Patient Advocacy

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

Greg Greenfield Leave a comment

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.

A 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

Bottom of Form

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

Read More

This Could Be the Obamacare Outcome we’ve All Been Waiting For

Doug Leave a comment

This often-overlooked long-term goal of Obamacare may be finding the mark according to this latest study from the American Cancer Society.

The third open enrollment period for the Affordable Care Act, best known as Obamacare, has been ongoing for roughly five weeks now. And as seems to be the trend around this time of year, more questions than answers appear to be swirling around healthcare’s law of the land.

Big changes lead to an uncertain future

Obamacare is facing a number of changes in the 2016 calendar year, and, frankly, no one is certain yet how those changes might affect enrollment or patient mix for insurers.

For example, insurance premiums are rising at about their fastest rate in about a decade. The Great Recession held premium rate inflation in check for years, but the failure of more than half of Obamacare’s health cooperatives, coupled with many low-cost insurers coming to the realization that their rates were unsustainably low, are leading to big premium hikes in the upcoming year.

Data from the Washington Examiner showed that 231 insurers requested double-digit percentage premium price hikes in 2016 compared to just 121 in 2015. Furthermore, the magnitude of these hikes — 61 plans are looking for a minimum premium increase of 30% this year — is much higher than 2015. In short, there’s concern that higher premiums could reduce the affordability of the program for those who don’t qualify for a subsidy, leading to a higher uninsured rate.

Meanwhile, the employer mandate will be fully implemented on Jan. 1, 2016. The employer mandate will require that businesses with 50 or more full-time-equivalent employees (FTE’s) offer eligible health coverage to those FTE’s and their dependents under the age of 26, as well as provide financial assistance in instances where low-income FTE’s would be paying more than 9.5% of their modified adjusted gross income out of pocket toward their premium. If qualifying businesses fail to follow the rules, they could be looking at a $2,000 to $3,000 fine per employee.
The big question here is how businesses will respond. Will bigger companies step up and supply health insurance for their workers or will we see layoffs, hour cutbacks, or a move to private health exchanges? Obamacare’s big changes in 2016 are leading to a seemingly uncertain enrollment outlook in the near term.

Obamacare’s incredibly important goal that you probably overlooked

The easiest way to measure the success of Obamacare has always been by its overall enrollment totals. Obamacare was first and foremost designed to reduce the number of uninsured and to utilize the individual mandate and employer mandate to make that happen. The Centers for Disease Control and Prevention reported in Q1 2015 that just 9.2% of U.S. adults remained uninsured, including Medicare patients, which is the lowest figure on record. By this token, Obamacare would appear to be hitting its primary goal.

But there’s an even more important long-term goal that’s often lost on critics when discussing Obamacare’s success or failure — namely, the impact that preventative (and earlier) medical access could have on reducing long-term medical costs.
For insurers, Obamacare is a bit of a give and take. Insurers are enrolling more people than ever, and they’re also being required to accept members with pre-existing conditions. The result is that some insurers, such as the nation’s largest, UnitedHealth Group, are dealing with adverse selection and losing money on their individual marketplace plans because they’ve enrolled a large number of sicker individuals. Even though some of its large peers such asAnthem are healthfully profitable, the margins most insurers are generating on Obamacare plans (if they’re even profitable in the first place) are relatively small.

Now here’s the catch: In exchange for spending more money on their members up front, it’s possible that chronic and serious diseases that are the primary expense culprit for insurance companies can be caught before they become a serious issue. Thus, while health benefit providers may be spending more now than they would like to, their long-term outlook is also looking brighter presuming the current generation of members is now going to be healthier than the last generation given expanded access to medical care.

This could be the outcome we’ve been waiting for.

This last point sounds great on paper, but it’s difficult to prove that Obamacare is really making a dent in lowering long-term healthcare costs, especially since it’s only been the law of the land for about two years. All that consumers and critics can focus on at the moment are the rapidly rising premium prices.

