Improving the patient financial experience requires an end to ‘mafia’-style price negotiations

Though healthcare may be the single most important purchase most people will make in their lifetime, it’s also the one that they’re the least informed about. Despite legislative changes such as the No Surprises Act and the Centers for Medicare and Medicaid Services’ price transparency rule, patients in the U.S. still have a woefully loose grasp of the process of paying for healthcare.

The lack of transparency in healthcare pricing often leads to devastating consequences for patients, forcing some into deep medical debt and others into avoiding doctor’s visits or skipping their medications. This problem won’t get better until the healthcare industry rids itself of price-gouging middlemen and closed-door price negotiations held by businesspeople, according to a discussion panelists had during a session at MedCity’s Invest Digital Health conference on Wednesday.

The panelists agreed that CMS’ price transparency rule isn’t working. Though it was heralded by lawmakers as a huge win for patients, many experts hold the belief that the pricing data that hospitals post is essentially useless for consumers. The rule is flawed in its design because it requires hospitals to post highly complex billing data that is too confusing for patients to understand, the panelists said.

Further, it’s impossible to produce an accurate cost estimate for care in a fee-for-service environment, Cedar CEO Florian Otto pointed out. For example, patients often change medications or get sepsis while in the hospital — true price transparency would involve a bundled payment system that accounts for the flexible nature of a patient’s entire care journey, Otto said.

Even health system administrators can’t understand price transparency data, according to Ryan Hildebrand, audience member and innovation administrator at LCMC Health. He recalled a recent conversation he had with LCMC Health’s chief revenue officer Suzanne Haggard in which he was seeking to better understand the cost of care at the health system.

“I asked her, ‘Hey, what would a knee surgery cost?’ and she said ‘Well, I don’t really know — you would need to know this and that and this and that.’ There’s just so many layers that are built in, that there’s really nobody that understands it from top to bottom.” he said.

This complexity and lack of transparency is sometimes at its worst on the medication side of things. A key reason why close to 40% of Americans skip or ration their prescriptions is because of price gouging committed by pharmacy benefit managers, said Adrian Rodriguez, vice president of quality and safety at Mark Cuban Cost Plus Drug Company

His company seeks to cut out these middlemen by going directly to suppliers to obtain drugs. Circumventing pharmacy benefit managers not only often results in an 85% cost savings for patients, it’s also a more honest and transparent way to go about providing people their medication, Rodriguez pointed out. 

Pharmacy benefit managers aren’t the only ones who price gauge — providers are very capable as well, according to Maria del Carmen Uceda, chief surgical sherpa at Surgical Sherpa. Her company guides patients through the process of negotiating healthcare prices (just as sherpa guides a climber up a mountain). She said she often deals with surgical practices who charge patients several times the Medicare rate for procedures.

Del Carmen Uceda shared an anecdote that summarizes a problem she often runs into in her work. She was speaking with a surgeon who used to lower prices for the patients she worked with, but he said his hands were completely tied once his practice was bought out by Texas Oncology

“He said ‘I have to code the way they want to code.’ For a procedure, they wanted to charge seven times the Medicare rate. It’s not right,” del Carmen Uceda said. “I’m sorry, but there’s a mafia out there. I’m gonna probably offend some hospital systems, but they’re negotiating with payers behind closed doors, and the community is hurting.”

Photo: JamesBrey, Getty Images

Katie Adams

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