Without transparency, health-care industry will keep price-gouging

Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) introduced a bipartisan bill to finally end the money games of medicine — games that have relied on secrecy, kickbacks and ruling class rules to overcharge everyday Americans at a time when they are most vulnerable. One in five Americans now has medical debt in collections and frustration with health-care’s pricing failures has finally hit a boiling point.

While surprise bills are one manifestation of the power struggle, they are a symptom of a larger problem — the absence of information to shop for medical care. The new bill, which is in line with the White House’s goal to increase transparency in health care, would shed light on the negotiated prices that hospitals and insurers keep secret, hindering competition. It would also establish a national database, run by a non-profit unaffiliated with the federal government, of paid amounts to hospitals, just as some states already have to identify a “blue book” price.

Worried about how new legislation might reign in the profitable business of price inflation, health-care lobbyists have already begun organizing to oppose the legislation and defend the status quo system. Remarkably, they are defending our current system that allows predatory price gouging of out-of-network care delivered at in-network hospitals. Given the strong bipartisan support for many of these reforms and other patient protections, health-care’s special interests are faced with a moral dilemma: Do they stand with patients or with providers who are price gouging them?

The business of price gouging and non-transparent pricing is now eroding the trust between the medical profession and the public. Some Americans now avoid medical care altogether for fear of being over-charged. It’s time medical professionals fight for a better system, rather than simply demanding more pay. Doctors, as patient advocates, should be leaders in calling for full price disclosure of non-emergent, out-of-network care delivered at an in-network hospital. Such transparency would bring more honesty to medicine at a time when hospitals are struggling to maintain the public trust.

Without real price transparency, the dysfunctional marketplace will continue to autonomously gouge hard-working Americans, either directly through predatory billing or indirectly through higher insurance costs. Prices, which have increased markedly in areas that have seen mass hospital consolidation, are surging as high as the market will allow in some areas. Health-care’s bloated $3.5 trillion spend last year desperately needs competition.

While Americans and their health plans are willing to pay more for quality, research shows there is currently no correlation between price and quality. A study from the University of Iowa found that of 101 U.S. hospitals that perform standard coronary bypass (CABG) surgery, only half were able to provide a price, and among the hospitals that could, the price ranged from 44,000 to 448,000. Did the highest priced hospital use diamond studded surgical instruments? Or care for the most uninsured patients? On the contrary, price gouging was not correlated with charity care and when prices were compared against the gold standard heart surgery outcomes in the Society of Thoracic Surgeons database, there was no association between price and quality. In other words, the joke is on the American public. But this joke is not funny.

We are told by the hospital lobby that hospitals are squeaking by on razor thin margins. But in reality, large hospitals are making record profits as small rural hospitals are closing. A new Axios report published last week found that 31 prominent not-for-profit hospital systems are on track to make a record 5.1 percent margin this year based on early 2019 data.

So it’s ironic that this new bill from Sens. Alexander and Murray is being introduced just months after HealthLeaders reported that the combined CEO pay of Advocate Aurora Health doubled by $11 million in one year.  

It’s time health-care’s leaders remember why we all went into medicine. Consider, for instance, the founding charter of most U.S. hospitals, many of which were founded by churches. Many of these charters dedicate hospitals to be a safe haven to for the sick and injured of the community, regardless of one’s race, creed or ability to pay.

In addition to calling for an end to secret pricing and gotcha surprise bills, the bill offered by Senators Alexander and Murray also facilitates biosimilars and generics medications that compete with overpriced brand drugs.  

Moreover, the new bill would ensure U.S. businesses can see what their health insurance and pharmacy benefit manager (PBM) brokers are paid on the back end. For too long, their perverse incentives have had striking parallels to the sub-prime mortgage broker business before the 2007 financial collapse. In both situations, people were sold products they can’t afford.

According to a recent Kaiser Family Foundation/LA Times poll, insurance premiums and medical bills are positioned to be the leading issue on the minds of voters leading up the next presidential election. Transparency reforms are exactly what Americans are asking for right now. Its time congress stands up to health-care’s special interests and do what best for patients.

Congress should pass this legislation before health-care’s corporate lobbyists swoop in to re-write the bill using the usual scare tactics of warning of hospitals closings and patients’ suffering. Americans are already suffering from the financial toxicity of health-care’s money games and what we need right now is more honesty in medicine.

Marty Makary M.D., M.P.H  is a professor of health policy at the Johns Hopkins University School of Medicine. He is is the author of “The Price We Pay.”