However, a new study from the American Cancer society that was published online in the Journal of the American Medical Association late last month appears to show that there is a correlation between Obamacare’s expansion and a higher rate of cervical cancer diagnoses in select patients.

Researchers from the Department of Epidemiology at Emory University and from the ACS’ Department of Intramural Research analyzed a large database of cancer cases within the United States, separating cervical cancer diagnoses for women ages 21 to 25 in one group from cervical cancer diagnoses in women ages 26 to 34 in the other cohort. The reasoning behind this split? Persons under the age of 26 are still eligible to be covered under their parents’ health plan under Obamacare, and thus the expansion of this dependent clause should give researchers a reasonable correlation of how well Obamacare is affecting the rate of cervical cancer diagnoses.

After examining cervical cancer diagnosis rates for both cohorts before and after the implementation of Obamacare, researchers noted that there was a substantial increase in the number of cervical cancer diagnoses for women ages 21 to 25, whereas the age 26-34 cohort had a relatively consistent number of diagnoses before and after Obamacare’s implementation.

On the surface, a rising rate of cervical cancer diagnoses may not sound good at all. But, in a different context it could be just the news we’ve been hoping for. The key to beating cervical cancer is discovering it early, and presumably being able to stay on their parents’ health plans until age 26 helped the 21- to 25-year-old cohort gain this vital medical access. It’s possible that this early diagnoses not only saved lives, but for insurers that it kept them from shelling out big bucks in mid- to late-stage cancer treatments.

Keep in mind that this is just one example, and one example does not make a trend. However, it’s long been postulated that reducing the barriers to health insurance would lead to a higher medical utilization rate for consumers and a better chance of discovering potentially serious and chronic conditions at an earlier time, thus saving the patients’ lives and cutting insurers’ long-term medical expenses. It’s possible we could be witnessing the first signs of that.

Understandably, we’ll want to see additional studies emerge that examine disease diagnosis and treatment rates in a pre- and post-Obamacare setting so we can make a conclusive ruling as to whether or not Obamacare could actually lower long-term healthcare costs and improve long-term patient survival rates. The initial signs, though, are very encouraging.

Read More

A Look at the Lives of American Nurses

Doug

Fantastic new book, film and website explores nurse’s critical role at the bedside working within the state of our current healthcare system. This film has received nationwide acclaim and is worth seeing.

By Nancy Szokan, Washington Post

Photographer and filmmaker Carolyn Jones created “The American Nurse” after publishing a coffee-table book on the subject two years ago, and the film builds on the same mix of powerful images with words of men and women whose lives are devoted to healing.

Over the film’s 78 minutes, viewers see Jason Short, an auto mechanic, describe how a bad motorcycle accident taught him what it was like to be helpless and in need of care; he is now a home health nurse in Appalachia. They follow Tonia Faust into her job at the Louisiana State Penitentiary: “People ask me how I can take care of people who have committed such horrific crimes,” she says.

“But when I’m at their bedside, I’m taking care of just another human being.”

The other nurses are a nun who runs a nursing home in Wisconsin, a labor and delivery nurse at Johns Hopkins Hospital in Baltimore and a former Army medic who rehabilitates wounded soldiers in San Diego.

After its premiere before an invited audience, the movie will be distributed nationwide through theaters and health-care centers. To see a trailer and a schedule of screenings go to: www.AmericanNurseProject.com.

Read More

No Easy Answers on Financing Long – Term Care

Doug

By JUDITH GRAHAM, NY Times

This article points out the difficulty in financing long term care for the elderly.  Experts believe more focus should be on finding ways to provide affordable care within the efforts to reform Medicare and Medicaid.  For now, families continue to bear the brunt of the cost associated with caring for the elderly.

The federal Long-Term Care Commission published its full report on Wednesday, but it did little to change the perception that substantial relief for caregivers will be a long time coming.

