When a baby is about to arrive, every minute counts. Yet when Jen Villa of Salinas, California, was in labor, she and her partner drove 45 minutes in the middle of the night, bypassing nearby hospitals to reach one they could afford.
For years, the price of hospital care has been hidden from patients, companies and taxpayers who get the bills — and that secrecy has made a hospital visit in some places prohibitively expensive. It has also fostered disparities, forcing people to pay far more depending on where they go.
Salinas sits in Monterey County, known for cliffside estates in Carmel that hug the Pacific and farms where immigrant workers harvest lettuce. The county is also distinctive in another way: Its three hospitals are among the most expensive in the US. They’re so costly that local teachers like Villa must pay an extra $10,000 a year if they want an insurance plan that will cover a visit to one of them.
Villa made $71,000 before taxes in 2018, the year her son Benjamin was born, and couldn’t afford that coverage. She’s outraged at the cost of care in her town.
“We are teaching your children,” she said, “and we can’t come to your hospital.”
US Spends Most in World on Health Care
Share of GDP spent on health care, by country
Note: Data is from 2020.
Source: World Bank
The US devotes more resources to health care than any other country, with patients, employers, and government health programs spending $4.5 trillion last year. Hospitals get the biggest share by far, taking in more than three times what Americans spend at the pharmacy on prescription drugs. Rising hospital prices have helped make health insurance more costly.
Federal rules put in place in 2021 require hospitals to make their prices public so consumers can compare them and know ahead of time how much going to one will cost. While many hospitals have been slow to comply, the emerging picture has revealed imbalances that leave patients like Villa weighing saving money against being seen by a preferred doctor or at facilities closer to home.
Read more: A Fifth of US Hospitals Have Been Warned Over Secretive Prices
A Bloomberg News analysis of data compiled by Rand Corp. found more than 350 hospitals in communities across the US with significantly lower-cost competitors within 5 miles. More than half the time, the less expensive facilities had quality ratings that were similar or superior to their pricier neighbors. If patients are willing to travel as far as Villa did for lower cost care, they’re likely to find it: Almost half of US hospitals are within 30 miles of a significantly less expensive competitor, according to Bloomberg’s analysis of the Rand data.
Such inconsistencies seem to defy the normal market forces that shape prices for most goods and services. Large employers who pick up a big chunk of the US health-care tab are feeling the limits of their power.
“Our members pay over $350 billion a year for health care. They are paying a lot of money and what they say is that health is not improving, they are not getting good value,” said Elizabeth Mitchell, chief executive officer of the Purchaser Business Group on Health, which represents large employers including Walmart and Boeing.
The group praised a bill passed in the House in December to strengthen transparency rules and has implored officials to restrict practices that can quash competition.
“The market is not functioning and there needs to be some form of government intervention,” Mitchell said.
A 45-minute trip while she was in labor saved Jen Villa thousands of dollars.
Photographer: Michaela Vatcheva/Bloomberg
Employers and unions across the US are demanding greater transparency as companies face rising legal exposure over how they spend worker health funds. Employers have even sued insurers to get information about how their money is being spent.
The hospital industry says variation in prices isn’t a problem. “There’s this notion that hospitals are a monolith,” said Benjamin Finder, director of policy at the American Hospital Association. The group lobbies on behalf of about 5,000 US hospitals and tried unsuccessfully to block the price-transparency rules in court.
Hospitals may have different staffing requirements or other underlying costs, Finder said, which can affect pricing. Some hospitals seek higher payment rates from insurers that tend to deny claims or put up hurdles to care. The AHA pointed to research showing that dominant insurers tend to pay hospitals less and said some don’t fully pass the discounts they negotiate with care providers back to the people they cover.
The AHA also questions the research on price disparities. The data analyzed by Rand, from employers that joined its study and some state databases, may not accurately reflect the broader market, Finder said. The group has said Rand’s study “jumps to unfounded conclusions based on incomplete data.”
If you can’t afford those plans, what we recommend as part of your birthing plan is you drive outside the county.
