Letter: Pricing Transparency

There are several issues here. First, is the hospital efficiently managed? If its costs are excessive because it is poorly run, it is unreasonable to expect anyone, insured or otherwise, to compensate it for its inefficiency. Second, does it have any idea what its costs are? Many hospital accounting systems aren't very good. If it could credibly quantify its costs and communicate them to both uninsured patients and third party payers, it would be helpful. While Medicare may dictate prices that the hospital feels it must accept due to the high number of patients insured by the program, it should be able to negotiate more reasonable payment terms with private insurers. Again, a robust accounting system would be helpful in negotiations. With respect to the uninsured, I just don't think it is reasonable to charge them more that about 10 to 15 percent above what it accepts from private insurance for the same service or, if less, 25 percent above Medicare for the same set of services even if the patient is wealthy. I suggest that hospital executives might ask themselves how they would feel if they were on the receiving end of bills to the uninsured knowing what the hospital routinely accepts as full payment from insurers, including Medicare. If Medicare is paying mostly on the basis of DRG's and private insurers are paying either on a case rate or per diem basis (depending on the treatment), the same approach should be used for the uninsured.

If a hospital cannot operate within a reasonable pricing environment, it might consider merging with another hospital or group to become a larger entity with more negotiating leverage. If it is a just plain inefficient, high cost provider, it should downsize or close. Conversely, efficiently run hospitals could embrace pricing transparency and fair treatment of all patients when it comes to billing to drive market share. Ideally, it should work with doctors, anesthesiologists, imaging centers, rehab centers, etc. to offer package pricing for a complete episode of care for procedures that can be scheduled in advance and for services that are not delivered under emergency conditions. I am keenly interested in the issue of pricing transparency including efforts by insurers to disclose actual payment rates to insured patients not just for hospital charges but for all medical services. If there are confidentiality agreements that hospitals impose on insurers to preclude pricing transparency on the part of insurers, those agreements should be eliminated or even outlawed via legislation if necessary.

Barry Carol

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