The Trump Administration has waded into the thicket of health care pricing. Unfortunately, his minions will be talking to all the wrong people on how to get transparency done.
Instead of talking to the private sector companies that pay the totality of all the nation’s health care bills, they will be seeking advice from the price-setters in the Medical Industrial Complex (MIC). They will also consult with the policy wonks in academe and staffers inside the beltway. They have concepts, sound bites, political strategies, but almost no pragmatic experience in managing the underlying costs that ultimately drive the outrageous health care prices in the U.S.
It would help if they had ever paid out their own money for the bills for a group of people – as corporate managers do.
The Trump people say they will insist on “negotiated prices” that hospitals pay to insurance companies.
That’s a start because “list” or “sticker” prices at hospitals bear almost no resemblance to “real” or “net” prices after discounts. The discounts can range from zero in virtual monopoly areas like Northwest Wisconsin to 90% on some procedures in the rest of the state.
But, even with net prices, consumers will still be in a fog.
The published prices may be net of discounts, but most people still won’t know what they are looking at. The code system installed by Medicare years ago and used by health insurers is so complex as to be indecipherable.
Some companies use a core navigator to gang all the codes included in a procedure. That expert allows the employer to steer its people to the best deal. A colonoscopy can range from $2300 to $9000 in the “marketplace.” The navigator helps the patient/employee through the maze to find the $2300 price.
Better yet, there is a silver bullet for the 40% of elective procedures that are “shoppable.” It’s bundled prices.
An example is MRI scans for $600 at Smart Choice MRI. Serigraph and its employees saved $100,000 last year on scans there. Our employees paid zero if they were smart consumers and went to Smart Choice, which has been around for a dozen years. Everyone can understand a fixed price of $600.
Another oft-cited example of an all-in bundled price is $28,600 for a hip or knee replacement at the Orthopedic Hospital of Wisconsin (OHOW). That price is half or less of market. Why would anyone pay more, especially since OHOW is top-rated for quality?
There are a limited number of bundles out there now, led by imaging and orthopedics. But it won’t be long before there are bundles for standard protocols for some cancer and cardiac treatments. If there are standard protocols of treatment, why aren’t there standard prices?
Large self-funded corporations in the country are going around the health insurers to buy value and fixed prices directly from the best hospitals and clinics. It’s happening.
In another break-through toward understandable prices, Ascension Wisconsin, part of one of the biggest systems in the state and country, introduced what it calls “rational pricing” for MRI and CT scans and for colonoscopies. Its bundled price for a standard MRI scan sold to a self-insured payer will be $900. That compares to its previous unbundled price of about $2000.
A CT scan will carry a bundled price of $780 vs. $2,000 before. A colonoscopy will bundle at $1,285 s. $2600.
Can this be a semblance of a competitive marketplace taking shape? Be still, my heart. It’s been a long time coming.
Yet, the bundling of prices never reached the president’s radar screens.
Mr. President: Have your lieutenants come out to Wisconsin and talk to real payers. We’ll show you how to achieve real transparency and save payers tons of bucks.
Controlling costs, the real health care issue facing the country, is clear sailing politically. The Democrats don’t comprehend cost management; they talk almost only about insurance and coverage.
Mr. President: you have a golden opportunity to help yourself in 2020, and the country, but you are listening to the wrong people.