Charges, not costs, the cul­prits, re­searchers say, but the med­i­cal com­mu­nity re­buts the find­ing

Modern Healthcare - - Front Page - Jes­sica Zig­mond

I“t’s the prices, stupid,” might be how po­lit­i­cal strate­gist James Carville would char­ac­ter­ize the find­ings of a new study on health­care costs.

The re­searchers con­cluded that the higher fees—rather than higher prac­tice costs, vol­ume of ser­vices or tu­ition ex­penses—were the “main driv­ers” of higher spend­ing in the U.S., es­pe­cially in or­tho­pe­dics.

Pub­lished in the Septem­ber is­sue of the jour­nal Health Af­fairs, the study by Columbia Univer­sity pro­fes­sors Miriam Lauge­sen and Sherry Glied com­pared physi­cians’ fees paid by pub­lic and pri­vate pay­ers for pri­mary-care of­fice vis­its and hip re­place­ments in ments in the U.S. com­pared with other coun­tries was higher still: 70% for pub­lic pay­ers and about 120% for pri­vate pay­ers.

“In terms of the fees, we would ex­pect those to be a lit­tle higher given the cost of prac­tic­ing medicine,” Lauge­sen said in an in­ter­view. “But the dif­fer­ence be­tween those fees and other coun­tries—there is an added amount that we can’t ex­plain,” she added. “It’s just higher.”

Lauge­sen posited a few the­o­ries of why this is the case, sug­gest­ing pri­vate in­sur­ers are per­haps less likely to ne­go­ti­ate fees, and also that there is no stan­dard price for pro­ce­dures in the pri­vate sec­tor. The dra­matic dif­fer­ences in fees are dif­fi­cult to ex­plain be­cause of the gen­eral lack of price trans­parency through­out health­care in the U.S. and else­where, Lauge­sen and oth­ers in­ter­viewed about the find­ing said.

“We don’t re­ally have a lot of in­for­ma­tion about what pri­vate pay­ers pay doc­tors,” Lauge­sen said. “We know gen­er­ally, but it’s noth­ing like a national data­base of fees.”

Dr. Bruce Malone, an or­tho­pe­dic sur­geon at the Austin (Texas) Bone & Joint Clinic who serves as pres­i­dent of the Texas Med­i­cal As­so­ci­a­tion, like­wise thinks in­sur­ers need to be more open about pric­ing.

“In­sur­ers are pro­pri­etary and com­pet­i­tive and will not tell us where their best hos­pi­tal con­tracts are,” Malone said last week. “We have asked some of the large com­mer­cial car­ri­ers if they want to pub­lish a list of where their best deals are,” he said, adding that if an in­surer shared this in­for­ma­tion with him, he’d choose to work with that payer. “They won’t be­cause they have an agree­ment with a hos­pi­tal sys­tem that won’t re­veal those,” he added. “That’s part of the com­pe­ti­tion.”

But Amer­ica’s Health In­sur­ance Plans con­tends that in­sur­ers aren’t the only play­ers in the health­care game who need to be forth­com­ing when it comes to prices.

“There needs to be far greater trans­parency about the prices hos­pi­tals and physi­cians are charg­ing for their ser­vices,” said Robert Zirkel­bach, spokesman for AHIP. Zirkel­bach added that last year’s Pa­tient Pro­tec­tion and Af­ford­able Care Act fo­cused heav­ily on in­sur­ance pre­mi­ums with pro­vi­sions such as a fed­eral cap on ad­min­is­tra­tive costs and fund­ing for rate-re­view pro­grams. Nei­ther of those, Zirkel­bach said, ad­dresses the “un­der­ly­ing is­sue of prices.”

Rep­re­sen­ta­tives for the Amer­i­can Hos­pi­tal As­so­ci­a­tion and the Med­i­cal Group Man­age­ment As­so­ci­a­tion were not avail­able to be in­ter­viewed for this story.

It isn’t sur­pris­ing that none of these stake- Aus­tralia, Canada, France, Ger­many, the United King­dom and the U.S.

The study also ex­am­ined physi­cians’ in­comes (net of prac­tice ex­penses), dif­fer­ences in pay­ing for the costs of med­i­cal ed­u­ca­tion, and the rel­a­tive con­tri­bu­tion of pay­ments per physi­cian and of physi­cian sup­ply in the coun­tries’ national spend­ing on physi­cian ser­vices.

For in­stance, Medi­care paid about 27% higher fees for of­fice vis­its to U.S. pri­ma­rycare physi­cians, com­pared with pub­lic pay­ers in the other coun­tries, while pri­vate health plans paid 70% more. And the dif­fer­ence in fees to or­tho­pe­dic physi­cians for hip re­place-

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