Kati Bassler, President of Salinas Valley Federation of Teachers
In Monterey County, groups that pay the hospital bills say the local prices defy explanation.
It’s highly unusual for a health plan to send patients to faraway hospitals to give birth. But Kati Bassler, who leads the Salinas Valley Federation of Teachers, said the union plan pays tens of thousands of dollars more for births in the county than in neighboring hospitals, and insurance premiums need to reflect that.
“If you can’t afford those plans, what we recommend as part of your birthing plan is you drive outside the county,” she said.
Delivering a baby in Monterey County typically costs in excess of $40,000, more than double the US average, according to the Rand data. When Villa gave birth in Santa Cruz County, the tab was $8,354. She owed about $2,500, and her plan covered the rest.
Patrick Pine, who administers a medical plan for thousands of farmworkers in California, said the market looks broken. “They’re not using the normal market incentives that you do in other kinds of business,” he said. “They don’t compete on price.”
None of the three Monterey County hospitals would make executives available for interviews.
Montage Health, the owner of the nonprofit Community Hospital of the Monterey Peninsula, said it offers free or discounted care “to all who apply” with incomes less than four times the poverty level, or $120,000 for a family of four. The group said its prices have increased “less than 5% each year” for the past five years.
“Discounting our rates to a level that does not sustain the long-term viability of our local hospital would be irresponsible,” Montage said in a statement.
A representative for Salinas Valley Health cited salaries and the area’s cost of living as drivers of pricing and said the system is trying to make care more affordable. It subsidizes care for many patients and is trying to reduce its own costs, the representative said.
Both Montage and Salinas Valley Health said that the majority of their patients are covered by government programs like Medicare that don’t cover all of their costs.
Representatives for Natividad, the county hospital in Monterey, didn’t respond to phone and email messages over several weeks.
There’s one state where things are going differently. After years of frustration over rising health costs, employers in Indiana asked Rand in 2016 to compare what businesses paid for hospital care with what the US Medicare program would have paid for the same treatments.
Each company handed over medical claims data that allowed Rand’s researchers to make broad comparisons among hospitals. The researchers found steep markups relative to Medicare, and big price jumps from hospital to hospital.
Rand’s first analysis, published in 2017, found employers were paying $2.72 for every dollar Medicare would have paid, on average. The economists then expanded the study nationwide, drawing on data from about 1.3 million inpatient stays and 12 million outpatient visits.
Price Disparities Deepen for Outpatient Services
Average commercial treatment prices paid relative to Medicare, per state
Note: Maryland is not included in the Rand study. Data show unweighted averages.
Source: Bloomberg News analysis of Rand 4.0 Supplemental Data
Rand’s most recent analysis last year found that, on average, employers paid more than double Medicare rates in 2020. In Indiana, prices were higher than that, at almost triple Medicare rates.
“Our legislators and everybody else lost their minds,” Gloria Sachdev, chief executive officer of the Employers’ Forum of Indiana, said at a recent conference. “They were like, ‘What do you mean? We’re Indiana, we’re in the middle country, why would we be high?’”
The American Hospital Association rejects Medicare as a benchmark for private prices. Pegging payments to “inadequate Medicare rates would cause even more financial strain to hospitals already facing tremendous challenges,” the AHA said.
Yet higher prices generally aren’t linked to better care, according to a 2020 review of dozens of studies. And while hospitals often say they must charge insurers more to make up for lower reimbursements from US government health plans, facilities that treat more patients on public plans don’t always charge the highest prices.
Some employer groups say the market power of big hospitals is to blame.
“If you have a dominant health system, that kind of drives pricing,” said Chris Skisak, executive director of the Houston Business Coalition on Health, which represents employers. “There’s no competition.”
Thanks to decades of consolidation, most US hospitals don’t have a nearby competitor. Just 4% of hospitals are in competitive markets based on standard measures of market concentration, according to a Bloomberg analysis of data from Yale University’s Tobin Center for Economic Policy.
