Hospital Shuns Original Medicare Users: Lawmaker

Some members of the U.S. House are wondering whether the big hospitals’ health systems have too much market power.

The issue came up often Tuesday, when the House Energy and Commerce health subcommittee held a hearing on transparency and competition in health care.

Rep. Anna Eshoo, D-Calif., said she has been thinking about how a large health system in her area has been responding to would-be patients, because of differences in the reimbursement rates the system gets for different types of patients, after provider network contract discounts and other payment rate rules are applied.

“They were turning away new patients with traditional Medicare but accepting patients who have Medicare Advantage and private insurance,” Eshoo said. “The private-insured are favored over the publicly insured.”

The health system’s new CEO told Eshoo the organization would try to change that strategy, at least for new health care providers, but, later, she found that the organization seemed to be keeping the patient selection strategy in place.

Eshoo said that she thinks insurers are in a much better position to negotiate prices than the patients, but that, in some cases, health systems have bought up all of the competitors and have no need to do much for the insurers.

“They can demand that insurers pay whatever price they set,” Eshoo said.

What It Means

Members of Congress have noticed that health care system players other than health insurers may contribute to rising health care costs and the lack of easy-to-find information about costs.

The Hearing

Health insurers and health care policy specialists have been talking for decades about the effects of lack of competition, complicated pricing structures and lack of easy patient or employer access to detailed price information on the cost and quality of U.S. health care.

During the administration of former President Donald Trump, Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, tried to increase price transparency by releasing price transparency regulations.

Trump himself issued executive orders setting price posting requirements for hospitals and insurers.

Rep. Cathy McMorris Rodgers, R-Wash., the chair of the full House Energy and Commerce Committee, and Rep. Brett Guthrie, R-Ky., the chair of the health subcommittee, said they organized the hearing because of bipartisan frustration with the lack of full, useful compliance with the price transparency requirements.

McMorris Rodgers cited the story of a South Carolina woman who needed a biopsy, received a hospital price tool estimate that the biopsy would cost $1,400 out of pocket, and ended up having to pay $5,000 out of pocket.

“Patients shouldn’t be in the dark until after they receive care and their bills come,” she said.

Most hospitals have not complied fully with the hospital price posting rules, and CMS has imposed two penalties on hospitals for price posting failures, McMorris Rodgers said.

Guthrie said he believes many problems with hospitals are the result of mergers and a falling level of hospital competition.

Price Posting Standards

One of the hearing witnesses was Chris Severn, the co-founder and CEO of Turquoise Health, a San Diego-based company that runs a hospital price data service.

Patients can visit the firm’s website, at Turquoise.Health, and look up the cash prices and insurance company-negotiated prices of many different medical procedures.

He noted that the company now provides price data from about 5,100 hospitals, and that the number of hospitals in the system is now much higher than it was two years ago, before the federal price posting rules appeared.

But he added that Turquoise had to write about 1,000 separate software programs to import the data because hospitals reported the price data in so many different formats.

One problem is that the federal government has suggested a standard price reporting format but has not required hospitals to use the format, Severn said.

If hospitals had to use the same reporting format, and describe their pricing strategies in one section of the reports, competition might push them to use better, simpler pricing strategies as well as to lower and standardize their prices, Severn said.

Another witness, Sophia Tripoli, director of the Center for Affordable Whole Person Care at Families USA, suggested that one way to improve the price data would be to require all hospitals to give actual dollar prices.

Today, she said, many hospitals report prices based on formulas, such as the ratio of the hospital’s price to the price Medicare pays.

Severn said that he’s hoping that the No Surprises Act will lead to improvements in health care cost transparency, by letting patients dispute bills when health care providers’ “good faith estimates” of the cost of care are more than $400 too low.

The Insurers

Lawmakers and witnesses did have some harsh words for health insurers.

Rep. Buddy Carter, R-Ga., accused health insurers of hurting independent pharmacies by buying pharmacy benefit managers and using the PBMs to steer prescription business toward mail-order pharmacies owned by the PBMs.

Carter said Congress should forbid health insurers from owning PBMs.

“To me,” he said, “it’s a direct conflict of interest.”

Pictured: Rep. Anna Eshoo, D-Calif. (Photo: U.S. House)