Effort to Decipher Hospital Prices Yields Key Finding: Don’t Try It at Home

Although the No Surprise Act and Transparency in Coverage Rule have become the law of the land and consumers are technically protected, price transparency is still ridiculously complex.  For those hoping to anticipate the total cost of their medical procedures and compare prices among hospitals you still may want to enlist the assistance of a professional advocate.

By Bernard J. Wolfson – JULY 9, 2021

Sutter Health negotiates separate deals with numerous health plans, and its prices can vary by thousands of dollars for the same service, depending on your insurance.

federal price transparency rule that took effect this year was supposed to give patients, employers and insurers a clearer picture of the true cost of hospital care. When the Trump administration unveiled the rule in 2019, Seema Verma, then chief of the Centers for Medicare & Medicaid Services, promised it would “upend the status quo to empower patients and put them first.”

Asking Never Hurts

A series of columns by Bernard J. Wolfson addressing the challenges consumers face in California’s health care landscape.

Send questions to bwolfson@kff.org.

I set out to test that statement by comparing prices in two major California hospital systems. I am sorry to report that, at least for now, that status quo — the tangled web that long has cloaked hospital pricing — is alive and well.

I have spent hours toggling among multiple spreadsheets, each containing thousands of numbers, in an effort to compare prices for 20 common outpatient procedures, such as colonoscopies, cataract surgeries, hernia repair and removal of breast lesions.

After three months of glazed eyes and headaches from banging my head against walls of numbers, I am throwing in the towel. It was a fool’s errand. My efforts ultimately yielded just one helpful piece of advice: Don’t try this at home.

I was most of the way to that realization when a conversation with Shawn Gremminger helped push me over the line.

“You are a health care reporter, I’m a health care lobbyist, and the fact that we can’t do this ourselves is an indictment of where things stand at this point,” said Gremminger, health policy director at the Purchaser Business Group on Health, which represents large employers who pay their employees’ medical bills directly and have a big stake in price transparency. “The subset of people who can do this is pretty small, and most of them work for hospitals.”

I heard similar comments from other veterans of the health care industry, even from the former managed-care executive who inspired the story.

He had come to me with a spreadsheet full of price info that appeared to show that a Kaiser Permanente hospital in the East Bay charged significantly higher prices for numerous procedures than a nearby hospital run by archcompetitor Sutter Health.Top of Form

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That was a compelling assertion, since Sutter is widely viewed in California as the poster child for excessive prices. Nearly two years ago, Sutter settled a high-profile antitrust case that accused the hospital system of using its market dominance in Northern California to illegally drive up prices.

I knew from the outset it would be tricky to compare Kaiser and Sutter because, operationally, they are apples and oranges.

Sutter negotiates separate deals with numerous health plans, and its prices can vary by thousands of dollars for the same service, depending on your insurance. Kaiser’s hospitals are integrated with its insurance arm, which collects premiums — so, in effect, it is playing with house money. There is just one Kaiser health plan price for each medical service.

Still, the story seemed worth looking into. Those Sutter and Kaiser prices matter, because they are used to calculate how much patients pay out of their own pockets. And helping patients know what they’ll owe in advance is one of the goals of the transparency rule.

The federal rule requires hospitals to report prices for all the medical services they provide in huge spreadsheets that can be processed by computers.

It also obliges them to provide prices in a more “consumer-friendly” format for 300 so-called shoppable services, which are procedures that can be scheduled in advance. And it requires that they report the cost of any “ancillary services,” such as anesthesia, typically rendered in concert with those procedures. Of the 300 “shoppables,” 70 are specified by the government and the rest are chosen by each hospital.

Kaiser Permanente is both a provider and an insurer: Its hospitals are integrated with the insurance arm, which collects premiums — so, in effect, they are playing with house money.

Most of the 20 common medical procedures I attempted to compare were among those 70. But a few, from lists of top outpatient procedures provided by the Health Care Cost Institute, were not. I decided to use the more comprehensive, less friendly spreadsheets for my comparisons, since they contained all 20 of the procedures I’d chosen.

Each carried a five-digit medical code known as a CPT, a term trademarked by the American Medical Association that stands for “current procedural terminology.” The transparency rule requires hospitals to include billing codes, because they supposedly provide a basis for price comparison, or in the rule’s jargony language, “an adequate cross-walk between hospitals for their items and services.”

Much to my chagrin, I soon discovered they don’t provide an adequate crosswalk even within one hospital.

