals, of course, get significant tax breaks for providing “community benefits,” including charitable treatment for those in need. Institutions should advise the poor aggressively about financial assistance programs they provide and could benefit the needy. But they don’t, the Wall Street Journal and other news organizations have found. Instead, desperation may compel patients finally to get gnarly about medical bills — and contest them to the nth degree.
Battling medical bills
Elisabeth Rosenthal, a seasoned health journalist and onetime practicing doctor, has written extensively on this topic. And the Kaiser Health News service, the health and medicine news site she leads, has just interviewed Marshall Allen, a top investigative journalist from the Pulitzer Prize-winning ProPublica news organization about how to fight medical bills. He offered ideas he developed as he worked on his new book, “Never Pay the First Bill: And Other Ways to Fight the Health Care System and Win,” and here are two:
“Hospitals sometimes sell old debts to third parties, who have the right to keep whatever they collect. Marshall found out how much those third parties pay: 2 to 5 cents on the dollar. So, if you’re on the line with someone like that, he says they might accept just 15% of the total. That’s a good return for them. That data? It gives heft to Marshall’s magic phrase: I’m sure we can come to an agreement that works for both of us.”
“[I]insurance companies make all kinds of weird deals with doctors and hospitals. Sometimes they agree to pay a hugely inflated price — and we can end up on the hook. Because we’ve got a high deductible– the amount we pay before insurance kicks in. Or because we’re supposed to pay a certain percentage. And a percentage of a hugely inflated price could be a lot. So, if you need a medical device, Marshall’s book reminds us, maybe you could buy it online. Sometimes a discount-drug service like GoodRx could get you a cheaper price than your insurance. And it never hurts to ask a provider: How much would it be if I just paid cash? Marshall gave that one a shot, just for kicks … He picked a couple very common, basic lab tests — like a blood count and a metabolic panel — and called an independent lab near his home. First, he asked how much he would pay with his insurance, then the cash price. In both cases, he would’ve paid three times as much by using his insurance. More than 60 bucks, versus about twenty.”
In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent health care. This has become an ordeal due to the skyrocketing cost, complexity, and uncertainty of treatments and prescription medications, too many of which turn out to be dangerous drugs.
As patient advocates look at ways to slash at bankrupting health care costs, they have put hospitals squarely in their sights, as these institutions have become a major driver of spending, taking up roughly 1 of every 3 dollars spent in this area (~$1.2 trillion in 2018 alone).
A better way?
Sure, hospitals and the people in them need to make a reasonable return. But grinding down patients and their families by grubbing mercilessly for every penny is a poor way for any enterprise to treat its customers. This is exponentially more so with hospitals exploiting the poor to pad their financial statements.
Just what would the U.S. health care system look like if, for example, hospitals eliminated pricing games? Could we and they get rid of a giant, inefficient bureaucracy if hospitals didn’t operate a labyrinthine system of varying prices — not only jiggling and juggling them for the poor and uninsured but also so they extract more from the insured to cover so-called shortfalls in what the federal government, one of the largest payers, shells out through programs like Medicaid and Medicare? How much simpler would life be all around for everyone if, for example, hospitals would not seemingly pluck prices out of the air but instead would agree to take as compensation for services a reasonable multiple of what Uncle Sam will pay? Would 2 or 2.5 times that baseline be fair? Why must it so often be so much more?
President Biden, by executive order (and with critical details to be filled out in the days ahead), has pushed the federal bureaucracy to improve U.S. health care, especially by boosting competition that brings out the best in us, the Wall Street Journal reported.
He has ordered government officials to put out a plan, asap, to deal with soaring prescription-drug prices. He wants new rules soon to allow hearing aids to be sold over the counter. He has insisted on ways to help expedite imports of prescription drugs from Canada. He has told regulators to revise guidelines for hospital mergers. And he wants more federal support for hospital price transparency rules, addressing surprise hospital billing; and tp standardize plans on the National Health Insurance Marketplace to help comparison shopping.
We have much work to do to both control the soaring cost of our health care system — the most expensive in the world — and the outcomes it produces, now the poorest outcomes among our peers in industrialized Western nations. We can and must do much better.