State Health Plan report accuses NC hospitals of 'massive' price markups

The majority of the state's 140 hospitals are being accused of "massive price markups" of up to 1,120% on routine care and basic services, along with a lack of pricing transparency, in the latest in a series of reports on healthcare systems.

According to the 19-page report released Monday, State Health Plan researchers reviewed hospital prices and hospital compliance with federal price transparency rules addressing 16 common shoppable services.

The report leads with "too many North Carolina hospitals are violating federal rules to hide their prices from patients."

"The anticompetitive infractions thwart patients' ability to make informed decisions about their health care."

The study was commissioned by state Treasurer Dale Folwell as part of his push against the state's not-for-profit healthcare systems. It is at least the sixth such report since October 2021.

The state treasurer has oversight authority of the SHP, which covers more than 727,000 participants that include current and retired state employees, teachers and legislators. It is North Carolina's largest purchaser of medical and pharmaceutical services.

"Patients are under siege in North Carolina," Folwell said.

"Too many hospitals continue to give the middle finger to presidential executive orders."

According to the latest SHP report, 71 of the 140 hospitals reviewed disclosed commercial insurance prices for the 16 medical procedure categories, while 59 disclosed the out-of-pocket costs.

"Thousands of families have lost their upward mobility to hospital lawsuits, but we don't even know if they were sued over inflated prices," Folwell said.

"When patients tried to fight back, they argued that they could not even tell whether they had been charged a fair price."

Folwell, a two-term state treasurer, is running for the Republican nomination for governor in 2024.

Study findings

Researchers from the Johns Hopkins Bloomberg School provided data analysis based on June 2023 data from Turquoise Health, a software company that collects and displays hospital prices for patients and researchers to facilitate price transparency in health care.

Regarding the 1,120% price markup cited in the report, SHP researchers said the breakdown for an automated urinalysis test was $2.36 for the median Medicare Advantage cost, compared with $21.20 for the median cash out of pocket, and $28.80 for the median commercial insurance cost.

Median is defined as the middle value in a list of numbers.

In terms of the most costly of the 16 cited medical procedures — a major joint replacement of lower extremity, typically a knee — the median Medicare Advantage cost was $13,869, compared with $26,305 for commercial insurance and $28,838 cash out of pocket.

Researchers said that uninsured patients are exposed to high price markups. Across the majority of the 16 shoppable services, hospitals charged uninsured patients more than 150% more than Medicare Advantage rates.

There were three categories in which the median Medicare Advantage cost was more than both the commercial insurance and cash out of pocket: routine obstetric care for vaginal delivery, including pre-and-post care; electrocardiogram; and removal of tonsils and adenoid glands for patient younger than age 12.

"Too many hospitals are hiding their prices, overcharging patients, and then suing them for medical debt," Folwell said.

Another Folwell-commissioned report by Duke University, released Aug. 17, found that more than 7,500 North Carolina patients and family members were sued over medical debt over the past five years. Atrium Health represented about 42% of the lawsuits.

Atrium said in August that "as a current practice, Atrium Health does not file any lawsuits against patients, nor do we execute on any liens or foreclose on property that were filed previously." Atrium declined to say when it ended the practice.

State attorney general report

You can lead health care consumers to comparative pricing, but can you get them to shop?

That's the question that has resurfaced recently with the January 2021 implementation of a hospital price transparency initiative by the federal Centers for Medicare and Medicaid Services.

Every hospital "will be required to provide clear, accessible pricing information online about the items and services they provide," CMS said.

That includes requiring hospitals to provide a cost estimator and a public list of prices for all procedures. Hospitals may face civil monetary penalties for noncompliance.

The initiative, developed by the Trump administration, is the latest attempt at aiding consumers who want to comparison shop for health care, whether a hip replacement, annual physical or colonoscopy.

It's also meant to address concerns about "surprise medical bills," typically patients being billed at an out-of-network rate without being notified of the higher out-of-pockets costs associated with that level of care.

In January, the state Attorney General's Office released a statement that said the Triad's three main healthcare systems — Atrium Health Wake Forest Baptist, Cone Health and Novant Health Inc. — are in full compliance with meeting federal regulations to improve price transparency for patients.

Meanwhile, 16 hospitals were not compliant with the requirement that they provide a machine-readable list of services and prices. Hospitals listed in that category are Alleghany, Ashe, Hugh Chatham in Elkin, Northern in Mount Airy and Randolph in Asheboro.

NCHA response

The Triad's three major healthcare systems — Atrium Health Wake Forest Baptist, Cone Health, Novant Health Inc. — deferred comment on the report to the N.C. Healthcare Association.

The NCHA typically has responded to Folwell-sponsored healthcare system reports by citing primarily patient billing policies and procedures.

"NCHA and our members support transparency so consumers can make better-informed decisions. It is the right thing to do and is in the best interests of our patients and communities," the NCHA said in a statement.

A report issued in July from patientsrightsadvocate.org found that North Carolina is No. 7 on the Top-20 states with the highest percentage of hospitals complying with the price transparency rule.

"This effort toward pricing transparency is a work in progress," the NCHA said.

"We will learn more over time about what is helpful to consumers, and will continue working with patients, physicians, insurers and government entities to develop ways to help patients better understand out-of-pocket costs prior to making healthcare decisions and to more easily navigate the healthcare billing process."

The NHCA said part of the medical debt issue is that many patients have insurance plans that significantly contribute to medical debt."

"High-deductible plans, narrow networks and restrictive policies that prevent timely care compound this problem.

"Some patient debt can also be incurred when patients who would otherwise qualify for financial assistance decline to apply, or do not go all the way through to complete the process of qualifying for assistance."

NCHA cited that "numerous studies have shown that residents of states that did not expand Medicaid are more likely to have significant medical debt."

The Republican-controlled N.C. General Assembly passed a Medicaid expansion bill in March, but its implementation is contingent on funding contained in the 2023-24 state budget bill.