The commission had endorsed a package of 28 recommendations late last week, prior to the release of the full report. Among other measures, the recommendations call for recognizing caregivers as members of “care teams,” including information about caregivers in patient records, assessing caregivers’ need for support, and making services like respite care more widely available.

But this group of 15 experts couldn’t agree on how to pay for long-term care services needed by frail older adults or people with disabilities. The full report doesn’t change that.

Currently, only those who are impoverished and qualify for Medicaid get significant assistance from the government for long-term care. For the most part, middle-class families are left to bear the burdensome expenses: $18 an hour on average for homemaker services, $19 an hour for home healthcare aids, $3,405 a month for assisted living, $230 a day for a private nursing home room, according to the latest report from Genworth Financial.

How to ease this financial burden was the most important issue facing the commission. In the end, the report proposed two alternatives: some kind of government insurance program for long-term care, or some kind of private insurance option. Then commission members essentially threw up their hands, admitting they couldn’t agree.

When my colleague Paula Span wrote about the commission earlier this year, she asked whether its work would elicit a yawn or a cheer. For many, the answer is neither. Even some commission members feel a sharp sense of frustration and disappointment.

One is Judy Feder, a professor of public policy at Georgetown University, who voted against the commission’s final recommendations on the grounds that they didn’t fulfill Congress’s charge to come up with a comprehensive solution. I asked her about a statement from six of her fellow commissioners insisting that any new long-term care program not enlarge public budgets.

“The current system has a budgetary implication,” Dr. Feder said. “It sticks it to families.”

Another disappointed member is Judith Stein, executive director of the Center for Medicare Advocacy. “The vision in the majority report is not much more than we have now,” she said. “It is, ‘Plan, understand, think about savings and insurance, and provide for those who are impoverished.’ That kind of approach doesn’t meet our long-term care needs now, and it won’t meet them in the future.”

While several of the commission’s recommendations are welcome, they will make a difference only “around the margins,” Ms. Stein said.
Families will bear the consequences, said Ms. Stein and other experts. Elderly spouses will continue to struggle to care for each other, and adult children will strain to balance jobs and the needs of frail parents and their own children. Untold numbers of aging Americans won’t get enough care, and caregivers will suffer from stress and depression, endangering their own health.

If a public insurance program is unaffordable, as several commission members claimed, might the private market supply a solution to the aging population’s need for affordable long-term care? That seems unlikely. Premiums for private long-term care insurance have been rising dramatically, policies are becoming more restrictive, insurers have been exiting the market, and bureaucratic red tape makes it difficult for many individual and families to receive expected benefits.

Financially, the only way to make private insurance work is to spread risk over a wide base of policy holders. But the cost of long-term care coverage makes it unlikely that millions of healthy people will purchase policies. This was the economic calculus that doomed the Class Act, the voluntary long-term care insurance program that was originally part of the Affordable Care Act.

Is there a way forward? The long-term care commission recommended two options: convening a White House conference on aging to consider long-term care policies, and establishing yet another advisory committee to continue its work. But, said Dr. Joanne Lynn, a geriatrician who directs the Center for Elder Care and Advanced Illness at the Altarum Institute, “The administration has shown no interest in having that happen, and here we are on the cusp of the largest generation in history growing old.”

She believes that it’s a mistake to separate long-term care from broader reforms of Medicare and the health care delivery system. The two systems of caring for people with disabilities and older adults need to be much more tightly integrated, Dr. Lynn said. Savings from eliminating inappropriate medical care — by some estimates, as much as one-third of all care — could be used to finance the expansion of long-term care services, she suggested.

As for another commission, is there any reason to hope it will be more successful in tackling critical issues when advocates of smaller government are committed to standing against a new federal insurance program for long-term care that might rely, at least in part, on public financing?

