Hospitals Squeal Like Stuck Pigs Over Trump Proposal to Force Disclosure of Insurance Company Discounts

In one of his intermittent gestures of concern for ordinary people, Trump made what ought to be a modest proposal: to require hospitals to disclose the discounted prices they have negotiated various insurers. Hospital industry spokescritters reacted as if Trump was planning to throw their children in a vat of boiling oil.

The vehemence of the hospitals’ response, along with the ludicrous claims made, seems surprising given how toothless the Trump proposal is. Hospitals that don’t play ball would be fined up to $300 a day. Yes, you read that correctly. $300 a day, maximum.

However, as we’ll discuss, even a weak proposal like this could have significant impact if even a few hospitals were to accede to the Administration’s wishes.

First, a brief overview of the Trump plan, courtesy the Wall Street Journal:

Hospitals would have to disclose the discounted prices they negotiate with insurance companies under a Trump administration rule that could upend the $1 trillion hospital industry by revealing rates long guarded as trade secrets.

Hospitals that fail to share the discounted prices in an online form could be fined up to $300 a day, according to a rule proposed in the Federal Register. The price-disclosure requirements would cover all the more than 6,000 hospitals that accept Medicare.

Comments on the proposal would be due in September and, if completed, the rule would take effect in January.

Hospitals would have to disclose the rates for services and treatment that they have negotiated with individual insurance companies such as Aetna Inc., Cigna Corp. and Anthem Inc. under the proposal released Monday. The Trump administration is also working on initiatives that could compel insurers to disclose their rates, part of a push to publicize costs that is likely to spur lawsuits and sharp resistance from the industry.

The initiative represents the Trump administration’s growing effort to shift away from rolling back the Affordable Care Act rollback and put its own stamp on health care instead. Central to that strategy is the notion that more price transparency will inject greater competition into the market and lower costs.

An additional element, per CNBC:

As part of the proposal, the administration would require hospitals to publish insurer-specific prices for at least 300 “shoppable services” consumers might consider beforehand, such as X-rays or lab tests.

We have to stop and note that the Journal dignifies the laughable industry assertion that negotiated prices constitute a trade secret. A trade secret is intellectual property developed by the producer that is so important to its competitive standing that disclosure would amount to irreparable harm. Classic examples of a trade secret are the formula for Coca Cola and the designs for chips. The claim that a mere figure that was the result of a negotiation between two parties could ever be deemed to be a trade secret is ludicrous.

The fact that an industry shill managed to get the Journal to run such palaver is a sign that hospitals don’t have good legal arguments for preserving the secrecy of this information if government bodies require them to disclose it.

So what are the hospitals so keen to hide? That the discounts can be massive. One account from a reader who has lots of doctors in the family. A woman in California had her mother come from India to pay a visit. During her stay, the mother was diagnosed with breast cancer. The daughter wanted her to have surgery in the US. The mother did not have insurance. The hospital gave a rate of $120,000 for the procedure.

The daughter was able to ascertain that only about $7,500 was the hospital’s charge for the operating room; the rest was for the doctors. She contacted the surgeon whose fee was roughly $100,000. She was able to get him to agree to take only half. She continued working on him. By the time she was done, he agreed to charge the rate that would have been billed to an insurer: $3,800.1

Moreover, so far, hospitals appear to have had to do very little to beat back other reforms, such as a California bill to bar the abuse of “surprise billing,” also known as balance billing. As we noted in a post earlier this month:

This article demonstrates the power of health care industry incumbents. “Surprise billing” is pure and simple price gouging, particularly since hospitals routinely game the system, such as by scheduling doctors who are not in a patient’s network on his operation, even when the patient has gone to considerable lengths to try to prevent that.

All these hospitals did was the equivalent of yelling “Boo” at the legislature, and the legislation to combat surprise billing was yanked, even though there has been a great deal of deservedly critical press coverage of this abuse.

On this issue, the hospitals’ mouthpieces have roused themselves to muster arguments but they don’t stand up to scrutiny. From the Journal:

Industry groups have argued that mandatory price disclosure could push up costs if hospitals see competitors are getting higher payments and demand the same. They say the federal government is overstepping its statutory authority and interfering in private contracts between insurers and hospitals. The contracts are generally bound by confidentiality agreements.

Tom Nickels, executive vice president of the American Hospital Association, has said consumers care more about their expected out-of-pocket costs.

“Disclosing negotiated rates between insurers and hospitals could undermine the choices available in the private market,” he told the Journal in March, when the White House was considering initiatives on price disclosure. “While we support transparency, this approach misses the mark.”

Help me. How does disclosing prices reduce choice? This is bafflegab.

