Court Rules Against the Hospital Industry Mandates Price Disclosure

Court Rules Against the Hospital Industry Mandates Price Disclosure. Hospital prices that were historically rigged by the medical business along with the insurance industry, and kept secret from the public, will see the light of day January 1, 2021. This because on June 23, 2020 a federal judge in Washington D.C. dismissed a suit brought by the American Hospital Association (AHA) that challenged the Department of Health and Human Services rule mandating hospitals to disclose their privately negotiated prices with health insurance companies.  This ruling, and what it means for doctors, patients and the industry, is the subject of the latest edition of the Houston Healthcare Initiative podcast. The Houston Healthcare Initiative podcast can be heard on SoundCloud, iTunes, iHeart, Spotify and on the Houston Healthcare Initiative website.

Court Ruling Allows Transparency

Hospital Price Transparency
Court Rules Against the Hospital Industry & Mandates Price Disclosure.

The court ruled that an executive order from the Trump administration requiring hospitals to disclose pricing was legal. A federal judge upheld a policy that requires hospitals and health insurers to publish their negotiated prices for health services, numbers that are typically kept secret. The policy is part of a major push by the Trump administration to improve transparency in health care. Insurers and health providers usually negotiate deals behind closed doors, and patients rarely know the cost of services until after the fact.

Healthcare Industry Public Relations Offensive

The meaning of the ruling and what will happen are different. As Dr. Goldstein told his audience, “there will be an appeal accompanied by a full court public relations press by the hospital industry to derail this effort.” Dr. Goldstein went on to say, “if the battle can be dragged out until after the presidential election, hospitals and insurance companies can hope a new administration will rescind the executive order.”

Four organizations are now urging the Department of Health and Human Services to delay implementation of the price transparency rule until after the appeals court makes a decision in the case. The American Hospital Association, the Federation of American Hospitals, the Association of American Medical Colleges and the Children’s Hospital Association made their request in a letter to HHS Secretary Alex Azar on June 29, five days after these associations and others filed an appeal against the ruling which would implement a rule on price transparency on January first. The groups said the rule would ‘pose a burden to hospitals and health systems responding to the COVID-19 public health emergency.’ Thirty-four hospital groups have already urged HHS to delay the start of the price disclosure.

In an article published in “Becker Hospital Review” AHA General Counsel Melinda Hatton said, “the proposal does nothing to help patients understand their out-of-pocket costs.” She added, “it also imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care. Hospitals and health systems have consistently supported efforts to provide patients with information about the costs of their medical care. This is not the right way to achieve this important goal.”

About The Houston Healthcare Initiative

Dr. Steven Goldstein is a Houston based neurologist. He founded the Houston Healthcare Initiative and is an advocate for common sense solutions to the healthcare crisis that confronts the citizens and residents of the United States of America. Court Rules Against the Hospital Industry Mandates Price Disclosure.

What The Court Ruled About Hospital Price Transparency

This week on the Houston Healthcare Initiative podcast, Dr. Steven Goldstein takes a deeper dive into a court decision where hospitals must reveal private negotiated rates with insurers starting this coming January 1, 2021. Plus, he will provide more insight into how hospitals decide what and how much to charge us, and man is that a story. It’s all more than a little complex. The podcast is available on all the popular podcast networks including SoundCloud, iHeart, and Spotify among others.

How Are Prices Now Assessed

Hospital prices are not based on the free market. Instead, prices are agreed on via secret agreements between hospitals and insurance companies. The truth is that pricing for medical services as paid by insurance companies are artificially set and not competitive at all. Prices are agreed to in advance by the hospital and the insurance company, not disclosed to the public. “We are led to believe that our insurance providers negotiate on behalf of their policyholders,” Dr. Goldstein told his audience. This is not the case. The court has ruled that this will no longer be permitted, that hospitals will have to reveal these negotiated rates and thus hospitals must reveal private negotiated rates .

Hospitals must reveal private negotiated rates to the public.
Hospitals must reveal private negotiated rates to the public.The court ruling that upheld a Trump Administration policy that forces hospitals to reveal their prices.

Why Hospitals Object

One reason many hospitals do not list their actual prices is that, according to them, some cases are more complicated than others. “An appendectomy may go smoothly or may be complicated by other factors such as adhesions from a previous surgery that caused scarring,” Dr. Goldstein said. “This may require additional operating room time resulting in a higher cost.  Thus hospitals claim they can only give estimates.”

