It’s not often that a nice succinct story about hospital consolidation, high out-of-pocket costs, and limitations on patient choice comes along and clues in the public about the vast changes in healthcare coming their way. Fred Knapp, a reporter/producer for Nebraska Public Radio and Television, did just that in a piece that aired last week. Knapp used a public meeting in Lincoln, hosted by Blue Cross Blue Shield of Nebraska (one of six it held around the state), to explore the battle between insurance companies and hospital systems to determine the prices of the medical services patients receive.
It’s a story that is ready to be written or aired in most parts of the country, as insurers try hard to bend the proverbial cost curve by forcing big hospital systems to accept lower reimbursements for care they provide. The patients in Nebraska are caught in the middle, just as they were in Pittsburgh, Nashville, and Boston. If Blue Cross doesn’t come to terms with Colorado-based Catholic Health Initiatives (CHI), which runs 12 hospitals in Nebraska, those hospitals, along with some 1,400 doctors and other providers, mostly in Omaha, will be excluded from the insurer’s network, forcing policyholders to pay the out-of-network rate. The difference is hardly trivial, especially for high-cost services. Imagine paying $20,000 out of pocket because your carrier and the local hospital can’t agree on a fair price.
Determining what the fair price is, though, can get confusing. Knapp helped clear up some of the confusion over what a hospital charges and what the insurance company actually pays, which don’t line up. A Blue Cross executive told the crowd in Lincoln that “on average we pay around … $4,300 for a pregnancy, a normal birth. And CHI will bill about $33,000. And so you see that spread is pretty significant.” Cliff Robertson, the CEO of Catholic Health Initiatives, countered, “What they may be trying to do is confuse patients, because what we expect to be paid—regardless of what is charged—what we expect to be paid is very close to that $4,300 that they say is their usual and typical payment for a normal delivery.”
So why not just charge what you expect to be paid? The answer has to do with hospitals’ traditional way of pricing, which reflects something called “charge master”—a list of prices nobody actually pays except the uninsured. The prices paid by insurance companies, which typically are much less than the “charge master” rates, are determined through negotiations with the providers. Those negotiations have gotten more contentious in recent years, as medical inflation has escalated. Knapp used two quotes from the opposing sides in these negotiations to explain what’s going on. A bit more context from Knapp would have helped make this point clearer.
Robertson suggested that Blue Cross was using patients as pawns by going public with this dispute over charges and payments, saying, “They chose to do that specifically to put patients in the middle of a negotiation that should be handled behind closed doors and at the negotiation table.”
Maureen Swan, a Minneapolis hospital consultant, told Knapp, “This is unusual that it gets to the level where it hits the newspapers and press releases.”
CHI has even run ads in local newspapers addressing the dispute. One in the Omaha World-Herald, the state’s largest paper, told readers: “You should choose your doctor—not Blue Cross.” Another ad that ran in the Lincoln Journal-Star and other papers read: “You deserve the truth, What Blue Cross isn’t telling you,” and then suggested questions to ask the insurer.
Fights between providers and insurers are not new, as Knapp points out, but this time patients stand to lose much more because the price of healthcare is so much higher than it was two decades ago, when managed care and selective networks first surfaced. What’s new is the public nature of the spats, as they spill from the boardroom into the media. In theory that’s great for public understanding of our way-too-complex healthcare system, but it also demands that journalists explain the spin coming from both sides, and decode the various prices and charges, particularly what relative prices are in a given region. For instance, Blue Cross insists that doctors and hospitals in Omaha are the real culprits in this dispute, charging 10 to 30 percent more than providers elsewhere in the state. Some of these gigantic hospital systems do business in multiple states and in many parts of a single state, and their charges may vary considerably. Andy Williams, Blue Cross’ consumer marketing director, says the hospital system won’t negotiate separate deals for hospitals in other parts of Nebraska.
(Here are a few sources to help understand price variation: Dartmouth Atlas; physician data from Data.Medicare.gov; Fairhealth.org; and Castlight.)
These public disputes also give us a chance to once again examine the contradictions of consumer choice. At the Lincoln hearing, a Blue Cross executive argued, “It’s time for healthcare to be like any other service,” in which information empowers consumers and doctors to make “better decisions.” But it doesn’t work that way in the real world, and journalists should push back when they hear such assertions. The prices Blue Cross and other carriers pay for services are not transparent, yet knowing them is key to making good choices. And there’s the matter of choosing a doctor you trust. Trust is also key to the healing process. That, too, came through in Knapp’s story. At the Lincoln meeting, Barb Hellerich stood up and said that the doctor who performed her esophageal surgery last spring at Creighton University Medical Center, one of the CHI hospitals, is “the only one that does the surgery I had. I want to continue to be able to go to him,” she said.
That’s hardly an uncommon, or unreasonable, desire.