Hospitals “routinely” charge uninsured and cash-paying patients rates higher than those negotiated by payers, according to a recent Wall Street Journal report reviewing hospitals’ newly available price transparency data.
Among a sample of 1,550 hospitals, 21% billed these patients at the highest rates for the majority of the healthcare services included in the WSJ’s analysis.
For 11% of the hospital sample, the cash rates for every reviewed service were higher than insurers’ rates or were tied for the highest rate.
Further, a review of 1,166 hospitals that shared Medicare Advantage plan rates suggested that uninsured patients’ fees were 3.6 times higher than the average paid by these plans.
The WSJ noted that these types of practices were common among the hospitals of major nonprofits including Mass General Brigham, Sanford Health and Yale New Haven Health System.
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Cash prices frequently varied between hospitals within close proximity of each other, according to the report. Within 270 counties with at least two hospitals that had disclosed prices, the analysis found an average $1,852 spread between the highest and lowest rates for complex emergency room visits.
“[Hospitals] don’t want to give away too much of a discount because they really want the best discounts to go to these larger volume negotiated insured rates,” Will Fox, an actuary with Milliman Inc. who advises hospitals on pricing, told the WSJ. “Somebody walking off the street, we’ll give you a 20% discount, but we’re going to give our favorite customer, who sends us millions or even billions of dollars in business, we’re going to give them a much bigger discount.”
Hospitals have financial aid programs to support those who can’t afford the procedures, but the requirements to qualify can run high, the WSJ wrote.
For full coverage, the top quartile of hospitals with restrictive aid policies place that cutoff at about 160% of the federal poverty threshold, according to the analysis. For partial discounts, the cutoff is 250% of the federal poverty level among the top quartile of hospitals with restrictive aid policies.
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The Centers for Medicare & Medicaid Services (CMS) began requiring hospitals to post the prices of their services online Jan. 1. The WSJ’s analysis reviewed a collection of these pricing disclosures collected by price transparency startup Turquoise Health focusing on 17 services often sought by uninsured patients during emergencies.
Hospitals’ adherence to CMS’ new price transparency rule has so far been spotty. Turquoise Health, academic researchers and industry analysts alike have highlighted inconsistent adherence among the majority of hospitals during the first few months of 2021.
Patients, meanwhile, are almost entirely unaware that these prices are (or should be) available from hospitals.
Data reported last week by the Peterson-KFF Health System Tracker found that only 9% of adults knew hospitals are now required to post their prices. The patients are also unlikely to use these resources when seeking care, as just 14% said they or a family member had gone online to research the price of a hospital’s treatments within the previous six months, the group found.