Opinion

Hospital Price Gouging in the Age of COVID

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Posted: Oct 01, 2020 12:01 AM
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Hospital Price Gouging in the Age of COVID

Source: AP Photo/Mary Altaffer

Many hospitals are taking advantage of the global health pandemic. Having taken to heart the old quip “a crisis is a terrible thing to waste,” they are gouging patients and overbilling for COVID treatments.

As bills start to roll in for COVID testing and services, more and more examples of exploitative and dishonest billing are coming to light, and they’re enough to make you … sick. The predatory behavior underscores the fact that we need price transparency in health care, and we need it now.

The Kaiser Family Foundation helped unmask the arbitrary nature of medical billing in its recent analysis of Covid-19 diagnostic test prices. According to the study, the cost of the test ranges from $20 to $850, depending on the facility. Such a wild disparity is enough to call into question how pricing is determined, but the racket doesn’t stop there.

Dr. Zachary Sussman went to Physicians Premier ER for an antibody test and the facility billed his insurance company $10,984. When he looked at his “Explanation of Benefits” for the visit, the charges for the test were significantly higher than the list price, and a few charges for services he did not receive were added on. Sadly, this sort of haphazard and fraudulent billing is nothing new.

Opaque and inflated hospital billing has been going on for decades. The coronavirus has increased confusion over who is getting the bills and who is on hook to pay for them. Americans are now seeing clearly the health care pricing racket that has been going on for years between hospitals and insurance companies. Our public policy debates have traditionally centered around who should pay those bills.  But the real question is why these massive, erroneous bills are generated in the first place, because this scheme has grave repercussions for average Americans.

The middle class is hit the hardest by egregiously high health care costs but far too many are unaware due to our country’s employment-based health care model. Employers pay approximately 70 percent- 82 percent of health insurance costs for their employees. That money doesn’t appear from thin air — rising costs of health care mean less money forraises and bonuses, and fewer people on payrolls. In short, when health care costs rise, employers are forced to cut jobs, limit growth, and hold off on raising wages and salaries.

Make no mistake, medical billing malpractice and price gouging are stealing the American Dream from the middle class.

We must prevent fraudulent, inflated billing by ending secret prices in health care. The Trump administration has taken a critical step in the right direction, issuing a  rule earlier this year from the Centers for Medicare and Medicaid Services (CMS), which requires hospitals to post their secret prices on a public website and to provide prices for common procedures to patients before the service is provided. The rule, which goes into effect January 1, 2021, is potentially transformative, but it lacks meaningful enforcement, blunting its potential to drive down health care prices.

First, the penalty for non-compliance — $300/day — is far too low to ensure compliance by the corporate hospital systems that dominate most communities; $1 million per violation is more appropriate to ensure compliance.

Second, the January 1 rule only applies to hospitals, exempting individual doctors’ offices, labs, imaging centers, urgent cares, surgical centers, and many other health care facilities outside of hospitals. The administration has proposed a second rule requiring insurers to disclose their secret prices for care at non-hospital settings as well. In order to effectively advance price transparency in health care and bring prices down, the administration needs to finalize that proposed rule as soon as possible.

We know that price transparency creates the accountability that drives down prices and reduces fraud. Why? Millions of Americans who don’t use insurance to pay their healthcare bills can attest. Direct-to-provider arrangements with employers, Health Care Sharing Ministries, and cash pay programs are already demanding upfront prices, fair cash payments, and negotiations for medical bills. Patients have reported discounts as high as 90 percent for paying cash.

While the world eagerly awaits a coronavirus vaccine, there’s no reason we can’t tackle another plague inflicting damage on our economy: exorbitant and dishonest health care costs. The antidote is ending secret prices once and for all. We just need our leaders in Washington to step-up and deliver the prescription.

Katy Talento is an epidemiologist, former senior healthcare adviser to President Trump, and executive director of the Alliance of Health Care Sharing Ministries.