How much does a new hip cost? A new federal mandate will require hospitals to post insurance negotiated prices

Lauri Moore, of Fogelsville, has a husband, two kids and a career in advertising. She also has a family insurance plan with a deductible of about $15,000, which means that much has to be paid out of pocket before insurance starts paying.

Moore recently decided against a doctor recommended procedure because of it.

The situation was a reminder of how little has changed to make health care affordable in the two decades since she was trying to help her then-boyfriend navigate tens of thousands of dollars in bills for his melanoma treatment. The insurance company suggested they host a hoagie sale. Instead, they took an oncologist’s advice to not pay the bills. Her boyfriend, Michael Molloy, died from the cancer shortly after that.

What Moore wants is for hospitals to post prices so people can shop around for affordable options. She’s working with the group Patient Rights Advocate to push for more transparency in health care prices.

“I knew after that experience with Mike,” she said. “I felt strongly if there was anything I could do to change the health system so it’ll be a more positive and helpful experience, I’d do it.”

Medical costs have long outraged Americans, driving calls for reforms and complete overhauls of the health system for decades. Not only do patients often face high bills but they don’t know the tally for months, as bills keep arriving in the mail.

To compel hospitals to compete to lower costs, President Donald Trump’s administration is requiring them to post the prices they negotiate with insurance companies as well as the cash price they accept from people without insurance starting Jan 1. The national associations representing hospitals, along with several health systems, sued to block the mandate, arguing that the government doesn’t have the authority to force hospitals to disclose prices, which they consider “trade secrets.” A federal judge sided with the Trump administration in June.

Hospitals argued the requirement would burden health care workers, who should be focused on patients, and that it would confuse patients because the negotiated rate isn’t what they pay. The American Hospital Association is appealing the decision.

Patients would be better served by financial counselors who can talk them through individual financial and health situations than with postings of prices, said Jolene Calla, vice president of health care finance and insurance for the Hospital and Healthsystem Association of Pennsylvania, which is aligned with the national group.

“When you have to post all your negotiated rates for every service the hospital provides, for every payer the hospital works with ... it’s very complicated,” she said.

The Lehigh Valley’s two large hospital systems do not post negotiated prices. St. Luke’s University Health Network, however, posts cash prices for a range of services, as well as an estimated patient price for those with insurance. This estimate does not include physician services, the network’s website notes. And it requires patients to enter personal information into a portal.

St. Luke’s said complying with the new mandate, then, will be is an incremental step.

“Patients can only benefit when other health networks finally begin to share the kind of price information that St. Luke’s has made available for years,” said Francine Botek, senior vice president of finance.

Lehigh Valley Health Network, which does not offer a similar service, did not respond to The Morning Call’s questions about the mandate.

The fight over price transparency is taking place during a deadly pandemic that has killed more than 150,000 Americans, forced millions to quarantine and also brought health access and affordability problems to the surface. The high price of care is a major deterrent for people to seek treatment, which is critical to preventing the spread of infectious diseases. In response, several states and insurance companies made coronavirus treatment free, but not Pennsylvania. The piecemeal solution has left many Americans with big medical bills.

A Bethlehem woman who was left with $33,000 in hospital bills for a three-day stay for COVID-19 said she had to set it aside while she struggled to navigate the unemployment system.

Hospital billing is confusing even for people who work in health care. Basically, there’s a portion the patient pays and a portion that insurance pays, both can vary significantly. Large hospital systems with limited or no competition typically can demand higher payments from insurance companies than smaller hospitals. And that dynamic can drive up health care costs for the portion that the patient pays.

In a January letter to Center for Medicare and Medicaid Services Administrator Seema Verna, a representative from the American Hospital Association said revealing such information would confuse patients further.

“Consumers do not have any need for negotiated rates information to make informed decisions, because negotiated rates do not necessarily reflect the cost that consumers actually bear,” Thomas P. Nickels, executive vice president of the association, wrote. “Indeed, requiring disclosure of negotiated rates is likely to confuse consumers, who may, for example, erroneously believe that negotiated rates reflect their out-of-pocket expenses.”

Federals officials are trying to keep prices competitive by demanding transparency in both the negotiated price insurance companies and employers pay, and the cash price that patients who are not using insurance pay. And they’re supported by patient advocate groups and employers paying for health care.

“Now more than ever, every American needs to protect physical, mental health as well as financial health,” said Cynthia Fisher, the founder of Patient Rights Advocate. “We need financial certainty by seeing prices before we get care.”

Price-checking surgery

Price transparency can be useful for elective surgeries, where patients can plan ahead and shop around, said Ge Bai, a professor of health policy and management at Johns Hopkins University. With emergency medical treatment, she noted, people don’t have time to price check. They’ll just go to the nearest hospital. But for a knee or hip replacement, patients have the time and inclination to shop.

“There are elective procedures that people can plan in advance and can travel to a facility that is far from where they live that makes the services shoppable,” she said.

But the impact of price transparency on affordability is pretty limited, partly because competition has decreased significantly among hospitals as independent facilities consolidate into large regional health systems. Fewer hospitals mean less competitive pressure to lower prices.

Bai said consolidation will “diminish the effects of the executive order, but it will not eliminate the effect.”

The posted prices will largely affect people without insurance who are considering elective procedures, which is a small segment of the patient population, Bai said.

The greater problem is still that a serious medical issue can bankrupt the average family, which typically has a savings account of $5,200. Nearly two-thirds of bankruptcies are medical-related, according to a 2009 study published in The American Journal of Medicine.

With so many people saddled with medical debt, the movement for universal health care has gained momentum in the last half decade, elevating “Medicare For All” proponents like Vermont Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez of New York to prominence.

Government efforts to control prices have largely fallen flat. The Affordable Care Act offered some protections, such as requiring insurers to cover people with chronic health problems and offering free preventive care, but the insurance plans on the federally run marketplace required some patients to shoulder so much of the cost that the plans were unusable. Many people were forced to choose between expensive monthly premiums or extremely high deductibles.

Similarly, the Medicare-led push to move away from a fee-for-service model, where doctors and hospitals are incentivized to perform more procedures, largely failed. For the most part, patients can expect to pay at least a deductible, which typically is thousands of dollars, for a hospital stay. But even with insurance, patients may get billed by a provider or facility that won’t accept that coverage and end up with the entire bill, which can be tens to hundreds of thousands of dollars.

GoFundMe, a crowd fundraising website, is full of people asking for help to pay medical bills.

That’s where David Caruth of Upper Macungie Township turned when he received the nearly $1 million hospital bill for neonatal intensive care for his daughter, who was born in 2017 weighing 1 pound, 7 ounces. Even with his insurance, he was on the hook for about $50,000.

She was in the hospital for four and a half months and he agonized over her health, completely blind to the cost.

Seeing the negotiated prices ahead of time would have made him better prepared for when he saw the big dollar figure in black and white.

“It would have stopped that heart attack, just knowing how much this stuff costs,” he said.

With a full-time job, Caruth never thought he’d have to turn to GoFundMe. But he had no good alternatives at that point.

“It’s embarrassing,” he said. “It’s not something I wanted to do. I am not looking for a handout.”

In the end, Caruth’s child qualified for a state program that covered the bill.

Binghui Huang can be reached at 610-820-6745 or Bhuang@mcall.com

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