Health insurance companies to change previous approvals
HHS Secretaries Robert F. Kennedy and Dr. Mehmet Oz announced that major insurers have agreed to reduce and streamline their prior approvals
People are usually well versed to see if the hospital or doctor has insurance. However, it is a mystery how much medical procedures and operations cost, even with coverage.
A new report from healthcare analytics firm Trilliant Health shows how much the same healthcare services cost differently in different hospitals and surgical centers.
Do I need to change my entire knee? It costs just $12,870 or $101,527. Ankle replacement? A hospital in Austin, Texas has charged $22,011, while a hospital in New Jersey has been charged more than $197,000 for the same business. These broad price fluctuations can leave large bills, loans and medical liabilities for insured consumers.
Using claims data from two major health insurance companies, Trilliant Health analyzed inpatient and outpatient rates billed from nearly 2,700 hospitals and 3,500 surgical centers. The report found that the same operations or procedures could lead to a 9-fold change in price. And the prices of hospitals in the same state have more than tripled, the report said.
Trilliant also analyzed 10 hospitals listed on multiple best hospital lists, but there was no link between higher prices and improved health quality.
Allison Oakes, Chief Research Officer at Trilliant Health, said the report is intended to inform consumers and employers about medical prices so that they can better assess the value of the services they are purchasing. Oaks said healthcare prices and discounted rates negotiated by insurance companies – historically “a very well-secured industry secret.”
“The fact that we have information related to prices now would be great if we could start to keep our spending down,” Oaks said.
Hospital prices increase health spending
Research shows that such price fluctuations are key contributors to why healthcare costs are so high in the US than in any other country. The US spent $4.9 trillion in healthcare in 2023 – or $14,570 on everyone. According to the Peterson-KFF Health System Tracker, the US life expectancy is the lowest among the larger, wealthy countries, despite spending more than any other country.
Employers paying health insurance for working-age adults historically did not have a price when deciding which hospitals or surgical centers to include in their network of workplace insurance plans.
Consumers with deductible health plans often pay thousands of dollars out of their pocket before coverage begins. Or, in many cases, they will have to pay a percentage of their medical expenses.
According to a peer-reviewed health issues 2024 survey, over the past 25 years, employers’ health insurance premium costs have almost tripled the pay rate for workers. Key contribution factors: hospital price.
Under the Federal Price Transparency Rules adopted earlier this decade, health insurance companies must disclose prices negotiated with hospitals and other healthcare providers. Trilliant’s analysis included prices negotiated by the two national health insurance companies: UnitedHealth Group and Aetna.
Will price transparency add competition and lower prices?
Researchers not involved in the Trilliant report analyzed price transparency data and came to similar conclusions about widespread price differences.
One study by Johns Hopkins University found that X-ray prices and CT scans have changed more than 10 times across the country. The study found that the same scans in the same hospital were almost tripled based on different plans from the same insurance company, said Ge Bai, professor of accounting and health policy and management at Johns Hopkins University.
Bye said the study highlighted the lack of competition in health services.
“There’s a long way to go before we reach the competitive market for healthcare prices,” Bye said.
The Baker Institute at Rice University compared prices for three Houston hospitals and found a major difference between the three health insurance companies: Texas, United Health and Humana. The biggest price gap: Overnight stays covered by the Humana PPO plan ranged from $17,628 to $57,898 at different hospitals in the Houston area.
Vivian Ho, an economist at Rice University who studied hospital pricing, said employers can use price information to adjust health insurance offerings to workers.
“There are plenty of opportunities for employers to receive this information and start restructuring their interests,” Ho said.
The massive New York union has tried to drive employees out of New York to other hospitals as part of a cost-cutting move. The union, a local 32BJ of the United Nations of Service Employees, has investigated the Department of Justice’s New York Presbyterians to investigate allegations that anti-competitive behaviour keeps hospital prices high. According to a subpoena reviewed by the New York Times, the Department of Justice has launched an investigation into the contract practices of well-known hospital chains and their insurance companies.
A spokesman for the New York Presbyterian declined to comment.
Another study on Massachusetts health planning that examined the use of staged pricing that charges consumers higher out-of-pocket costs if they choose more expensive hospitals. Consumers can opt for a $250, $500 or $750 copy, and are linked to more expensive hospitals.
Three years later, overall spending fell by more than 8%, making consumers more willing to choose low-cost copies or hospitals.
Ho said the hierarchical Copay approach is easy to understand, as it makes it easier for consumers to understand health prices and what steps they can understand to reduce costs.
“The average consumer doesn’t understand the problem,” Ho said.
When health prices rise, consumers are blamed on insurance companies, Ho said. Additionally, although insurers are being scrutinized for practices such as prior approval and denial of service, the main driving force behind health insurance premiums is hospital fees for both inpatient and outpatient services.
“The hospital and integrated healthcare system charges very high prices,” Ho said. “And there’s nothing in your health insurance benefits to stop you from going to the best priced provider.”
Email Consumer Health Reporter Ken Alltucker (alltuck@usatoday.com).