“I think this will be a hard discussion, but it is one that we as a country will have to grapple with,” said Dr. Bruce Chernof, the commission’s chairman and president of the SCAN Foundation in California. He sees the seeds of a potential compromise embedded in the commission’s report. The two primary financing options considered by the commission share “some commonalities,” he said, including agreement on the need for strong public programs and a role for the private sector.

“If you look carefully at these two perspectives, you can begin to see a way forward.”

Read More

How to Charge $546 for Six Liters of Saltwater

Doug

This article exposes some of the ways medical product suppliers and hospitals mark up products, sometimes 1,000 times, to capture profitable revenue from sick patients and their insurance companies.  Another example of all of the players getting caught with their hand in the cookie jar.  Will it ever change?

By NINA BERNSTEIN for the NY TImes
It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.

Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.

Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.

 Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.” And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.

It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.
At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.

And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.

A Price in Flux

In the food-poisoning case, some of the stricken were affluent, and others barely made ends meet. Some had private insurance; some were covered by government programs like Medicare and Medicaid; and some were uninsured.

In the end, those factors strongly (and sometimes perversely) affected overall charges for treatment, including how much patients were expected to pay out of pocket. But at the beginning, there was the cost of an IV bag of normal saline, one of more than a billion units used in the United States each year.

“People are shocked when they hear that a bag of saline solution costs far less than their cup of coffee in the morning,” said Deborah Spak, a spokeswoman for Baxter International, one of three global pharmaceutical companies that make nearly all the IV solutions used in the United States.

It was a rare unguarded comment. Ms. Spak — like a spokesman for Hospira, another giant in the field — later insisted that all information about saline solution prices was private.

In fact, manufacturers are required to report such prices annually to the federal government, which bases Medicare payments on the average national price plus 6 percent. The limit for one liter of normal saline (a little more than a quart) went to $1.07 this year from 46 cents in 2010, an increase manufacturers linked to the cost of raw materials, fuel and transportation. That would seem to make it the rare medical item that is cheaper in the United States than in France, where the price at a typical hospital in Paris last year was 3.62 euros, or $4.73.

Middlemen at the Fore

One-liter IV bags normally contain nine grams of salt, less than two teaspoons. Much of it comes from a major Morton Salt operation in Rittman, Ohio, which uses a subterranean salt deposit formed millions of years ago. The water is local to places like Round Lake, Ill., or Rocky Mount, N.C., where Baxter and Hospira, respectively, run their biggest automated production plants under sterility standards set by the Food and Drug Administration.

But even before the finished product is sold by the case or the truckload, the real cost of a bag of normal saline, like the true cost of medical supplies from gauze to heart implants, disappears into an opaque realm of byzantine contracts, confidential rebates and fees that would be considered illegal kickbacks in many other industries.

IV bags can function like cheap milk and eggs in a high-priced grocery store, or like the one-cent cellphone locked into an expensive service contract. They serve as loss leaders in exclusive contracts with “preferred manufacturers” that bundle together expensive drugs and basics, or throw in “free” medical equipment with costly consequences.

Few hospitals negotiate these deals themselves. Instead, they rely on two formidable sets of middlemen: a few giant group-purchasing organizations that negotiate high-volume contracts, and a few giant distributors that buy and store medical supplies and deliver them to hospitals.

Proponents of this system say it saves hospitals billions in economies of scale. Critics say the middlemen not only take their cut, but they have a strong interest in keeping most prices high and competition minimal.

The top three group-purchasing organizations now handle contracts for more than half of all institutional medical supplies sold in the United States, including the IVs used in the food-poisoning case, which were bought and taken by truck to regional warehouses by big distributors.
These contracts proved to be another black box. Debbie Mitchell, a spokeswoman for Cardinal Health, one of the three largest distributors, said she could not discuss costs or prices under “disclosure rules relative to our investor relations.”

Distributors match different confidential prices for the same product with each hospital’s contract, she said, and sell information on the buyers back to manufacturers.