My first inkling of the insuperable complexity came when I noticed that Sutter’s Alta Bates Summit Medical Center in Oakland listed the same outpatient procedure with the same CPT code three times, thousands of rows apart, with entirely different prices. CPT 64483 is the designated code for injection of anesthetics or steroids into a spinal nerve root with the use of imaging, which relieves pain in the lower back, legs and feet caused by sciatica or herniated discs. The spreadsheet showed a maximum negotiated price of $1,912 in row 12,718, $3,650.85 in row 19,014 and $5,475.80 in row 19,559 (let your eyes glaze over for just a few seconds, so you know what it feels like). The reason for the triple listing is tied to Medicare billing guidelines, Sutter later told me. I’ll spare you the details.

My head really began to hurt when I decided to double-check some of the prices I had pulled from the big spreadsheets against the same items on the shorter shoppables sheets. Kaiser’s prices were generally consistent across the two, but for Alta Bates, there were large discrepancies.

The highest negotiated price for removing a breast lesion, for example, was $6,156 on the big sheet and $23,069 on the shorter one. The difference seems largely attributable to the estimated cost of additional services, some rather nonspecific, that Sutter lists on the smaller sheet as accompaniments to the procedure: anesthesia, EKG/ECG, imaging, laboratory, perioperative, pharmacy and supplies.

But why not include them in both spreadsheets? And what do the two dramatically divergent prices actually encompass?

“How many bills they really represent and what they mean is difficult to interpret,” said Dr. Merrit Quarum, CEO of Portland, Oregon-based WellRithms, which helps employers negotiate fair prices with hospitals. “It depends on the timing, it depends on the context, which you don’t know.”

In some cases, Sutter said, its shoppables spreadsheets show charges not only for ancillary services typically rendered on the day of the procedure, but also for related procedures that may precede or follow it by days or weeks.

The listings for Kaiser’s ancillary services do not always match Sutter’s, which further clouds the comparison. The problematic fact of the matter is that hospitals performing the same procedures bundle their bills differently, use different medications, estimate varying amounts of time in the operating room, and utilize more or less advanced technology. And physician charges are not even included in the posted prices, at least in California.

All of which makes it almost impossible for mere mortals to anticipate the total cost of their medical procedures, let alone compare prices among hospitals. Even if they could, it might be of limited value, since independent imaging centers and surgery centers, which are increasingly common — and generally less expensive — aren’t required to report their prices.

The bottom line, I’m afraid, is that despite my efforts I don’t have anything particularly insightful to reveal about how Kaiser’s prices compare with Sutter’s. The prices I examined were as transparent to me as hieroglyphics, and I’m pretty sure that hospital executives — who unsuccessfully sued to stop implementation of the price transparency rule — are not losing any sleep over that fact.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

Bernard J. Wolfson: bwolfson@kff.org@bjwolfson

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10 Ways to Save on Healthcare

As health care costs continue to increase, it is extremely important for consumers to scrutinize the charges they receive.  Medical bills are difficult to understand. In fact, 77% of Americans don’t understand health insurance or medical billing. It pays to have a advocate review your bills and negotiate with medical providers on your behalf.  Their experience, available data resources and relationship with providers will save you time and money. Below are 10 ways you can save on healthcare costs.

By Margarett Burnette, Bankrate.com

As health care consumers endure higher deductibles and reduced insurance benefits, it is becoming more important to understand and even negotiate prices before receiving medical treatment.

Dr. Kathryn Stewart, medical director of care management at Mount Sinai Hospital in Chicago, believes that patients can and should be more proactive about seeking the best prices for their services.

“Hospital costs are probably 40 (percent) to 50 percent of what their (list price) charges are,” she says. But when it comes to billing, “most hospitals are happy to break even or have a little bit of profit.”

This means there is plenty of room to negotiate and reduce your out-of-pocket expenses.

Cutting costs

Shop for hospital care as you would any other consumer service, but with more effort since costs can run really high. You can save yourself a bundle using these strategies.

10 ways to reduce your medical bills
 1. Ask your doctor to be your ally
If you’re shopping around for medical services, you probably have a primary physician who directed you to seek the service in the first place. “You have to get diagnosed by somebody,” says Stewart. “So let that person be your advocate.”
She advises patients to ask their doctors where the best hospitals are for the recommended procedures, which centers will work with patients to lower out-of-pocket costs, and to even ask for help communicating with that facility’s finance department.

