I often write about how the U.S. health care industry is predicated on maximizing revenue against third party payers, primarily employer plans. Health insurers negotiate prices with providers but about half of people in private health insurance are covered by self-insured employer plans. That means an insurer is often managing the plan but not taking on any risk. Some benefits brokers have told me insurers frequently profit off third-party claims due to spread pricing. That is, charging the employer plan slightly more for a procedure than what the insurer paid the provider. That is problematic because the party negotiating the prices (insurers) profits every time they spend (someone else’s) money. That is not a very strong incentive to hold prices down, or steer enrollees to the cheapest options.
This brings me to Kaiser Health News’ latest anecdote about price gouging. Dani Yuengling needed a breast biopsy. Her Aetna insurance had a $6,000 deductible and she still had $5,169.67 before she met her deductible.
After a mammogram confirmed the lump needed further investigation, Yuengling scheduled a breast biopsy for Valentine’s Day this year at Grand Strand Medical Center in Myrtle Beach.
But the hospital wouldn’t give her a price. She was told her providers wouldn’t know what type of biopsy needle they needed until the procedure was underway and that would impact the price.
The hospital’s online “Patient Payment Estimator” showed Yuengling an uninsured patient would owe about $1,400 for the procedure.
However, this information was incorrect and the hospital was not held to their estimate. The total bill before negotiated discounts was $17,979 for the procedure, while Cigna’s in-network negotiated rate was $8,424.14. Mrs. Yuengling’s share was $5,169.67. Ultimately, the hospital lowered the amount she owed to $3,306.29, a 36% discount. It wasn’t clear from the article whether or not the discount was offered after Kaiser Health News became interested in the story. Often when you read articles about exorbitant hospital prices later reduced it was after the media became involved.
What were the red flags here? First, she should have asked her doctor if he or she works for a hospital. If so, are they penalized for referring outside the hospital. Let them know you do not want to have anything done in a hospital that can be done cheaper elsewhere. According to the website ChoosingWisely.com:
Surgical biopsies are done in a hospital or surgical center, and they can cost thousands of dollars. But a core-needle biopsy costs as little as $500. It is done in a radiology or breast imaging center, or in the doctor’s office.
Had Ms. Yuengling been on Medicare, the total cost would have been $1,500 of which she would have owed $300. If Ms. Yuengling had gone to other hospitals should would have been treated for about $3,500, on average according to Fair Health Consumer. That would also have been her cost since her deductible was not met. The HCA hospital Ms. Yuengling went to, like many other hospitals, offers lower cash prices for those who lack insurance coverage. Her hospital makes it clear that only people confirmed to have no insurance can receive the cash price. A nearby hospital had a cash price of $2,100.
Ms. Yuengling went to an expensive hospital when she should have checked out cheaper options. Yet, had she had been given accurate price information with the true costs she likely would have looked elsewhere. She was at a disadvantage because hospitals are not held accountable for misinformation or inaccurate information. For that matter, why does Aetna not have its own cost-sharing calculator that could have helped Ms. Yuengling shop for cheaper care?