2013 Year-in-Review: Medicaid expansion, chargemasters and price transparency

The year 2013 was a busy one for healthcare finance. The huge changes wrought by the implementation of the Affordable Care Act have intersected--often profoundly--with the needs and expectations of fair play for patients.

Where and when Medicaid expansion occurs as part of the ACA has become one of the most important issues. It's become pretty clear where it's not occurring--virtually all of the Southeast, and most Rust Belt states with GOP-led governorships and statehouses.

Hospital associations became fairly aggressive in 2013 in making the economic case regarding Medicaid expansion, with many noting the billions of dollars of revenue and thousands of jobs that may be left on the table. However, their state-by-state efforts were scattershot at best.

Currently, the U.S. is close to evenly split on the issue. Two dozen states and the District of Columbia are moving forward with expansion in 2014, with a nearly equal number either outright refusing expansion or yet to make a decision. It's made for some dire predictions in holdout states, which often have a large proportions of uninsured patients, such as Louisiana and Texas. Many smaller rural hospitals in Georgia have already closed their doors and officials expect more closures in the coming years.

The health insurance exchanges are also laying out a pretty clear scenario for providers: Keep prices low or be left out. In California, large, well-regarded hospitals, such as Cedars-Sinai Medical Center, have been all but excluded from the provider networks being offered via the exchange.

The biggest event of the year that impacted hospital finance outside of Medicaid expansion occurred in journalism. In March, Time magazine published the longest standalone article in its 90-year history. "Bitter Pill" was a methodical examination of hospital chargemaster practices--and abuses--by media entrepreneur Steven Brill. The founder of American Lawyer magazine and Court TV delved back into reporting projects as he believes the need arises, and Brill's need was piqued by a group of MD Anderson Cancer Center buildings in Houston he thought were uncomfortably close in resemblance to the glittering towers of Dubai.

Sure enough, Brill was able to track down Sean Recchi, a non-Hodgkin's lymphoma patient from whom MD Anderson extracted $83,900 in advance of treatments because management didn't like his insurance policy. Recchi, despite his grave illness, was kept waiting for his first round of treatment because the hospital couldn't verify his checks had cleared. The go-ahead for care was only sealed after he advanced MD Anderson $7,500 on his credit card.

Recchi's story began Brill's opus, which also delved into the bill he received. He was charged $1.50 for a single Tylenol pill---a 10,000 percent markup from Amazon.com's prices. He was charged $283 for a chest x-ray, about 1,400 percent more than what Medicare pays. Meanwhile, MD Anderson had a 26 percent operating profit margin in 2010. And its CEO's $1.8 million in compensation was just the gravy; he also earned undisclosed income from his interests in three different pharmaceutical companies.

Those disclosures occurred in the first 1,000 words of Brill's article, followed by 24,000 words that delved into hospital financial practices.

Brill's conclusion: Chargemasters were pretty much ignored by hospitals, except when financially vulnerable patients such as Recchi walked through their doors. They were then methodically soaked for the maximum price on everything and anything.

"Bitter Pill" spurred the Centers for Medicare & Medicaid Services to disclose the prices for the 100 most popular procedures for hospitals around the country. Although CMS' intentions are noble, clunky may be the most charitable way to describe the interface for scanning those prices. And that price list only scratches the surface of hospital chargemasters. Small private firms, such as The Healthcare Blue Book and Pricing Healthcare, are slowly gaining purchase in that realm (pun sort of intended) and sharing price data with consumers.

However, there are literally mountains of pricing information that have yet to be processed. Throw in the billing code multiplier effect that will be created with the introduction of ICD-10, and it will soon become a mountain range.

Therefore it will be years, if not decades, before actual price transparency may occur. For now, patients must rely on transparency they can see through.