A huge Cardinal distribution center is in Montgomery, N.Y. — only 30 miles, as it happens, from the landscaped grounds of the Buddhist monastery in Carmel, N.Y., where many of the food-poisoning victims fell ill on Mother’s Day 2012.

Among them were families on 10 tour buses that had left Chinatown in Manhattan that morning to watch dragon dances at the monastery. After eating lunch from food stalls there, some traveled on to the designer outlet stores at Woodbury Common, about 30 miles away, before falling sick.

The symptoms were vicious. “Within two hours of eating that rice that I had bought, I was lying on the ground barely conscious,” said Dr. Elizabeth Frost, 73, an anesthesiologist from Purchase in Westchester County who was visiting the monastery gardens with two friends. “I can’t believe no one died.”

About 100 people were taken to hospitals in the region by ambulance; five were admitted and the rest released the same day. The New York State Department of Health later found the cause was a common bacterium, Staphylococcus aureus, from improperly cooked or stored food sold in the stalls.

Mysterious Charges

The sick entered a health care ecosystem under strain, swept by consolidation and past efforts at cost containment.
For more than a decade, hospitals in the Hudson Valley, like those across the country, have scrambled for mergers and alliances to offset economic pressures from all sides. The five hospitals where most of the victims were treated are all part of merged entities jockeying for bargaining power and market share — or worrying that other players will leave them struggling to survive.

The Affordable Care Act encourages these developments as it drives toward a reimbursement system that strives to keep people out of hospitals through more coordinated, cost-efficient care paid on the basis of results, not services. But the billing mysteries in the food poisoning case show how easily cost-cutting can turn into cost-shifting.

A Chinese-American toddler from Brooklyn and her 56-year-old grandmother, treated and released within hours from the emergency room at St. Luke’s Cornwall Hospital, ran up charges of more than $4,000 and were billed for $1,400 — the hospital’s rate for the uninsured, even though the family is covered by a health maintenance organization under Medicaid, the federal-state program for poor people.
The charges included “IV therapy,” billed at $787 for the adult and $393 for the child, which suggests that the difference in the amount of saline infused, typically less than a liter, could alone account for several hundred dollars.

Tricia O’Malley, a spokeswoman for the hospital, would not disclose the price it pays per IV bag or break down the therapy charge, which she called the hospital’s “private pay rate,” or the sticker price charged to people without insurance. She said she could not explain why patients covered by Medicaid were billed at all.

Eventually the head of the family, an electrician’s helper who speaks little English, complained to HealthFirst, the Medicaid H.M.O. It paid $119 to settle the grandmother’s $2,168 bill, without specifying how much of the payment was for the IV. It paid $66.50 to the doctor, who had billed $606.

At White Plains Hospital, a patient with private insurance from Aetna was charged $91 for one unit of Hospira IV that cost the hospital 86 cents, according to a hospital spokeswoman, Eliza O’Neill.

Ms. O’Neill defended the markup as “consistent with industry standards.” She said it reflected “not only the cost of the solution but a variety of related services and processes,” like procurement, biomedical handling and storage, apparently not included in a charge of $127 for administering the IV and $893 for emergency-room services.

The patient, a financial services professional in her 50s, ended up paying $100 for her visit. “Honestly, I don’t understand the system at all,” said the woman, who shared the information on the condition that she not be named.

Dr. Frost, the anesthesiologist, spent three days in the same hospital and owed only $8, thanks to insurance coverage by United HealthCare. Still, she was baffled by the charges: $6,844, including $546 for six liters of saline that cost the hospital $5.16.
“It’s just absolutely absurd.” she said. “That’s saltwater.”

Last fall, I appealed to the New York State Department of Health for help in mapping the charges for rehydrating patients in the food poisoning episode. Deploying software normally used to detect Medicaid fraud, a team compiled a chart of what Medicaid and Medicare were billed in six of the cases.

