Hospital list prices may be useful after all, study finds
PITTSBURGH — For years, big medical networks have said that hospital list prices for medical care are meaningless, but new research suggests otherwise.
Researchers Michael Batty and Benedic Ippolito found that hospital list prices were related to “prices actually paid by patients and their insurers,” according to a report in the journal Health Affairs.
People without health insurance or who receive medical care outside their plan’s network of providers immediately feel the sting of high list prices, but the study also suggests a connection between higher list prices and the reimbursement that hospitals receive from insurers.
Higher hospital charges were unrelated to the quality of care provided, the study found.
“The study suggests the impact might be beyond the uninsured,” said Ippolito, an economist at the American Enterprise Institute, a neoconservative think tank in Washington, D.C.
Batty is an economist at the Federal Reserve Board in Washington, D.C. The researchers used Medicare reports covering 3,230 hospitals nationwide from 2002 to 2014, supplemented by data sets from California.
Pricing for medical treatment can be hard to check, with few hospitals disclosing prices before a service is rendered. The lack of transparency can hurt patients at their most vulnerable moments, during treatment for a heart attack, for example.
In the Pittsburgh area, employer groups have begun demanding actual costs for medical care, sometimes through third-party vendors, as a way to comparatively shop for the lowest cost, highest quality care.
“Transparency has been around for quite some time, but it’s gotten more traction because of high-deductible health plans,” said Tom Tomczyk, office leader at the downtown Pittsburgh offices of Conduent HR Services. “People are seeing there is quite a variation in fees among hospitals.”
Hospital list prices are used as a starting point in contract negotiations with health insurers, which may explain how higher charges can lead to higher reimbursement, said Tom Fitzpatrick, senior vice president of provider contracting and relations at Pittsburgh insurer Highmark.
In addition, insurers must pay hospital charges for members who receive care from an out-of-network hospital, say, if the patients receive emergency care.
The Pittsburgh Business Group on Health members in 2015 partnered with startup Innovu to get a better handle on health care costs and quality for its 82 employer members, and the Allegheny County School Health Insurance Consortium began using hospital rankings by Greenville, S.C.based Comparion Medical Analytics for the same purpose in 2014.
Hospital costs rather than charges have been the consortium’s focus, according to trustee Jan Klein, with UPMC Presbyterian Shadyside Hospital identified as a high-cost hospital for the group’s 42,000 school personnel and their dependents.
UPMC spokesman Paul Wood has challenged Comparion’s analysis as “flawed and statistically questionable,” and UPMC spokeswoman Susan Manko said UPMC Presbyterian-Shadyside has higher operating costs and cares for more complex cases than community hospitals.