Momentum is growing, finally, for a crackdown on the disgraceful practice of price gouging in the healthcare industry – and the devastating effect it has on so many American patients and families.
Major national news coverage by, among others, the New York Times, Time magazine, and ABC news have focused an unflattering spotlight on hospitals, drug companies, insurers, medical device manufacturers, doctors, nursing homes, medical labs, and other sectors.
Hospitals, where patients are at their most vulnerable, have drawn probably the most scrutiny.
Such as the $55,000 bill for appendectomy surgery at Sutter General Hospital in Sacramento. The 20-year’s bill, first posted on the social media site Reddit rapidly went viral, then gained additional prominence with the help of ABC’s Sydney Lupkin.
Or the story of Sean Recchi, profiled by Steven Brill in Time magazine last year who had to pay MD Anderson Cancer Center in Houston $48,900, due in advance for treatment for non-Hodgkin’s lymphoma.
Or on a smaller scale, Chelsea Manning, hit with a $3,000 bill from a Port Huron, Mi. hospital for six stitches after she tripped while running, as New York Times reporter Elizabeth Rosenthal recently wrote.
Hospitals have tried to deflect the unwanted attention by claiming the charges are random and that the big corporate hospital giants are just victims to being cruelly battered in the marketplace by the insurance companies or other industry players.
But National Nurses United, and its research arm, the Institute for Health and Socio-Economic Policy, which has been collecting and analyzing hospital pricing data for more than a decade, puts the dissembling from hospital board rooms to rest.
New data released earlier this month by NNU shows that some hospitals jack up their prices up to 12 times above their costs. And, that there are clear trends in the findings.The main hospital industry defense is that the charges don’t matter because Medicare and Medicaid set the rates they will pay and insurance companies negotiate discounts to the list price.
• The more hospitals charge, the more they get back in payments.
• Hospitals that charge the most have the biggest profits.
• Charges are set the highest by large corporate chains, especially the for-profit hospital systems. And average charges are highest in states, like Florida which are dominated by such chains, and lowest in states like Maryland, which do a better job regulating their hospitals.
• Lowest charges are found at publicly run hospitals, those operated by state, county, or local governments. Not coincidentally these are the hospitals that more often have the most disclosure of their budgets, hold public meetings, and have boards that can be elected and unelected.
• As a result of failure to crack down on the abuse, charges continue to skyrocket. Hospital charges in the most recent year, 2011-2012, increased by 22 percent over 2010-2011, the single largest increase since IHSP began tracking the publicly available data.
But the higher the starting charge, the more the insurer will end up paying. Then the profit-focused insurers, of course, just pass along their higher costs to employers, who shift the burden to employees in the form of higher co-insurance, deductibles, co-pays and other out-of-pocket costs, or to individual ratepayers.
Then there’s the uninsured who typically get the bill for the full list prices. Hospitals may write off the bill, so they can boast how much they supposedly provide in uncompensated care or “bad debt” after inflating the prices. Or they demand payment up front, or turn the patient over to bill collectors afterwards with patients and families facing financial ruin or bankruptcy.
In a 2005 Lewin Group study of hospital pricing practices for the Medicare Payment Advisory Commission, several hospital execs let the truth escape. “Our key goal is to help the hospital meet its profitability and cash flow needs,” said one. “Our price updates focus on areas that give us the biggest bang for the buck,” said another.
Nurses know well the terrible impact of high charges.Most RNs can cite similar experiences, patients delaying even life prolonguing treatment, such as chemotherapy, or cutting pills in half, or not going for the diagnostic test recommended by their doctor. Or paying the high costs and cutting back on other family necessities, like shelter or food. Or facing bankruptcy due to medical bills, still the number one cause of personsal bankruptcy in the U.S.
As NNU Co-President Jean Ross, RN told ABC’s Lupkin, skimping on care, patients often pay for it with their health. “If you are presented with a bill, and you know that bill is something you can’t afford, you’re not going to go in,” Ross said.
“The first question — instead of triaging their physical and mental state — is not how ill you are but what kind of insurance you have,” Ross said. “That never was asked before, not when I started nursing. That didn’t come up as a question, nor should it.”
A Commonwealth Fund study released in November 2013 comparing 11 developed nations found the U.S. adults have the most likely to forego medical treatment due to cost and spend the most out of pocket on care.
More than a third, 37 percent of U.S. adults chose not to see a doctor, follow up with recommended treatment or filled prescriptions due to high cost, compared to just 4 percent of respondents in the United Kingdom. The difference? The UK has a national healthcare system which effectively controls cost – and does not exclude anyone.
Even industry analysis now cite the building pressure on policymakers, employers, consumers and the media to publicly reveal the prices charged and reimbursements they actually get is “forcing providers and payers to reconsider their long standing opposition to price transparency.”
That’s one important step. But stronger medicine is needed as well, such as:
• Tougher regulation on price gouging by hospitals, and on other healthcare industry sectors that inflate prices, including pharmaceutical, insurance companies, medical device manufacturers, medical labs, nursing homes.
• A crack down on non-profit hospitals that abuse their tax exempt status by inflating prices while providing little in return in charity care. A provision in the Affordable Care Act would allow the repeal of tax-exempt status for non-profits that engage in price gouging but it has never been enforced due in part to hospital industry lobbying.
• Increased support for public hospitals, which have the lowest charges over cost and the most public oversight and accountability, yet face cut after cut in public budgets.
• Transformation of our healthcare system from a profit-driven industry to one based on patient need with a uniform standard of excellent care and effective public controls of pricing practices. The best way approach, expanding and improving Medicare to cover everyone.