But the department has yet to release the chart. It is under indefinite review, Bill Schwarz, a department spokesman, said, “to ensure confidential information is not compromised.”

Read More

For Obamacare, Some Hurdles Still Ahead

Doug

President Obama and his advisers hope the healthcare overhaul will do two things. The first is to extend coverage to tens of millions of Americans who today lack health insurance. The second is to hold the line on rising health care costs. This article describes some hurdles to achieving those two goals. While you are enjoying a vacation this summer, hopefully you will have time to ponder the impacts Health Care Reform will have on you and your family.

By Eduardo Porter, NY Times

Like other big employers, in the mid-1990s Harvard University was struggling with the ballooning cost of providing health insurance.
It chose what was a novel solution for the time. It dropped its standard deal — a subsidy that rose in line with the price of the insurance policy — and switched some 10,000 workers on its payroll to a fixed subsidy that encouraged them to shop around for care.

For Harvard’s accountants, the change worked wonders. A study a couple of years later by David M. Cutler, a Harvard economist, and Sarah Reber, a Harvard graduate, concluded that competition among insurers cut the university’s health bill by 5 to 8 percent.
But not everybody was equally pleased. Families of workers who chose the Preferred Provider Organization offered by Blue Cross/Blue Shield — the most comprehensive plan, with lots of doctors and hospitals on its network — faced a $500-a-year jump in their out-of-pocket spending on health care.

Younger and healthier workers canceled their P.P.O. plans, enrolling in cheaper H.M.O. options or dropping Harvard insurance altogether. Left with a sicker patient base, the P.P.O. raised its premiums further, which prompted the next layer of relatively healthy customers to leave.
And so on. In 1997, Blue Cross/Blue Shield withdrew its P.P.O. from the market, making it a victim of what economists call the death spiral of adverse selection.

In a couple of months the nation is set to experience a similar shock on a very large scale: the greatest change in how Americans pay for health care since the advent of Medicare nearly half a century ago.

Come October, millions of uninsured people will be able to choose one of several health plans, offered at four different tiers of service and cost through new health exchanges coming onstream in every state.

Cheap “bronze” plans will shoulder some 60 percent of patients’ medical expenses. Pricey “platinum” plans will cover at least 90 percent. But insurers will not be allowed to exclude people with pre-existing conditions, or charge more for the sick, or put a lifetime cap on medical costs. Their policies will have to cover a minimum standard of medical care. And the government will subsidize those who cannot afford to buy the policies.

President Obama and his advisers hope the overhaul will do two things. The first is to extend coverage to tens of millions of Americans who today lack health insurance. The second is to hold the line on rising health care costs.

“Over time, success will depend on what happens to the cost curve,” Professor Cutler told me. “If we don’t bend the cost curve, everything will fail. The government won’t be able to afford it. Nobody will be able to afford it.”

In theory, the overhaul could meet both goals. Millions of new Americans armed with a subsidy and shopping among plans would bring consumer choice to bear, finally, on the health care industry. Insurers would compete to create policies that offered the most value for money, pressuring hospitals and doctors on behalf of all of us.

Yet despite the care the administration took in establishing incentives and safeguards, even some of Obamacare’s most committed backers are wondering whether the experiment will work as advertised — or, like Harvard’s P.P.O., go off the rails along the way.

Adverse selection is perhaps the direst threat. For Obamacare to work, millions of healthy, young, uninsured Americans must join a health plan to counterbalance the sicker millions who are most likely to buy insurance. Otherwise, health plans on the exchanges will have to raise premiums to shoulder the higher costs.

(more…)

Read More

High Medical Bills Driving Some Americans to Extreme Measures

J Roberts

Have you ever delayed, put off or just gone without seeing a physician because of the cost? You would not be alone if you did. A recent study found that many Americans are juggling the high cost of health care by delaying non-essential or non-critical care. In one study, stories of credit card debt and cutting back on food and heating were common, even for the insured.

