Opinion

Hold Hospitals Accountable by Including Price Transparency in the Next Stimulus Bill

Hospital executives and those on their payroll are complaining to anyone who will listen that the coronavirus is causing them significant financial pain. “The red ink is going to be pretty deep,” said Kevin Ward, the chief financial officer at New York-Presbyterian in Queens.

Welcome to the club. Over the last six weeks, over 30 million Americans — 20 percent of the workforce — have filed for unemployment benefits. Businesses across the country are boarded up and bankrupt.

It’s true that many hospitals haven’t been able to conduct lucrative elective procedures during this pandemic. Yet hospitals have also received $175 billion in taxpayer bailouts in the recent stimulus bills.

There’s little scarier than money-hungry hospitals, which already charge five-figure sums for common procedures and ruthlessly collect unpaid bills, routinely placing liens on homes, garnishing wages and seizing bank accounts. A new ProPublica report reveals that some hospitals have continued aggressive bill collections during the coronavirus pandemic.

According to the Urban Institute’s calculations, 16 percent of Americans have medical debt in collections. The United States spends 18 percent of its GDP on health care, about double the developed-world average, with researchers pointing to secret high prices as the main reason.

The coronavirus gives hospitals the opportunity to double-down on their high-priced practices because taxpayers and insurers have committed to covering treatment costs for the disease. The next federal stimulus legislation can hold hospitals accountable for keeping coronavirus treatment prices in check by expanding on a price transparency provision in the last stimulus bill.

President Trump recently announced that the government will pay for coronavirus treatments for Americans who lack health insurance. And major insurers, including Cigna, Aetna and Humana, have said they’ll waive out-of-pocket costs related to the disease. When third parties promise to pick up the tab, there’s little to stop hospitals from jacking up their prices to take advantage.

According to a recent study by a health insurance trade group, the average cost for a patient hospitalized with the coronavirus is $30,000. The Kaiser Family Foundation estimates that hospitalization could top $20,000. Time magazine reported on a Boston woman who was charged $35,000 for coronavirus testing and outpatient treatment.

Expect these prices to rise even further if patients aren’t directly paying any portion of them. If insurers offer to pay hospitals with the equivalent of a blank check, then hospitals can easily raise rates for care. Medicare rates limit government payments to hospitals, but there’s nothing to stop pervasive medical waste, which makes up 25 percent of U.S. health care prices, from being passed on to taxpayers. 

Higher hospital prices will ultimately be paid by American employers, workers and consumers. Health insurers claim their coronavirus costs will lead to dramatic premium increases next year. Yet policyholders should not accept this argument because insurers are also saving hundreds of millions of dollars from the widespread cancelation of expensive elective procedures and significantly fewer emergency room visits.

Lawmakers can prevent hospitals from increasing their rates in this environment by requiring them to post their hidden cash prices and secret negotiated rates. This information will allow payers to shop for the best quality of care at the lowest possible prices, creating a market that puts downward pressure on prices. Even in a pandemic, hospitals will be forced to compete for business, just like companies in every other sector of the economy.

With price discovery, inefficient or price-gouging hospitals will lose patients to competitors that offer better value. Clear prices flip the current health care power imbalance on its head, empowering patients and third-party payers to be active consumers in health care. Rather than not knowing what they’ll pay until bills come weeks and even months later in the mail, health care customers can budget, compare and save. As a member of our Pennsylvania focus group noted, shopping for health care can become like shopping on eBay. 

Lawmakers can look to recent precedent for this price transparency push. The Phase 3 stimulus bill that passed Congress in March paired coverage guarantees for coronavirus tests with a requirement that providers publish their cash prices for tests online. This measure will control diagnostic rates in a world where payment is guaranteed. Policymakers can follow the courage of their convictions by extending this price transparency principle to coronavirus treatments or — better yet — all of health care in the upcoming stimulus legislation.

By covering the cost of coronavirus treatments, the government and insurers are — at least in the short term — sheltering patients from financial pain. This move is likely a smart one during a pandemic. Yet to prevent employers, employees and taxpayers from the associated unintended consequence of higher hospital prices, policymakers should include price transparency protections in the next stimulus bill. Hospitals will complain even more, but their $175 billion worth of bailout funds is more than enough taxpayer sugar to help this medicine go down.

 

Cynthia A. Fisher is a life sciences entrepreneur, the founder and chairman of PatientRightsAdvocate.org, and the founder and former CEO of ViaCord, Inc.

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