It is also not a secret that some hospitals, particularly teaching hospitals, demand and get higher reimbursements from insurers. And some even stare them down. For instance, the University of Alabama at Birmingham has the best med school in the South. The contracts between United Healthcare and UAB Health System members, such as the UAB hospital, Kirklin Clinic (a huge outpatient center), all other UAB Medicine primary care, specialty care, and urgent care clinics, as well as other operations expires today. That means anyone with United Healthcare who goes to a UAB System participant, save for the emergency room, will pay the full rack rate.

And what hospitals are keen to hide is the gap between their out of network versus in network rates, which per the comment above, they are desperate to hide because putting out of network doctors in an operating team is their big way of larding up prices to patients. Exposing the size of the gap between the rack rate and the insurers’ prices will put pressure on hospitals to end or at least curtail this abuse.

It is entirely possible that even if the Administration prevails, some or even many might defy the new rule and pay the fine. But they run the risk that Trump will use his media megaphone to hector them. That has driven down stock prices upon occasion, hitting execs in their weak spot. And local media and local politicians might name and shame the refusniks.

This Trump plan is clearly just an opportunistic gesture to allow the GOP to pretend they are serious about combatting ever-rising health care prices. But it’s also a sign that more and more Republicans see defending the status quo as a political loser.

____
1 The part that is not obvious from this interaction is how much of the doctor’s fee actually went to the hospital. Calling it a surgeon’s fee, implies that it all or largely went to the surgeon personally, which is not the case.

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51 comments

  1. CoryP

    “But they run the risk that Trump will use his media megaphone to hector them. That has driven down stock prices upon occasion, hitting execs in their weak spot.”

    — This is the one thing that gives me hope that a Sanders presidency could accomplish good things even if it’s paralyzed in the legislature. Trump knows where the power is. (disregarding the unitary executive theory)

    Reply
      1. CoryP

        Well, I meant effective use of the bully pulpit. Of which the insulin trip was a good example — but at the same time I think cross-border insulin purchasing far predates Sanders’ involvement in the issue

        Reply
        1. annie

          don’t i recall a sanders’ bill that would have allowed americans to purchase drugs from canada. it went down to defeat. cory booker voted against it.

          Reply
          1. Telee

            Absolutely right. Along with five other democrats. Corey’s policy positions are situational and lack consistency. He also ran in New Jersey on a get tough on crime position.

            Reply
        2. Auntienene

          Sanders led a group of breast cancer patients to Canada in 1999 to purchase Tamoxifen. He’s not new to this issue.

          Reply
  2. Amfortas the hippie

    ahem…
    “rational actors, using perfect information to maximise their advantage”

    as i’ve said, ain’t a pricetag one in the hospital we go to, save in the gift shop and the little coffee bar.
    and I’ve never understood how “different prices for different people” could be justified.
    seems rather arbitrary and tautological, as well as discriminatory and wholly unfair.
    it ain’t a “market”.

    Reply
    1. Carolinian

      Yes. It’s absurd and immoral to treat healthcare like an ordinary business but if that’s the way they want to play it then they should at least be forced to abide the same rules on pricing, antitrust etc. The hospitals and doctors will claim that if we knew in advance how much they are charging us then that would deter patients from needed care–as if that is their real concern. It’s all part of the game medical professionals play where they pretend questions of vulgar money are out of their hands.

      And of course many or most medical professionals really are concerned about patient welfare but the money angle leaves them hopelessly conflicted. It’s a Rube Goldberg machine that needs to be replaced with something more sensible.

      Reply
      1. Amfortas the hippie

        from the er to the hospital room to the clinic to the dr.’s offices, everyone defers, as if in ignorance, to “the business office”.
        “i really don’t know about that side of things….”
        all of the professionals we’ve interacted with seem to genuinely love actual healthcare, mind you…but their obvious(contextually, connotatively, etc) uncomfortableness with the rapacious bean counter side of it all, is subsumed in those pat denials of knowledge or agency.
        the woman in the oncology clinic’s “finance office” got up and closed her door before admitting to how utterly FUBAR the insurance “industry” is. Was there a memo, or is it just an unspoken rule?
        my whole point in repeatedly making these arguments this way(as if i just left the honorary milton freidman lecture hall) is to point out the absurdity of the whole mess…in their own terms.
        I am adamant that health and education should be shorn mercilessly of anything resembling a profit motive.

        But market language is what just about everybody uses to talk about these things…farm hands in the feedstore parrot the “how you gonna pay for it?” trope.
        40 years of systemic and well funded and disseminated Min$f&ck can’t be undone overnight…or without like effort.