By Karen Pallarito – HealthDay Reporter

Jan. 18 (HealthDay News)

Insured Americans with serious medical conditions say the financial stress of rising out-of-pocket health care costs is forcing them to juggle household budgets, delay or skimp on care and even run up credit cards or dodge debt collectors, a new study reveals.

The report, published in the January/February issue of the journal Annals of Family Medicine, provides a snapshot of “life disruptions” people experience as a result of their medical expenses and the sometimes extreme measures they take to keep their heads above water.

One study participant was prescribed a drug to alleviate nausea and vomiting caused by his cancer chemotherapy. Insurance picked up $900 of the $1,200 cost, but he could not even afford the co-payment and went without the medicine. “I said, you know what, I’d rather be sick,” he told researchers.

Another paid all her bills but relegated her grocery budget to “whatever’s left.”

“Sadly, our experience with thousands of patients over the last decade has shown us that many of them have to make heartbreaking decisions about following doctors’ orders or putting food on the table for themselves or their families,” said Sarah Di Troia, chief operating officer of Health Leads, a Boston-based organization that works with hospitals and clinics to connect patients to basic resources.

David Lipschutz, policy attorney for the Center for Medicare Advocacy in Washington, D.C., said the study is important, timely and “reinforces a lot of the other literature out there” examining the effects of out-of-pocket spending.

Medicare has considerable cost-sharing requirements, and many people who have Medicare “simply don’t earn the income in order to afford it,” Lipschutz added.

Consider this: Half of the nation’s Medicare beneficiaries live on less than $22,000 a year, and 45 percent have three or more chronic conditions, according to data compiled by the Henry J. Kaiser Family Foundation.

Medicare beneficiaries spent a median of more than $3,100 of their own money on health expenses in 2007, the most recent comprehensive data, according to the AARP’s Public Policy Institute. Four million beneficiaries, or 10 percent of the Medicare population, shelled out much more. Their out-of-pocket spending topped $7,800.

With health care costs outpacing income growth, study lead author Dr. David Grande, assistant professor of medicine at the University of Pennsylvania Perelman School of Medicine, wanted to know how families are coping financially.

“My sense is that we focus so much on whether people are covered or not, which is extremely important, we forget how important it is that the coverage is adequate,” he said.

For the study, researchers interviewed 33 insured, chronically ill adults who were applying for financial assistance at a nonprofit foundation to help pay for their treatment costs. People were asked about illness-related financial challenges and their impact on housing, food, utilities, savings, borrowing and health expenses. The interviews were recorded, transcribed and coded for analysis. (more…)

Read More

Health Insurers Raise Some Rates by Double Digits

J Roberts
Insurance premiums are on the rise for 2013! It doesn’t appear that the Affordable Care Act has stemmed the double-digit increases in premium rates charged by health insurers for 2013.
By REED ABELSON

The New York Times – Online

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Dave Jones, the California insurance commissioner, said some insurance companies could raise rates as much as they did before the law was enacted.

Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.

In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.

 In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month.

The proposed increases compare with about 4 percent for families with employer-based policies.

Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.

The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability.

New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.

The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers. But the companies counter that medical costs for some policy holders are rising much faster than the average, suggesting they are in a sicker population. Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits. (more…)

Read More

Analysis: Employees to face healthcare sticker shock

J Roberts

Here we go again. Health care premiums and out-of-network costs are expected to rise in 2013. Read  more about the increases and what they mean for you.

Sun, Oct 28 2012

By Caroline Humer

NEW YORK (Reuters) – Visit to New York City orthopedist: $223. One X-ray: $50. One follow-up magnetic resonance imaging test: $766. Total bill for checking out that aching shoulder: $1,039 – all to be paid by the patient, rather than the insurer.

Healthcare has gone retail.

Over the next 18 months, between one quarter and one half of Americans who get insurance coverage through their employers will pay more of their doctor bills themselves as companies roll out healthcare plans with higher deductibles, benefits consultants say. The result: sticker shock.

