I’ve told this story a million times. A few years ago my wife saw her doctor for a recurring problem. It was something so common her doctor should have known off the top of her head what the problem was. Instead, her doctor strung my wife along for numerous appointments and tests. Perhaps it was defensive medicine. One of the tests was a CT scan. My wife didn’t know any better than to check on having it done at a hospital outpatient department. Prior authorization alerted us her sharing of the cost would be $2,700. My wife’s health insurance approved the hospital scan, but I found it elsewhere for only $403 at a diagnostic imaging center near the doctor’s office. As an aside, I suspect the imaging center was breaking contractual agreements by posting prices negotiated with insurance companies.
I always wondered why the insurance company didn’t reach out to my wife and inform her about lower prices elsewhere? I had to be the one to tell her you never go to a hospital if you can avoid it. Later that year I asked that question to a Humana spokesman presenting at a conference. He said it was because Humana respects “patient preference.” My wife was not insured through Humana, but I told him my preference is to save money, not spend more than $2,000 on unnecessary cost sharing.
Kaiser Health News published an anecdote about of a man who, along with his health plan, were charged more than $27,000 for two shots of Lupron Depot, a 50-year old prostate cancer therapy. This was not an inpatient stay. It was two injections including lab and physician fees. This from Kaiser Health News:
Total Bill: $73,812 for the two shots ($35,414 for the first, $38,398 for the second), including lab work and physician charges. United Healthcare’s negotiated rate for the two shots plus associated fees was $27,568, of which the insurer paid $19,567. After Hinds haggled with the hospital and insurer for more than a year, his share of the bills was determined to be nearly $7,000.
Kaiser Health News estimates that the University of Chicago Medicine paid a wholesale price of a little over $500 for two doses of the drug. Yet there were other options.
Since then, many other drugs aimed at lowering testosterone levels have entered the market, including a pill, relugolix (Orgovyx). So why wouldn’t a patient use them?
Here is the conspiracy part of the story. Why was Hinds not advised about alternatives? Doctors tend to say the convenience of one shot every three months is preferable to taking a daily pill for 90 days. Also, patients may forget to take it or stop taking a pill.
But there is another important factor that may well explain Lupron Depot’s ongoing popularity among medical providers: Doctors and hospitals can earn tens of thousands of dollars each visit by marking up its price and administration fees — as they did with Hinds. If they merely write a prescription for a drug that can be taken at home, they earn nothing.
More conspiracy: why didn’t Hind’s health plan reach out to him and explain that he was about to spend thousands of dollars unnecessarily?
Asked about this high patient charge and the possibility of using alternatives, United spokesperson Maria Gordon Shydlo said payment was “appropriately based on the hospital’s contract and the member’s benefit plan,” adding that the insurer encourages customers to shop around for the best quality and price.
Yes, but it’s difficult to shop around when only the insurer knows the prices and keeps them a secret. Why did Hinds have this drug infused at a hospital rather than a physicians’ office? Why did his doctor not inform him of all his options, was it because his doctor worked for the hospital? Moreover, why couldn’t his health plan advise him? So many questions. So few answers.
The status quo seems to work for all stakeholders except patients and employer plans. About half of people covered by private insurance are covered through an employer that is self-insured. That means an insurance company just manages the plan, not underwrites it. It almost seems like there is tacit agreement that insurers won’t rock the boat with hospitals because insurers make money managing big employer plans and the bigger the bills, the bigger the management fees.
A few years ago I met with executives from two different companies that helped employees make more informed decisions on medical services. Both companies charged employers a subscription fee based on the number of covered lives. One company was mostly an online portal with tools employees could use to search for cheaper care. The other was what they called a “high touch” service where an actual health manager would reach out to workers about to get high priced care and tell them about options. Workers could also contact their health manager for advice. This service was more expensive than the web portal. It’s not clear whether either service is still available.
Across the country physician groups are lobbying state legislatures to ban restrictive prior authorization that many health plans require for costly services. Funny thing: prior authorization is all that saved my wife from spending $2,300 more on a hospital CT scan than what I found it for elsewhere. Beginning in January insurers are required to provide decision-support tools to their enrollees. Let’s hope they’re robust enough to help patients navigate the maze that is our health care system.