SUMMARY: New transparency tools land in our laps every day. Today’s discovery: the Arizona hospital system that’s publishing cash or self-pay prices.
Not long ago, I wrote about a Florida hospital executive who had announced that he would be publicizing all the payments his hospital gets from insurers — but who had to back down, because the insurers wouldn’t let him publicize their rates.
But the news isn’t all bad. Prices are being made public, though the process of transparency isn’t always linear.
A bit of background: Hospitals and other providers often charge a high price (called the chargemaster price), something like a “rack rate” at a hotel, but are reimbursed only a fraction of that rate. The reimbursement rate is determined either by negotiations (with an insurance company or other private payer) or by law (the government’s rate, either on Medicare or Medicaid).
With the large number of uninsured people and people paying a percentage of their bills as coinsurance on their insurance policies, there’s been increasing interest in the actual price — what we call the cash or self-pay rate.
Recently a spate of hospitals and other providers have started to post or publish rates for common procedures. The latest we noticed is Banner Health systems, with headquarters in Phoenix and 24 hospitals across seven states.
Examples of prices
Here’s a pricing page, which lists the “direct pay price” — apparently the charge price — and also a self-pay or discounted price.
Some procedures are fairly simple.
Examples, from Banner Baywood in Mesa, Ariz.:
70450 CT scan of head or brain Charge $1,919 Self-pay $484 (The Medicare price is $181)
70551 MRI scan of brain Charge $1,272 Self-pay $321 (Medicare is $476)
71020 X-ray of chest, 2 views, front and side Charge $498 Self-pay $126 (Medicare from $23 to $87, depending on various factors)
Some procedures are charged by the case, these being more complicated instances such as surgery, colonoscopy and the like, where there are many constituent parts.
45378 Diagnostic exam of large bowel using an endoscope (That’s a diagnostic colonoscopy, in case you were wondering) Case $12,013 Self-pay $461-1,750
45380 Biopsy of large bowel using an endoscope Case $16,150 Self-pay $1,148-2,769
45385 Removal of polyps or growths of large bowel using an endoscope Case $10,294 Self-pay $1,275-2,199
47562 Removal of gall bladder using an endoscope Case $52,651 Self-pay $5,058-7,446
Why you might care if you’re insured: let’s say you are asked to pay 10 percent of the rate under your insurance plan. Is it 10 percent of the charged rate? Or 10 percent of the negotiated rate? Policies vary. But with that gall bladder surgery, 10 percent of the charged rate is … mighty close to the self-pay rate on the low end. Hm.
What the hospital policy is on pricing
Here’s their pricing policy page. It reads, in part:
“This site lists Direct Pay Prices and approximate price or range of discounted uninsured self-pay prices for the most common inpatient and most common outpatient diagnoses/services provided by the specified Banner Health hospital. The Direct Pay Price is the maximum price that a patient would pay for the standard treatments for the specified diagnoses/services regardless of insurance status, if paid directly by the patient or the patient’s employer. The Direct Pay Price is based upon the upper end of the usual and customary charges that would be incurred for the treatments, excluding complications and exceptional treatments. The usual and customary charges are those that are filed quarterly with the Arizona Department of Health Services.
“The actual charges incurred will vary based on a variety of factors, such as severity of illness, selected medical devices, and length of stay. …
“In most instances, Medicare, AHCCCS and commercial insurers pay an amount that is substantially less than the Direct Pay Price. Patients with insurance are encouraged to contact their insurance carrier to determine the specific amount that must be paid based on insurance plan coverage. Reduced self-pay package pricing is also available for certain services. Prompt pay discounts may also be available.
“The site also lists the approximate price or range of discounted prices that would be charged to uninsured patients who qualify for Banner’s Basic Financial Assistance program for the listed inpatient and outpatient hospital diagnoses/services. … Patients without insurance may contact Banner Patient Financial Services at (480) 684-7409 to determine their eligibility for financial assistance under the Banner Health policy for Financial Assistance Programs for Uninsured Hospital Patients.”
Why is this so hard?
In a recent article asking why transparency is so difficult to achieve, the Florida hospital exec, Steve Sonenreich, was quoted as saying the problem is consolidation in the industry. (We’ve reached out to Mr. Sonenreich for a chat, but we haven’t heard back.)
“Sonenreich claims that the rising cost of insurance is largely tied to consolidation and the market power of bigger, but not necessarily higher-quality, organizations,” Philip Betbeze wrote in HealthLeaders Media recently. “He says the lion’s share of reimbursement from commercial payers goes to those organizations.
” ‘What’s occurred is we have many large hospital systems that are using size to leverage insurance companies for much higher rates,’ he says. ‘Many institutions would like you to believe consolidation is to improve operations; it’s really to drive pricing leverage.”
We don’t disagree that consolidation is a problem. We also think the lack of transparency is a problem. Banner Health’s move to publicize cash prices is a step in the right direction.
If all the prices were public — and if meaningful quality metrics were public, too — then we would be having a much different conversation.