Provider consolidation, out-of-network fees raise costs

Provider consolidation as a result of accountable care organizations and high out-of-network provider fees are causing healthcare costs to continue to rise at exorbitant levels.

Private insurers are facing "very high price increases year-to-year" in many markets where Medicare has approved ACOs, Robert Galvin, CEO of Equity Healthcare at the Blackstone Group said Jan. 28 at a briefing sponsored by the Alliance for Health Reform, according to Bloomberg BNA.

That's because providers, who must coordinate care for patients within ACO arrangements, increasingly are consolidating with each other. "But where appropriate consolidation becomes too much consolidation, it becomes a problem," Galvin said.

Too much consolidation leads to large organizations with "tremendous pricing power" that causes costs to shift from Medicare and other public programs to private insurers, employers and customers. What's more, "innovation starts to get squeezed out" because, as Galvin noted, "it's just hard to be heard" within large organizations.

Meanwhile, America's Health Insurance Plans (AHIP) is laying blame for high costs on providers' excessive out-of-network charges. In a new report, AHIP calls attention to some of the highest fees by out-of-network doctors, which in some cases can be anywhere from 30 percent to 100 percent more than Medicare rates, The New York Times reported.

"When you're out of network, it's a blank check," AHIP CEO Karen Ignagni told the Times. The report shows, for example, that a Massachusetts doctor charged $6,205 for an outpatient office, which Medicare would have paid only $152.

But doctors strongly disagreed with the report, saying AHIP's focus on the few instead of the whole skews the results. "There are outliers in every profession, in every business," Dr. Andrew Kleinman, a plastic surgeon and vice president of the Medical Society of the State of New York, told the Times.

To learn more:
- check out the AHIP report
- read the Bloomberg BNA article
- see the New York Times article