“If the hospital where a physician admits is approached by that physician on behalf of the patient, I think (the patient) might get somewhere with the hospital. Let’s say I have a patient in my practice who has one of these really high-deductible (insurance) plans, and they need to have a hysterectomy. (I could) approach the finance department and say ‘I’ve got this patient, but they don’t have (enough) insurance and they can’t afford to pay full price, but they can afford to pay something. Can you work with them?'”

2. Compare costs by using the CPT code
Though your doctor might be willing to initiate a conversation with the hospital finance department, you can still expect to have several conversations with them on your own. Before calling, make sure you have the “current procedural terminology,” or CPT, code for the procedure you are seeking.
“CPT is the industry term for the ‘billing code.’ It’s a five-digit number that is used to bill the procedure,” says Jane Cooper, president and CEO of Patient Care, a health advocacy company based in Milwaukee. Cooper says that your physician or physician’s office can provide you with the code, and the number is the same across hospitals. With this code, you can call multiple medical centers to compare prices for the same procedure.

(more…)

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Cancer costs put treatments out of reach for many

Medical costs are on the rise again. Read about the high costs of cancer treatments that are unfortunately becoming more and more out of reach, not only for the uninsured, but for the insured as well.

By Debra Sherman

(Reuters) – The skyrocketing cost of new cancer treatments is putting advances in fighting the deadly disease out of reach for a growing number of Americans.

Cancer patients are abandoning medical care because the costs are simply too high and medical bills — even among the insured — are unmanageable and put patients at a greater risk of bankruptcy, studies show.

“There’s a growing awareness that the cost of cancer treatment is unsustainable,” said Dr. Lee Schwartzberg, an oncologist who did a study examining the factors that contributed to patients quitting their oral cancer drugs.

Cancer is one of the most costly diseases to treat, largely because many patients are treated over a long term, often with expensive new drugs that are complicated to produce and not available in generic form. As insurance companies cut all benefits, reimbursements on cancer treatments have also declined.

“When it’s an expensive drug, we have to have the hard discussion about a very substantial out-of-pocket payment. I ask: ‘Do you want to spend this money for an average improvement of just a few months of life?’ I’m very uncomfortable having those discussions because I want to focus on the patient getting better,” Schwartzberg, medical director of the West Clinic in Memphis, Tennessee, said in an interview.

Schwartzberg’s and other cost studies presented at the American Society of Clinical Oncology (ASCO) annual meeting come as U.S. lawmakers battle over ways to reduce the national debt, including cuts in healthcare funding. (For full ASCO coverage, see [ID:nN05141382] )

ASCO president Dr. Michael Link, a pediatric oncologist, said access to healthcare should be a national priority.

INSURMOUNTABLE BARRIERS

“We’re thrilled with what we consider to be breakthroughs and wonderful new therapies … yet the barriers for some patients to get them is insurmountable. It is an indictment of how we take care of patients in the United States,” Link said.

Cancer is the second-leading cause of death in the United States, after heart disease. The incidence is expected to increase with an aging population.

The costs for cancer care topped $124 billion in 2010 in the United States, led by breast cancer, according to the National Cancer Institute (NCI). That number is expected to rise as more advanced treatments — targeted therapies that attack specific cancer cells and often have fewer side effects — are adopted as the standards of care. The NCI projects those costs to reach at least $158 billion by 2020.

Until recently, almost all cancer drugs were administered intravenously. Today, about a quarter of them can be given orally, which means fewer visits to the doctor. But pills are often more expensive, have higher co-payments, and are reimbursed by insurers at lower rates than IV drugs, he noted.

Using a database of pharmacy claims paid by private insurers and Medicare, he found, not surprisingly, that those with higher co-payments quit their drugs more often.

Patients with co-payments of more than $500 were four times more likely to abandon treatment than those with co-payments of $100 or less, Schwartzberg said. Claims with the highest co-payments had a 25 percent abandonment rate, compared with 6 percent for co-payments of less than $100.

“Prices of drugs can’t be set so outrageously high,” he said. “We have a problem with cancer care … All stakeholders have to get together and compromise to translate this great science into great patient care without breaking the bank.”

Dr. Yousuf Zafar, an internist at Duke University Health System, did a separate study on the impact high medical bills have on patients’ cancer treatment. (more…)

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A Healthcare System Out of Balance

Why is the price of healthcare for the same procedure dramatically different from one hospital to the next? Why aren’t American’s aware of this? To find out more read the article from The Boston Globe about difference in pricing at Massachusetts Hospitals.