Alternatively, this could be handled in one of two ways. 1). Publish the price for each procedure at what the hospital perceives as the average price. Then find ways to cut costs so that average cost is lowered resulting in increased profit for the hospital.  2). Alternatively, publish a price for operating room time by the hour that would include all the ancillary charges + publish the range of operating room times for each procedure.

How Prices Are Set Now

With the use of computer technology, hospitals are able to establish a charge for each product or service, no matter how small. “Every aspirin, every blood test, every x-ray, every bandage, every suture has a charge; Dr. Goldstein said. “Some of these charges beg credulity e.g. the $20 aspirin. All these charges are added up to give the total hospital charge. Of course, this doesn’t include multiple physician charges that are separate.” This all resulted in the Trump administration’s order that hospitals must reveal private negotiated rates to the public.

But the final charge is the “sticker price”. The insurance companies never pay this price. They have a secret, negotiated price based on the Medicare price for those services.

Secret Revealed on Pricing Practices of Health Insurance Companies & Hospitals

The actual price of what a medical test, procedure, exam and often prescription cost and how charges are assigned is not based on the free market. Instead, prices are agreed on via secret agreements between hospitals and insurance companies. This is the subject of the Houston Healthcare Initiative podcast with Dr. Steven Goldstein. To hear the Houston Healthcare Initiative podcast, please visit: SoundCloud, Apple Podcasts, iHeart, PlayerFM, or the Houston Healthcare Initiative web site. Secret Revealed on Pricing Practices of Health Insurance Companies & Hospitals.

Pay More Attention

Price Transparency
Price transparency from insurance companies and medical companies is a rare thing.

Most people get health insurance from their employer which is the reason, so few pay much attention to the price of the medical services and pharmaceuticals that Americans purchase. Employer funded insurance pays for most of what is charged with individuals picking up a smaller deductible. But according to neurologist Dr. Steven Goldstein, it is past time to start devoting attention to not just what is charged but how the health insurance companies, and the medical community decides what to charge and why. Spoiler Alert: it is not based on the free market.

The idea that pricing for medical services as paid by insurance companies are artificially set and not competitive at all. They are agreed to in advance by the hospital and the insurance company, not disclosed to the public, and we are all led to believe that our insurance providers were negotiating on behalf of the people that pay the premiums.

It Is Expensive But…

The fact that the charges for visits to the doctor, hospital and pharmacist are mostly paid for by employer funded insurance does not make us any less likely to get both overcharged and underserved. It is a lack of transparency that makes medical costs so high. It was not wrong to believe that research, new equipment, and pharmaceutical discovery were what was behind the increase in healthcare prices; they account for some. “The issue is that patients do not know the actual price of services,” Dr. Goldstein told his listeners. “The list price is the price charged to patients without insurance. Each insurance company negotiates a discounted price.”

Thus, there are multiple discounted prices depending on the insurance company plus a different price for Medicare and Medicaid. These prices have traditionally been secret. There is no competition between hospitals based on price. “Medicare sets the price standard based on costs,” he said. “Thus, hospitals are cost plus operations with little incentive to reduce costs.”

Why Not Just Pay Cash?

Cash prices are often much less than what is charged even to the insurance companies. People often can secure better deals if they don’t use their insurance. A 2016 Wall Street Journal investigation found that hospitals frequently offer far better deals for people who pay in cash rather than use their insurance. “Price transparency allows individuals to shop for the best nonemergency deal. It would also force hospitals to compete, thus saving consumers money. It gives them a choice,” Dr. Goldstein said. The way any of us chooses to spend our money is the most democratic thing anyone can do.

Price transparency allows individuals to find the best non-emergency deal. It would also force hospitals to compete, thus saving consumers money. “If prices were known, posted in public, people could shop for the non-emergency services,” Dr. Goldstein said.

About Houston Healthcare Initiative

Dr. Steven Goldstein is a Houston based neurologist. He founded the Houston Healthcare Initiative and is an advocate for common sense solutions to the healthcare crisis that confronts the citizens and residents of the United States of America.Secret Revealed on Pricing Practices of Health Insurance Companies & Hospitals