“They have huge out-of-pocket costs before they get any insurance coverage, it’s a real slap in the face,” said Ron Pollack, the executive director of Families USA, a healthcare advocacy group.

High-deductible plans set a threshold for medical expenses that an individual must pay for, often in the thousands of dollars, before insurance kicks in. Studies show people on these plans are three times more likely to delay or skip care than people on traditional plans, where doctor or emergency room visits are covered by a relatively low co-payment.

These plans have been around for years, pushed by employers, insurers and industry experts who believe that consumers with “skin in the game” will drive demand for better quality care at a lower cost. It is a rationale also backed by President Barack Obama’s Republican challenger Mitt Romney.

But now corporate America’s adoption of high-deductible plans is accelerating, partly because of Obama’s healthcare reform, which requires insurance plans to provide more expansive coverage such as preventive care.

Several industry surveys forecast a two-percentage-point increase in the number of companies offering only high-deductible plans in 2013 to about 19 percent, and a larger jump of anywhere from 5 to 25 percentage points in 2014.

“2013 is almost a calm period before a period of intense change in 2014,” according to Randall Abbott of Towers Watson & Co, a Boston-based senior consulting leader at the human resources firm.

The shift means consumers will have to spend many more hours researching their treatment options and managing costs on websites like Healthcarebluebook.com, which helped budget the cost of examining the shoulder pain mentioned above.

It could also spur lawsuits against doctors whom patients may blame for not making clear whether a test or procedure would spare them future harm, legal experts say. (more…)

Read More

Big Firms Overhaul Health Coverage

J Roberts

Where do the majority of American citizens get their healthcare benefits? From their employer! That may not be the case in the future. Read how two large employers are fundamentally changing the way they provide healthcare benefits to their employees even before implementation of the Affordable Care Act.

Wall Street Journal – HEALTH INDUSTRY September 26, 2012, 8:41 p.m. ET

By ANNA WILDE MATHEWS

Two big employers are planning a radical change in how they provide health benefits to their workers, giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace.

Two big employers are planning a radical change in the way they provide health benefits to their workers, giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace.

Sears Holdings Corp. and Darden Restaurants Inc. say the change isn’t designed to make workers pay a higher share of health-coverage costs. Instead they say it is supposed to put more control over health benefits in the hands of employees.

Darden Restaurants, owner of Red Lobster, is giving staff money and allowing them to choose health coverage.

Some Workers Will Choose From Array of Benefits

The approach will be closely watched by firms around the U.S. If it eventually takes hold widely, it might parallel the transition from company-provided pensions to 401(k) retirement-savings plans controlled by workers and funded partly by employer contributions. For employees, the concern will be that they could end up more directly exposed to the upward march of health costs.

“It’s a fundamental change…the employer is saying, ‘Here’s a pot of money, go shop,’ ” said Paul Fronstin, director of health research at the Employee Benefit Research Institute, a nonprofit. The worry for employees is that “the money may not be sufficient and it may not keep up with premium inflation.”

Neither Sears nor Darden would say how much money employees would receive to buy health insurance. Darden says its sum would rise as health-care costs rise. Sears declined to disclose details of its contributions strategy.

Darden did say that employees will pay the same contribution out of their own pockets that they currently do for approximately the same level of coverage. Employees who pick more expensive coverage will pay more from their paychecks to make up the gap. Those who opt for cheaper insurance, which may involve bigger deductibles or more limited networks of doctors and hospitals, will pay less.

“It puts the choice in the employee’s hands to buy up or buy down,” said Danielle Kirgan, a senior vice president at Darden. The owner of chains including Olive Garden and Red Lobster will let its approximately 45,000 full-time employees choose the new coverage in November, to kick in Jan. 1. Darden says that employees with families to cover will be given more money to buy insurance than employees covering just themselves. (more…)

Read More