Most American Hospitals Are Not in Competitive Markets
Hospitals by market concentration
Note: Herfindahl-Hirschman Index is used as variable for market concentration
Source: Yale Tobin Center for Economic Policy
Hospitals provide crucial services, and communities across the US have experienced the pain of losing them to financial pressure. The pricing disparities identified by Rand, however, raise the question of how to keep a hospital financially healthy while ensuring it remains affordable.
Operating profit margins for hospitals “are near record highs as a result of rapidly increasing rates paid by commercial insurers,” the Medicare Payment Advisory Commission, or MedPAC, which advises Congress, wrote in March. The group recommends that the government pay rates high enough to ensure that people on Medicare can access care, but low enough to “maintain fiscal pressure on hospitals to constrain costs.”
Citing more recent strains on hospital finances, MedPAC in December said Congress should boost Medicare payments next year.
The nonpartisan National Academy for State Health Policy, using expense data that hospitals file with the government, estimated hospital “breakeven” rates, or how much they would need to be paid by private plans to cover caring for Medicare, Medicaid and uninsured patients. Its findings suggest that many hospitals could charge plans lower prices.
Private Insurers Pay Rates Above What Hospitals Need to Break Even
Average prices relative to Medicare, by state
Note: Maryland is not included in the Rand study. Data show unweighted averages.
Sources: National Academy for State Health Policy, Rand 4.0 Supplemental Data
Bloomberg News asked to interview executives from each of the 50 hospital systems that Rand identified as the most expensive. Those systems, representing hundreds of hospitals, all got paid at least 3 times Medicare, according to Rand.
We felt like we should put our prices out there, but we said if we put them out there now we’re going to be embarrassed.
Jenni Alvey, Indiana University Health Chief Financial Officer
Only one, Indiana University Health, agreed. The nonprofit is the largest system in the state.
When the US began pushing price-transparency rules in 2018, IU Health realized it would have to make changes, Chief Financial Officer Jenni Alvey said in an interview.
“We felt like we should put our prices out there,” she said, “but we said if we put them out there now we’re going to be embarrassed.”
IU Health pledged in 2020 to bring its prices in line with national averages by 2025, making every number “something that we can completely stand behind,” Alvey said. That meant standardizing prices at 15 hospitals, some of which had been acquired and had rates negotiated under previous owners.
The review led IU to cut prices for many commonly used services. It reduced radiology prices by 45% and ambulance charges by 24%. Specialty pharmacy services were lowered by 30%. For labs, the system now charges the same as Medicare or lower, it said.
Even with those cuts, IU Health made a 23% profit margin on commercial patients in 2022, a cushion it said is needed to subsidize losses on its Medicare and Medicaid patients. Overall, it posted operating income of $120 million in 2022 — an operating margin of about 1.5% — though it lost money on investments, according to its financial statements.
The Covid-19 pandemic, and the higher labor costs and inflation that followed, made IU’s attempt to “right-size” its prices harder, Alvey said.
Jen Villa and her son, Benjamin.
Photographer: Michaela Vatcheva/Bloomberg
Still, employers in Indiana want to drive hospital prices even lower, and they are turning to the government for more help. This year, the state passed a law restricting extra fees at clinics off a hospital’s campus. Employers are seeking even more curbs.
“We have for 21 years at the Employers’ Forum of Indiana been applying market pressure, and it’s not working,” said Sachdev, the group’s leader. “So now we are applying political pressure.”
Even as the battle over how to fix US hospital markets intensifies, however, Americans like Villa are feeling squeezed. Neither market forces nor regulation have curtailed the prices charged by the hospitals in her community. And people who are neither wealthy enough to simply swallow higher bills nor poor enough to get subsidized care are caught in the middle.
As Villa sees it, hospitals have been able to set prices without accountability. “They didn’t do it because they had to,” she said. “They did it because they could.”
from "price" - Google News https://ift.tt/Q0qL9SJ
via IFTTT
No comments:
Post a Comment