        Reply
        1. Inode_buddha

          Before I had insurance that put me financially under water, I tried to arrange things for cash, myself as the patient. Not one of the area hospitals would quote me for cochlear surgery (badly needed, now 100% deaf and out of work…)

          Between that and the way the so-called conservatives behaved when I was disabled, has convinced me to learn a different language and look seriously into moving to a different country.

          Reply
          1. ambrit

            My little sister had the cochlear implants with the subcutaneous metal plates for connecting to the external “hearing aids.” Her family are 10%rs, and had almost Cadillac insurance. Their out of pocket costs still came to over seven grand.
            I know that you are a peaceful person, but ‘things’ are reaching the point where the ‘liquidation’ of the ‘bean counters’ in the medical and insurance fields is coming to be a reasonable strategy.
            I’m beginning to feel like Samson; “Eyeless in Gaza, at the mill with slaves. Himself in bonds under Philistian yoke.”
            Heaven help the Oligarchs when the “sleeping masses” awaken in all their fury and might.

            Reply
            1. Amfortas the hippie

              Re: Samson…and great minds, and all…lol
              I have recently taken up the Jawbone of an Ass as the sigil for my House(Judges 15:15).
              it’s really a cow jaw i found somewhere and walked by for 20 years with Old Testament verses running in my head…but it will do.
              Usque ad Finem is the motto.
              boys are thrilled about all of it…their buddies(and girls!) ask questions about the bits of weirdness and art sticking out of the foliage everywhere, and they get to hold forth just like dear old dad.
              they still have to bring me in for the Delphic Aphorisms, since i’m one of only 2 people who can read greek within 50 miles, although youngest has decided it’s not that hard after all.

              Reply
              1. ambrit

                Alas, I am like Brutus; “It’s all Greek to me.” Good on your youngest! A Classical education is it’s own reward, and not just a Masters in Irony either. In Texas, you do also have a Degree in Ironmongery too, no? As in that big old lever action? I can see in my mind’s eye, the Cowboy Philosopher wandering the purple sage ruminating on Scripture as exemplified in Winchester 38:40 or Winchester 44:40.
                Don’t ask me why, but Phyllis just chimed in with something to the effect of; “That jawbone makes me think of Georgia O’Keefe and her cow skull paintings. The clear pure atmosphere of the Fabled West.”
                We hope that your wife is doing well with her cancer ‘adventure.’ (Ordeal would be a better ‘fit’ here.)

                Reply
                1. Amfortas the hippie

                  georgia okeefe country…like evrything else not-Texas…is at least a day and ahalf away, driving.
                  (Texas is Huge)
                  i’m a day’s horseride away(30 minutes by beat up pickup truck) from the geographic Center of Texas(been there, little obelisk in a pasture)
                  our scenery is as dramatic as hers, just in a different way…less sand and purples, mainly.
                  wish i knew how to put pictures on here.

                  Reply
          2. Hepativore

            I am currently uninsured as my wages at my crappy retail job at a pet store make the company offered plans currently unaffordable as even the bronze plan through Cigna at my job is more than eight percent of my monthly income. The sad thing is that it is still cheaper to go without it, as the deductible for the Cigna bronze plan is $4000. Now, taking premiums, copays, and the ridiculous deductible into account, there would be no point in paying for insurance that I would never be able to use in most cases. The deductibles for the silver, gold, and platinum plans at my workplace are much lower, but they are so far out of the range of affordability on our wages that it would be absurd to even mention them.

            But hey, the ACA is totally perfect even if it is just Romneycare with the serial numbers filed off.

            Reply
            1. Inode_buddha

              Fact is, I couldn’t afford it either. But I got the platinum plan anyway. Reason why? Do the maths… by the time you jump through all the hoops with the deductibles, co-pays, co-insurance BS etc. etc. you’ll be paying the same amount anyway, spread out over 12 mos. Knowing what was rapidly approaching I chose the platinum since it was gonna cost me the same at the end of the year anyway. FWIW I spent the last 12 yrs living on from !@ to 15/hr, and I’m at the top of a 25-yr career in the skilled trades, with education at my own expense. So yes, I actually *can* be violent. It would be nice if we actually had liberty and justice for all in this country.

