The problem with many of the past remedies and current proposals to fix health care is they tackle symptoms rather than the root cause of the problem. Reforms often tinker around the edges putting out fires caused by earlier reform attempts. None ever really reforms the incentives to make health care work like a market. For instance, Obamacare was an attempt to make health care affordable, it did the opposite. The federal Consumer Financial Protection Bureau recently announced new regulations banning medical debts from being reported on credit reports. In other words, we sweep medical debt under the rug and pretend it doesn’t exist but do little to prevent debt from accumulating.
A few years ago, Congress passed the No Surprises Act, a bill to stop surprise medical bills. Surprise medical bills, otherwise known as balance billing, occurred when patients unknowingly received care, or could not avoid receiving medical care, from physicians and therapists who were not in their health plan networks. Declining networks is fine if patients are warned and have recourse. But that’s the point: patients were stuck because certain physician specialties are not chosen by patients directly. In those circumstances patients become vulnerable to price gouging.
The No Surprises Act holds patients harmless in cases where their doctor was out of network but provided care at an in-network facility. Health plans and doctors could turn to a dispute resolution arbitrator for fee disputes. The process is burdensome, bureaucratic and seemingly discourages affiliating with networks in favor of binding arbitration, which often approves fees higher than in-network fees. Get the picture? It’s costly, bureaucratic, time consuming, creates perverse incentives and doesn’t work well. That’s typical of government intervention.
The No Surprises Act does not protect patients from all surprises. Aggressive provider charges – tacking on bogus charges for things health plans will not reimburse, can then be billed to patients. In one anecdote, patients were charged $250 for surgical trays used during a (supposedly free) preventive colonoscopy. In another anecdote simple in-office tasks like removing a splinter or a wart were coded as surgical procedures costing $400 to $500 apiece. I also wrote about a hospital that performed a colonoscopy and coded it as two colonoscopies whenever a polyp had to be removed. A few years ago, a Texas woman was sent for a urinalysis. The lab performed every test imaginable and billed $17,850. She (and her health plan) was ambushed pure and simple. These business practices are unethical, immoral but not illegal. The Texas Medical Board will go after physicians peddling herbs and questionable stem cell therapies, but not price gouging. Price gouging in health care is no longer frowned upon. It’s just business, as they say.
Following contract law could help reduce price gouging. Under contract law, to have an enforceable contract there must be a meeting of the minds, known as mutual assent. George Washington University law professor Barak Richman has written about using mutual assent to litigate surprise medical bills. He believes consumers already enjoy some protection. Unfortunately (my words, not his), Congress needs to beef up those protections and make it clear that a blanket form I was required to sign upon admission does not give an assistant surgeon the right to charge $117,000 from a doctor I’ve never met. The assistant surgeon was just a second pair of hands. A surgical assistant or a nurse could have done the job, but the hospital said none were available.
What would make health care work more like a market? Price transparency and requiring real mutual assent before a service is collectable. Transparent pricing should also require easy-to-understand package prices. For example, I found 17 different billing codes for a colonoscopy alone, while mild sedation during a colonoscopy is billed separately (that’s even more CPT codes).
There are currently more than 10,000 CPT billing codes. These are not designed to make price comparison easy, but quite the reverse. They were designed to make medical care confusing, charging for every conceivable disaggregated service after-the-fact. Hospitals often say they are unable to provide accurate estimates ahead of time because they won’t know which or how many of the codes will be used. Of course that’s wrong.
Why is our health care system so screwed up? It’s mostly because Congress tolerates it. Congress bows to special interests whenever debating reform. I’ve often heard it said that if many of the common shenanigans that occur in health care occurred in other industries the service providers would be brought up on fraud charges. But not in health care. Rather, it’s business as usual. Perhaps Trump’s 2nd term will see progress on transparency and mutual assent.
Thanks for another fine article.
I have worked on the price transparency issue for some time, so let me share a few observations.
1. Car repair shops must provide written estimates, and there are procedures to follow if the estimate must be modified.
Of course, the men who run car repair shops do not have anywhere near the prestige of doctors, so price transparency will be hard to enforce.
2. I have proposed the creation of medical claims courts. An aggrieved patient could take their case before an administrative law judge. If the judge ruled in their favor, they would not owe the doctor’s version of the charges.
3. I agree that it is terrible to have 10,000 CPT billing codes. You imply that this is done to make medical care confusing. For what it’s worth, I think that the health insurance industry has a lot to do with this surfeit of billing codes.
4. I think that we will need well-publicized cases where a judge tears up a medical bill and forces the providers to abide by the Medicare fee schedule, or something similar. I think it comes down to the oldest motivational system in the world –fear vs. greed. When doctors are afraid that their billings will be shredded, they will change.
Derrick, I certainly support your goal of having health care operate more like a market.
However, when it comes to surgery and highly specialized care, the typical patient is only a consumer once every few years, and maybe even only once in their life.
If a particular heart clinic and/or heart specialist is overcharging patients, for example, it will take a long time for this to be exposed. If a couple of the specialists at a clinic draw complaints, big deal. This news definitely does not travel fast.
Contrast this with a real market like airline travel. News about bad accidents and/or a huge scheduling snafu or constant late departures will spread like wildfire.
Health care consumers will mostly suffer in silence if they are ripped off. Not sure how you correct for this.