Out-of-net­work charges un­der fire

Modern Healthcare - - NEWS - By Bob Her­man —Data re­search by Art Go­lab

Hos­pi­tal list prices var­ied sharply within in­di­vid­ual mar­kets, with the high­est-priced hos­pi­tals rou­tinely charg­ing more than five times the rates of the low­est-priced fa­cil­i­ties in the same area, new CMS data show. Those high re­tail prices have be­come a grow­ing con­cern as more pa­tients face un­ex­pected out-of-net­work bills.

The CMS re­leased fis­cal 2013 data last week on the av­er­age amount billed by 3,290 hos­pi­tals for the 100 most com­mon in­pa­tient and out­pa­tient pro­ce­dures, and the av­er­age amount paid by Medi­care. On the in­pa­tient side, the data showed charge­mas­ter prices in­creased by about 10% from 2011 to 2013 even though health­care spend­ing grew at a much lower rate.

The high­est charges for 14 of the 15 most com­mon Medi­care in­pa­tient pro­ce­dures among all U.S. hos­pi­tals in 2013 were at fa­cil­i­ties owned by for­profit CarePoint Health in New Jer­sey. At CarePoint’s Bay­onne (N.J.) Med­i­cal Cen­ter, the list price for treat­ing chronic ob­struc­tive pul­monary dis­ease pa­tients av­er­aged al­most $208,000. CarePoint’s Christ Hos­pi­tal in Jer­sey City charged nearly $223,000 for pa­tients with se­vere sep­sis.

The na­tional av­er­age hos­pi­tal charge for se­vere sep­sis was $48,465, with the low­est be­ing $7,178.

“The mar­ket is to­tally out of whack,” said Ger­ard An­der­son, a health pol­icy and fi­nance pro­fes­sor at Johns Hop­kins Uni­ver­sity.

Those sticker prices mean lit­tle to Medi­care, though they do fac­tor in to what the pro­gram pays for high-cost “out­lier” cases. Medi­care pays hos­pi­tals sched­uled amounts, and hos­pi­tals can re­ceive add-on pay­ments if they are a teach­ing fa­cil­ity or treat high vol­umes of poor pa­tients.

But ex­perts note that charges are the ba­sis for hos­pi­tals’ rate ne­go­ti­a­tions with pri­vate in­sur­ers. In ad­di­tion, some pa­tients are di­rectly af­fected by the list prices. For in­stance, CarePoint does not have con­tracts with some ma­jor in­sur­ers in its ser­vice area, so in­sured pa­tients treated at CarePoint fa­cil­i­ties—and their in­sur­ers—some­times face those high re­tail prices.

“Many peo­ple be­lieve that the charge­mas­ter file is ir­rel­e­vant,” An­der­son said. “But if you are unin­sured, it’s clearly not. (And) if you got an out-of-net­work provider, you’re most likely to feel the ef­fect of th­ese very high charges.”

Hos­pi­tals gen­er­ally con­tend the charge­mas­ter prices are mis­lead­ing be­cause very few pa­tients re­ceive a bill based on those rates, and the pay­ments hos­pi­tals ac­tu­ally re­ceive are much lower. For ex­am­ple, Medi­care paid hos­pi­tals 22% of their charged amount for ma­jor joint re­place­ment surg­eries, the most com­mon in­pa­tient pro­ce­dure, ac­cord­ing to the CMS data.

But a grow­ing num­ber of Amer­i­cans are cov­ered by high-de­ductible health plans with nar­row provider net­works. When pa­tients go to an out-of-net­work fa­cil­ity or un­wit­tingly re­ceive care from an out-of-net­work doc­tor, they may be li­able for the high re­tail prices. Their in­sur­ers also may be on the hook if they don’t have a con­tracted rate with the provider.

For hos­pi­tals, stay­ing out-of-net­work is a “grow­ing strat­egy,” said Paul Gins­burg, a health econ­o­mist at the Uni­ver­sity of South­ern Cal­i­for­nia.

A CarePoint spokesman said re­tail prices af­fect less than 7% of its fa­cil­i­ties’ pa­tient en­coun­ters. When CarePoint bought its three hos­pi­tals out of bank­ruptcy, he said, pri­vate in­sur­ers were pay­ing them be­low Medi­care rates. The sys­tem tried ne­go­ti­at­ing higher rates, but in­sur­ers didn’t budge. “Be­ing outof-net­work is not a busi­ness strat­egy; it is a sur­vival strat­egy,” he said. “We would like to be in-net­work with ev­ery in­surer in our state pro­vided they could of­fer us a work­able rate of re­im­burse­ment that takes into ac­count our obli­ga­tion to pro­vide care for the un­der­in­sured and unin­sured.”

Providers charg­ing re­tail prices for out-of-net­work ser­vices has strained re­la­tion­ships with in­sur­ers, and pa­tients are caught in the mid­dle. Clare Krus­ing, spokes­woman for Amer­ica’s Health In­sur­ance Plans, said her group has found that out-of-net­work prices are “ex­or­bi­tant.”

Some states, in­clud­ing New Jer­sey, have pro­posed lim­it­ing the amount hos­pi­tals can charge for out-of-net­work ser­vices. Hos­pi­tals have op­posed such caps. CarePoint ar­gues that if hos­pi­tal prices are go­ing to be reg­u­lated, the state should es­tab­lish an all-payer rate­set­ting sys­tem to cre­ate a level play­ing field for all plans and providers.

“Many of the re­cent dis­cus­sions about cap­ping out-of-net­work pay­ments to hos­pi­tal providers are sim­ply a ruse to pro­tect in­sur­ance com­pany prof­its and en­able in­sur­ers to main­tain the ad­van­tage when ne­go­ti­at­ing their re­im­burse­ment agree­ments with hos­pi­tals,” CarePoint CEO Den­nis Kelly said in May.

Nev­er­the­less, hos­pi­tals across the coun­try, per­haps spurred by trans­parency ini­tia­tives such as the CMS’ an­nual hos­pi­tal data re­lease, have been work­ing with out­side con­trac­tors to up­date their charge­mas­ter price lists. “They’re try­ing to get a bet­ter un­der­stand­ing of where they are out of line in their charg­ing,” said Kathy Schwartz, prod­uct manager at rev­enue-cy­cle man­age­ment com­pany Craneware.

David Lan­sky, CEO of the Pa­cific Busi­ness Group on Health, a San Fran­cisco-based coali­tion of large health­care pur­chasers, urges mov­ing be­yond ex­am­in­ing re­tail prices to pub­lish­ing ac­tual ne­go­ti­ated rates be­tween in­sur­ers and providers. Those typ­i­cally are hid­den by con­fi­den­tial­ity clauses in con­tracts. Re­veal­ing those rates would help em­ploy­ers and con­sumers in seek­ing out lower-cost care and in­di­cate how ag­gres­sively in­sur­ers are work­ing to keep costs down, he said.

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