              Reply
              1. ambrit

                Kudos about mentioning the fact that most tradescreatures I have ever met underwrote their own in-trade educations.
                I too saw the steep fall off in renumeration after passing some nebulous age point. Once one begins to look old, some hidden bias kicks in and you begin to be passed over for the better paying trades jobs. Unless one becomes a ‘certified’ master at their trade, wage fall off is built in. Often, what I describe as a “wage fall off” can be as simple as not increasing a particular workers monetary wage along with the rest of the, by this time, younger workforce.
                One aspect of the Robber Barons Era labour relations that is not generally mentioned is the essentially successful use of terror campaigns by some of the nascent unions. Bombings of job sites were a tactic used by unions against die hard capitalist companies. Thus was some part of the Labour to Management balance struck.
                Something about part of this phenomenon: https://en.wikipedia.org/wiki/Los_Angeles_Times_bombing
                A good book on this is: https://www.laweekly.com/a-new-book-about-the-1910-l-a-times-bombing-that-killed-21-people/

                Reply
                1. Inode_buddha

                  I’m in the Rust Belt, the only guys making real money are in the unions. What you know and however good you may be has zero to do with your career success. And the unions are just as dirty as the bosses. No thanks.

                  Reply
                  1. ambrit

                    I’ll take a chance here and argue that the “dirty” money in the Union pool gets spread around a lot more equitably, within the Union “in group” admittedly, than does the bosses “dirty” money. From what I have read, there was a real ‘trickle up’ effect from Union wage gains that is not observed in the bosses’ ‘trickle down’ formula.
                    As usual, a Union is only as good as it’s management.
                    A neo-liberal Union!!! What a concept!

                    Reply
        2. Leroy

          Amen, my brother. It’s a result of years of the guy at the top saying “We can effectively regulate ourselves” thank you. And they did……………….

          Reply
      2. rd

        You normally do business and buy things from normal business when you are a) clothed; b) conscious; and c) not been injected by drugs by the company. So when the out-of-network doctor shows up in your operating room while you are in the opposite of all three modes, negotiation by an educated consumer is generally not a viable option.

        The “balance” billing for “out-of-network” charges is the most egregious part of the US health finance system. We already have sky-high insurance charges, pharmaceutical prices, etc. But for many people, go to the hospital is entering yourself into the bankruptcy lottery.

        Reply
        1. Procopius

          I think you forgot (d) not in excruciating pain. And maybe (e) not bleeding profusely. In any case, even for minor problems medical care is not fun. How any economist can argue with a straight face that if medical care is not expensive people will use too much of it is beyond me. There is a built-in incentive not to over-use medical care.

          “Oh, wow, the county hospital is having a special on dialysis this week. I think I’ll take advantage of that.”
          “But you have normal liver function.”
          “Yeah, sure, but look how much money I’ll save.”

          Reply
  3. Jim A.

    GOP: We want a free market solution to healthcare costs
    People: Well why don’t we start with a list of the prices
    Congressmen (of both parties) What? That is crazy talk.

    Reply
    1. jsn

      Free Market Ideologue: We want a free market solution to healthcare costs
      Suckers Who Buy This Framing: Well why don’t we start with a list of prices
      Everyone Who Gets Paid For the Privatized Provision Of Public Goods: What? That is crazy talk.

      This isn’t a “GOP vs Dems”, thing, or a ” People vs Govt” thing, it’s a psychopath/sociopath vs humanity thing.

      Reply
  4. Summer

    The legal argument around the prices being a trade secret????

    This is BS.
    There is zero argument for this bullsh- – of a system. Any argument is people’s fear over their own money or job or other people. F anyone that defends this system from this point.
    Destroy! Destroy!

    Reply
  5. John Beech

    I’m confused, President Trump is ALWAYS wrong, right? So where are all the naysayers and Russia-Russia-Russia advocates on this? I predict as this guy sees the handwriting on the wall he’ll come around to Medicare For All and claim he owned this issue all along. You watch. And it will be a winning formula because he always wins.

    Reply
        1. Katniss Everdeen

          So is honey, and you catch more flies with it than you do with vinegar.

          Is it really so hard to simply give un-editorialized credit where credit is due?

          What’s “toxic” is short-shrifting a reasonable idea because you can’t be seen agreeing with the guy who had it. That’s how relentless propaganda works.

          Reply
          1. Nancy E. Sutton

            So very, very true…. many of us think that acknowledging truth wherever it turns up, is sleeping with the enemy. Selling your brain to Trump or the DNC is giving the plutocrats the win…. IMO.

            Reply
    1. False Solace

      Trump sometimes manages to find his a** with both hands, when he tries.

      His budget also proposed cuts to Medicare and SS after he campaigned against it. Cuts were magically needed after he signed a huge tax cut for billionaires and speculators.

      He can’t even cut drug prices. M4A? Don’t make me laugh.

      Reply
      1. marym

        Even leaving aside the contentious issue of healthcare or other public services for undocumented immigrants, it’s difficult to imagine what Trump’s definition would be of the “All” who would deserve healthcare funded by some progressive form of taxation, based on his rhetoric and policies concerning most of the demographic groups in this country.

