How much health insurers pay for almost everything is about to go public
How much health insurers pay for almost everything is about to go public: Consumers, companies, and anyone else interested in health care costs will soon have access to information that has never been available before on what insurers pay for care, which could help answer the age-old question: Are we receiving the best bargain possible?
Starting July 1, health insurers and self-insured companies must post on their websites every price they’ve negotiated with providers for health care services, item by item, starting from July 1st, 2014. Except for prescription pharmaceuticals provided in hospitals or doctors’ offices, the only exclusion is the amount paid for these drugs.
Future costs and even how employers contract for health care may be affected by the federally mandated data release. In many cases, this will be their first opportunity to assess how their insurers stack up against the competition.
As compared to the previous year’s guidelines, which required hospitals to publish their negotiated rates for the general public to see, the new rules go far further. “Every physician in-network, every hospital, every surgery center, every nursing home,” Jeffrey Leibach, a partner at the consulting firm Guidehouse, said in a statement
In the end, “you’re talking about billions of records,” he remarked. Noncompliance with federal regulations could result in much higher penalties for the government as a whole than for individual institutions.
By learning from the hospital’s experience, federal officials provided insurers greater guidance on what to expect, said Leibach. If insurers or self-insured businesses fail to deliver the data, they might face fines of up to $100 per day for each infraction and each affected enrollee.
As Leibach pointed out, “All of a sudden, you’re in the millions.”
It’s possible that consumers who are determined, especially those with high-deductible health insurance, may dive right in and utilize data to compare the costs of certain services at different hospitals and clinics.
A large database may make it difficult for most users to make meaningful use of the information contained inside, according to Katherine Baicker, dean of the Harris School of Public Policy at the University of Chicago.
To begin with, at least.
Patients’ costs can be estimated more accurately with the use of new or existing services, which entrepreneurs are expected to develop swiftly. The new rules also mandate that insurers give consumers online tools that allow them to compare up-front costs for around 500 “shoppable” services, such as medical care that patients can plan in advance.
“You’ll at least have the possibilities in front of you,” said Chris Severn, CEO of Turquoise Health, an internet company that posts price information made public under the guidelines for hospitals, although many institutions have yet to comply.
Sites like his will be able to delve deeper into cost differences between locations or insurers with the addition of insurers’ data.
There are three options for imaging tests: $250 at this hospital, $75 at the imaging center down the road, or $25 done in the doctor’s office, according to him.
Everyone will know how much Aetna and Humana pay the same surgery center for a knee replacement, for example. Everyone will know everyone else’s business.
Both the Affordable Care Act and a Trump administration executive order from 2019 dictate the rules.
Elizabeth Mitchell, president and chief executive of the Purchaser Business Group on Health, an association of firms that provide employees with job-based health benefits, stated: “These plans are meant to operate on behalf of employers in negotiating acceptable rates.” “I think things are going to change,” says the author.
It appears that other people are more cautious.
An expert in health policy at the Yale University Institution for Social and Public Studies believes that at most this will lessen the large variation in prices. It won’t be a consumer revolution, however.
The July data release, though, maybe most useful in shedding light on how well insurers have been able to negotiate prices. Health care costs vary widely across the United States, according to a recent study. Employers who offer insurance plans based on employee pay, on average, 224% more than Medicare for the identical treatments, according to a recent study by Rand Corp.
Thousands of employers who purchase insurance coverage for their employees will receive this more detailed pricing picture, and they may not like what they see. They see it because of this.
According to John Hopkins Bloomberg School of Public Health professor Gerard Anderson, “What we’re learning from the hospital data is the insurers are really bad at negotiating.” He cited research that found that negotiated rates for hospital care can be higher than what the facilities accept from patients who do not have insurance and pay cash.
The present health insurance system is a major source of irritation for companies, according to Mitchell and others. More people may decide to deal directly with service providers and rely on insurance firms solely for the purpose of processing claims.
Further negotiations between employers and their insurance providers are possible.
ERISA Industry Committee president James Gelfand said, “For the first time, an employer can go to an insurance company and say, ‘You have not negotiated a good-enough bargain, and we know that because we can see the same provider has negotiated a better deal with another company.'”
“Patients will be able to save money” if that happens, he added.
That isn’t always the case, of course.
Because it hasn’t been widely attempted in the health care industry previously, it’s unclear how this will affect future spending. When insurance providers and insurers are brought back to the negotiating table, rates may fall. This could lead to price hikes from some suppliers, who may see that their competitors have a lower rate of return.
Kelley Schultz, vice president of commercial policy for AHIP, the industry’s trade association, said, “Downward pressure may not be a certainty.
Insurers and self-insured businesses’ size, for example, can have a significant impact on rates, according to University of Chicago economist David Baicker. Providers generally give larger discounts to insurers or self-insured employers that can send them the most patients, for example. It is also important to look at the number of hospitals in a region; if there is only one in a given location, the hospital can usually charge more.
Will insurers make the deadline and produce usable data? This is another mystery.
In part, because the original deadline was extended by six months, Schultz at AHIP believes that the sector is on track. Insurers, she believes, will fare better than the hospital sector. Said she had seen a lot of hospitals where files were either hidden from view or made difficult to find.
So far, the government has sent letters of warning to approximately 300 non-compliant medical facilities. A $300-day penalty for noncompliance is less than what insurers may face, but the federal government has lately up its ante to up to $5,000 per day for some of the nation’s major health care institutions.
There will be no immediate adjustment in price after the data is made public, according to Leibach. For several reasons other than cost, “patients will still make care decisions based on their doctors and recommendations.”
