Showing posts with label provider pricing regulation. Show all posts
Showing posts with label provider pricing regulation. Show all posts

Friday, November 29, 2013

Something to like about the Exchanges


There is a lot to dislike about exchanges and their rollout, but here is something to like.  Providers complaining about pay. 

The exchange is first and foremost a marketplace, it’s a means of communicating preferences between buyers and sellers of health care.  Buyers who choose low cost, limited networks are sending a message that the services of high cost providers are not worth the price.  What happens next?

One way providers could respond is to lower prices.  Another way is to make their case to the public justifying high prices and explaining why they are worth it.  Both of those are good things, as they'd force providers to think about costs and benefits.

Another way to respond is to lobby the government for preferential treatment as described by the WSJ.  To the extent providers are arguing for more money because that's what they're used to getting, the door should be slammed in their face.  But if a provider wants to argue that their service is so critical and so unique that a service area is being deprived of critical care if they're excluded from a network, than they've got a point. 

There are two kinds of facilities that might claim that:  those with high cost/low utilization services such as a burn unit, which serve only a tiny fraction of the population but are critical for them, or rural providers where they may be the only show in town.  Those cases are unique and may indeed warrant special treatment.  But that treatment can't be a simple mandate in their favor, it has to include obligations acknowledging that such providers are in effect monopolies. 

That's another conversation that has to happen, a recognition that there are areas of health care where because of monopolies, competition makes no sense.  In those areas the only answer is public oversight, as intensive and invasive as is applied to other utility providers.  And we should accept the possibility that for some services, the community really doesn't need a local provider and prefers the burden of having to travel further to receive such care.

All of these conversations about costs and benefits, monopolies and oversight are way overdue, ignoring them has turned health care into a runaway train.  Whatever the rollout problems, if the ACA makes those conversations happen I'd mark it a success.

Tuesday, November 5, 2013

Sutter Hospitals Settlement

A large non-profit hospital chain settled a lawsuit alleging fraud in their pricing of anesthesia services.  It's interesting because

1)  It's another example of someone going after providers for what the medical world considers business as usual, but which the rest of the world considers fraud.  Oregon's justice department did this when they went after a pair of doctors for not disclosing they were paid by device manufacturers.

2)  It shows the importance of pricing.  Getting providers to disclose pricing isn't just about empowering patients to shop, it's about exposing hospital charges to scrutiny.  Nasty things breed in the dark, like $5,000 "anesthesia" charges for materials and service that cost the hospital $250.

3)  It's worth reading the allegations to get a sense of how messy the billing for a surgical procedure is, and how abusive Sutter's pricing was.  They are contained in a filing by the CA Department of Insurance which supported the suit, it starts on page 18 of the pdf.

4)  It's also worth thinking about the limitations of using lawsuits to control hospitals.  This suit caught one service out of many the hospital bills.  There is nothing stopping hospitals from simply shuffling costs to a different service code.  Or they might not even do that, the basis of the fraud claim was that the hospital was charging a time-based fee for a one-time service that had no time component.  The suit alleged the hospital was either trying to trick people into thinking it was the anesthesiologist's bill (that is billed separately by the anesthesiologist, see what I mean about messy billing) or they were charging for services they didn't deliver.  Hospitals could fix that by just charging a fixed cost that wasn't time based but was no less inflated, and that's essentially what they're saying they will do.

Lawsuits are better than nothing, but they are no substitute for regulation.