        Reply
    2. Oh

      John, I’m sorry to say you’re believing this fraud who’s doing this for publicity and won’t follow through.

      Reply
    3. MyLessThanPrimeBeef

      Will we see another ‘only Nixon could go to China’ again?

      We are not talking about Trump ‘going to Russia.’ That’s not on the menu.

      Can only Trump go to Medicare for All?

      That would be so non-linear.

      Reply
      1. Amfortas the hippie

        and then MFA would be forever associated with his cartoon face.
        maybe this is what the Vichy Dems are hoping for.
        remember, not long ago, trump made noises about withdrawing from the WTO…which used to be a decidedly Lefty position(see: battle for seattle)…and suddenly, Team Blue was all over social media singing the praises of that global union of capitalist rent seekers.

        Reply
        1. Nancy E. Sutton

          From Seattle, so very, very true… ‘Vichy Dems’ love it! Now a sound bite like that that younger folk would get….

          Reply
    4. Jeff

      It’s just too much to ask that we the people applaud when a president or congressman does something right. It happens so rarely that maybe we’re just not sure what it looks like when they do what they’re supposed to do.

      I really didn’t like Obama, but I absolutely cheered his decision to kill pirates that were taking ships… Because it was the right thing to do.

      Trump derangement syndrome is real.

      Reply
  6. anon y'mouse

    if you can’t even discover the price, vs price paid by others, how can this in any way be conceived of as a “market”?

    yeah, i know–markets are imaginary.

    Reply
  7. mpinco

    Given how corrupt DC is, the only way to reform healthcare is by a thousand cuts, similar to the way Trump is addressing the issue. One big healthcare ‘plan’ would be an easy takedown by the embedded healthcare industry lobbyist in the same way as Obamacare. Remember the NakedCapitalism post “They have already won” from 2009 following by double digit increases every year? MFA would end up the same.

    Reply
  8. Otis B Driftwood

    One of the arguments opposing M4A is the claim that Medicare pays less than private insurance and will lead to closings of hospitals and clinics. Now I’m curious if this argument rests on what gets billed versus the amount negotiated with providers?

    I found this rundown of how billing vs. payment works – a pretty good explanation of how an Explanation of Benefit (EOB) works (or doesn’t). See http://truecostofhealthcare.org/outpatient_charges/

    Reply
    1. hoonose

      Hospitals can bill anything they want, so the numbers are typically inflated. They already know what Medicare pays, since Medicare has preset reimbursements. And those numbers are typically lower. They use this difference to show ‘write offs’ and ‘losses’. If all patients were on Medicare, most hospitals will have lower profits. And some might close.

      Reply
      1. ambrit

        Get with the spirit of the Opposition and let us nationalize those hospitals that threaten to close. Let the “investors” take a total loss on their ‘investments.’ If the VA can run the military oriented hospitals, let them also run the ‘orphaned’ civilian oriented hospitals.
        USNHS

        Reply
        1. Jeff

          Right, because the DMV, post office and the IRS are models of efficiency and good governance.

          Good grief.

          Reply
          1. inode_buddha

            When a business becomes more efficient, it is not necessarily doing so in order to benefit its customers. I have a lifetime of first hand experience that shows the benefits of efficiency typically goes straight into the bosses pockets.

            Reply
            1. ambrit

              Amen brother.
              If I remember my history correctly, those functions mentioned by Jeff were “nationalized” precisely as a result of egregious price gouging and other anti-social behaviours that the former private providers of those ‘services’ indulged in.
              When a function potentially effects all of the people of a polity, the entities carrying out that function should become answerable to all of the people in the polity. Let form follow function.

              Reply
  9. Oregoncharles

    “Calling it a surgeon’s fee, implies that it all or largely went to the surgeon personally, which is not the case.”

    That’s called a kickback, and it’s illegal in most states.

    Reply
  10. Phil inKC

    Broke my wrist a couple of months ago. ER was 13 grand. SUrgery another 13 g’s. Each PT session is from $350-550/session. I liked my ER doc, my surgeon, and all the PT folks. But I hate my insurance company (Bernie is right on that point). I hate the health care infrastructure even more, because they treat me not as a patient, but as a profit center.

    We don’t have patient-centered care, we have profit-centered care. The billing is deliberately misleading and often fictitious. We can do better.

    Reply
  11. Jeff

    Everyone here should shop their health insurance against health sharing ministry pricing. No networks to deal with is a huge advantage when it comes time to deciding which provider to go with.

    Reply

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