Robert Murray: Hospitals should have ER prices capped

Hospitals should be obligated to charge no more than a fixed "maximum price" for care rendered to patients in the emergency room or are out of their health plan's network.

The argument is posed by Robert Murray, president of Global Health Payment LLC, on the website of the journal Health Affairs.

He noted that insurance companies are obliged to pay full charges for patients who receive emergency out-of-network care--a situation that has been exacerbated by hospital price markups that have zoomed ever upward since the 1980s.

According to Murray, the average hospital markup above cost in 1980 is 20 percent; it reached 220 percent in 2011. Moreover, ED admissions are up more than 50 percent between 1993 and 2006.

"High and increasing hospital charges, combined with increasing proportions of cases admitted through the hospital emergency department, are major factors behind the ever-declining negotiating leverage of private health insurers," Murray wrote. He noted that the profits from such ER-related admissions give hospitals more incentive to drive harder bargains with insurers regarding contracts that cover other patients.

Earlier this month, the Centers for Medicare & Medicaid Services for the first time released data comparing average hospital charges for the 100 most common Medicare claims, illustrating wide variations not just across regions but within cities. That data led some healthcare organizations to consider price changes.

Meanwhile, a study earlier this year suggested that greater price transparency in the ER could help reduce costs--particularly regarding non-emergent care--but the practice remains uncommon.

To learn more:
- read the Health Affairs blog post