As his patient lies waiting in an adjacent exam room, Dr. James D. Alderman watches while an assistant reaches into a white envelope and pulls out a piece of paper that will determine where the man will be treated. Big money is on the line. of Massachusetts and Harvard Pilgrim Health Care. The gap is even more striking for many individual procedures, which can be two or three times more expensive in one hospital than in another.data shows, but now the escalating prices that hospitals and doctors charge is far more important. A recent Massachusetts study concludes that the price of inpatient care at hospitals is rising by 10 percent a year, while overall use of hospital beds is declining. obtained by the Spotlight Team. The health official who provided the information asked not to be identified for fear of professional retaliation. Though Partners’ rates are not the highest – that would be Children’s – Partners has more effect on statewide costs because its revenue is five times larger.’We were willing to take the risk of challenging payers,’ said Partners chief financial officer Peter Markell, adding that Partners should not have to apologize for a successful strategy. ‘If you are never willing to challenge them, of course they are going to jam it down your throat.’That willingness to get tough turned Partners’ main insurance contracts from money losers a decade ago to the company’s largest source of profit, Partners officials say. Extrapolating from Partners’ internal tally of its insurance revenues, the Brigham and Mass. General receive at least $500 million a year more from the three biggest insurers than if they were paid at the lower rates typical of their rivals. Likewise, Partners’ 6,000 physicians are paid 15 percent to 40 percent more than most other Massachusetts doctors, based on Blue Cross rates, while the company’s community hospitals earn at least 10 percent more than their peers., Tufts, and Harvard Pilgrim. officials discount Partners’ role, while Baker at Harvard Pilgrim says there is a meaningful but hard-to-measure ‘Partners effect’ on statewide insurance costs. And Partners officials themselves have said in the past that their goal was to ‘reset the prices’ paid to hospitals even if it drives up insurance premiums.rates obtained by the Globe.’Shouldn’t there be some correlation between what you get paid for doing something and the quality of what you do?’ asked Beth Israel chief executive Paul Levy last month in remarks at the Massachusetts Medical Society.; the two closely track. The Blue Cross data show that about 10 hospitals – four Boston teaching hospitals and six community hospitals – are paid at least 30 percent above the state average, while 12 hospitals make at least 20 percent below average, including Cambridge Hospital, which earns about half as much per procedure as the Brigham and Mass. General.

Alderman, an interventional cardiologist, plans to open the patient’s clogged coronary artery by inserting a flexible tube with a tiny balloon at the tip. Usually he does the procedure, called angioplasty, at MetroWest Medical Center in Framingham. But he sometimes operates in Boston as part of a research program. One time of every four, by the luck of the draw, Alderman and his patient go to a big teaching hospital in the city.

If the white slip of paper directs him to do the procedure in Framingham, the insurance company will pay the hospital about $17,000, not counting the physician’s fee. If Alderman is sent to Brigham and Women’s Hospital in Boston, that hospital will get about $24,500 – 44 percent more – even though the patient’s care will be the same in both places.’It’s the exact same doctor doing the procedure,’ said Andrei Soran, MetroWest’s chief executive. ‘But the cost? It’s unjustifiably higher.’Call it the best-kept secret in Massachusetts medicine: Health insurance companies pay a handful of hospitals far more for the same work even when there is no evidence that the higher-priced care produces healthier patients. In fact, sometimes the opposite is true: Massachusetts General Hospital, for example, earns 15 percent more than Beth Israel Deaconess Medical Center for treating heart-failure patients even though government figures show that Beth Israel has for years reported lower patient death rates.

Private insurance data obtained by the Globe’s Spotlight Team show that the Brigham, Mass. General, Children’s Hospital, and a few others are, on average, paid about 15 percent to 60 percent more than their rivals by insurance companies such as Blue Cross Blue Shield

This payment pattern has become a driving force in the state’s galloping healthcare costs, and it raises hard questions about why certain hospitals and physicians receive premium pay for care that is no better than that of their competitors. Until now, the growing pay gap has not been subject to public scrutiny because contracts between insurers and hospitals typically include confidentiality agreements.

But an ongoing Spotlight Team investigation of healthcare in this state found scores of payment disparities for routine procedures in which there is no obvious difference in quality. Consider:

(more…)

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