Blue Cross Blue Shield of Tennessee's recent decision to drop Memphis-area Methodist hospitals from its coverage plans is a coming attraction of the competitive healthcare system that will appear throughout the country in the years ahead. BCBS policyholders shouldn't consider the carve-out of these hospitals from its network negatively, as some reports have implied. This competition can lower the astronomical price of healthcare and coverage that's bankrupting patients, suppressing worker wages, and reducing business competitiveness. Robust hospital and health insurance price transparency can accelerate this healthcare revolution by empowering healthcare consumers, including employers who provide coverage to most Americans, with the information they need to compare and save.
Making healthcare competitive, transparent for consumers
A PatientRightsAdvocate.org analysis of hospital price disclosures verifies BCBS's claim Methodist hospitals charge it far more than competing carriers. In many cases, Methodist charges cash-paying customers less than those covered by BCBS, begging the question: What's the point in paying high monthly premiums? The passive acceptance of hospital overcharging by health insurers and employers is one of the biggest reasons why care and coverage have become unaffordable for ordinary Americans. The federal government recently announced that the country spent $4.3 trillion on healthcare in 2021, nearly 20% of GDP, with hospital costs accounting for the largest portion. According to Johns Hopkins University research, hospitals charge an average of seven times their cost of care. Until now, hospitals have been able to escape accountability for overcharging by hiding their prices. They have generally blinded consumers to prices then blindsided them with enormous bills they often never would have agreed to if prices were known upfront.
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Recent hospital and health insurance price transparency rules provide sunlight
A hospital price transparency rule that took effect on January 1, 2021, requires hospitals to publish their discounted cash prices and all insurance plan rates. A health insurance price transparency rule that took effect on July 1, 2022, requires insurers to post their negotiated care rates by coverage plan. Tech innovators can aggregate these disclosures in consumer-friendly web applications like Kayak or Expedia. BCBS indicated it used Methodist's price disclosures to decide to excise the hospitals from its plans. In the same vein, BCBS should make all its negotiated care rates by plan easily downloadable and discernible for all patients and employers, so they can clearly identify the best care at the best prices. Upfront prices allow consumers to see the well-documented wide price variations for the same care, even at the same hospital. For instance, the price of an outpatient brain MRI at Methodist Le Bonheur Children's Hospital for those covered by Cigna insurance is $489 versus $5,359 for those insured by BCBS. The price of a colonoscopy at Baptist Memorial Hospital in Memphis is $612 for patients paying in cash versus $3,124 for those with BCBS. Some reward for all those monthly insurance premiums. When these prices are easily known, no consumer will tolerate paying ten times more for the same care than their neighbor. A functional market will emerge that keeps costs affordable, as in nearly every other sector of the economy. Unfortunately, this healthcare revolution has been stymied by hospitals' widespread noncompliance with the hospital price transparency rule. A recent PatientRightsAdvocate.org report finds that only 16% of hospitals nationwide are following it. (To their credit, Methodist hospitals are compliant.) The Department of Health and Human Services, HHS, can vastly increase consumer price discovery and discretion by robustly enforcing this rule. So far, it has only fined two hospitals nationwide out of the thousands that are noncompliant. Yet those two hospitals quickly posted exemplary pricing files, demonstrating the power of enforcement. By significantly ramping up financial penalties, HHS can boost compliance and empower many more American healthcare consumers to shop for the highest quality care at the lowest possible prices. Systemwide price transparency will make competitive actions like BCBS's the main feature of an affordable, pro-consumer American healthcare system.
Cynthia A. Fisher is the founder and chairman of PatientRightsAdvocate.org.
This article originally appeared on Memphis Commercial Appeal: Blue Cross Blue Shield dropping Methodist creates competitive healthcare landscape