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American Hospital Association Advertisement
A Closer Look

A November 15 advertisement in the Wall Street Journal caught my attention – and then my ire. Rick Pollack, President and CEO of the American Hospital Association (AHA), a national organization that represents nearly 5,000 hospitals and health care networks – penned a piece titled, “Fighting for Fair Health Insurance Policies for Patients and Clinicians.”

The advertisement began with the following statement: “Hospitals and health systems put the health and welfare of their patients first. But for some of the nation’s largest commercial health insurance companies, that increasingly is not always the case.”

Pollack continues by asserting health insurance companies have policies that compromise patient care, access to that care and safety. “These include frequent changes to coverage, limited provider networks, delays in authorizing treatment and failure to pay providers in a timely manner.” I must admit, there is some truth to these assertions. Defending insurance companies on many of these issues will not come from me.

Pollack provides a few examples of the atrocities committed by insurance companies, which “blindsides” patients and “puts their health at risk.” Equally abhorrent, are the “billions of dollars in added costs to the health care system,” which “contribute to clinician burnout.” Again, I will not push back on such allegations.

Finally, Pollack goes for the jugular by writing that unjustified behavior by insurance companies is allowed because “commercial health insurance markets are increasingly concentrated and nearly every market is dominated by a single larger commercial insurer.” Yep, this too has some validity.

My ‘Ire’

So why am I incensed by this AHA advertisement? Quite simply, it amounts to the pot calling the kettle black. Finger pointing deflects blame from where it also belongs. Medicine has become more of a profit-incentive business than a public good that cares for patients. The large majority of clinicians serving patients are doing so for the ‘right’ reasons. Unfortunately, the business side of medicine tears away at the sanctity of patient care, leaving doubt in the care we once trusted. 

The AHA and its members are far from faultless on many of the criticisms it throws at health insurers. In fact, the atrocities they commit are swept under the rug and largely left ignored. When transgressions do surface, carefully polished responses are crafted by the AHA and its minions. Below are just a few of the many transgressions committed by the AHA and its powerful members:

  • Leveraged Local Power – Local hospitals infiltrate and hypnotize our communities, business associations and the state legislature to help soften or silence negative pushback on their business behaviors and practices. They often remind us of the “economic impact” they provide to our local economies and the ‘free’ care provided to those without health insurance. This is true, but nonprofit hospitals are exempt from paying most federal and state taxes, which may outweigh the charity care they provide. Because of this economic presence, they feel entitled to be treated with reverence to promote their own business interests. Yet contrary to arguments made by the medical establishment that bloated healthcare equates to more local jobs and serves as a multiplier-effect for local economies, growing our medical industrial complex just does not fit the true narrative of having thriving economies. Consolidation of hospitals, we are often led to believe, will broaden access to care and increase efficiency. As a result, the public will benefit by having “lower costs and improved care.” Yet, many of these mergers serve as a ploy to leverage bargaining prowess with third-party payers to ensure favorable, and more profitable prices. Studies have shown that hospital consolidation is more about enhancing bargaining power and less about integration aimed at reducing costs and providing better, safer care.
  • Opaque Pricing – The hospital price-transparency rule, which took effect this past Jan. 1, required hospitals for the first time to disclose the confidential prices negotiated with health insurers. Despite hospital opposition to this rule, it was implemented to help boost competition and control rising U.S. healthcare spending. According to a Wall Street Journal article in March, hospitals used various methods, including so-called blocking codes, to make it harder for people to search for and download pricing data. The Centers for Medicare and Medicaid Services then recently released a final rule to raise penalties if hospitals do not comply. Not surprisingly, the AHA and other hospital trade groups pushed back. Hospitals around the country are notorious for charging exorbitant and variable prices to patients. Keeping prices opaque is a huge benefit to hospitals, but not to those who pay the bills. Let’s be honest, it’s about the bottom line – healthcare is in the money business.
  • Billing Complexity Equals Medical Debt – Opaqueness in pricing also carries through to how hospitals bill for their services. Hospitals behave as if they are entitled to our money – even if the billing is unfair and inaccurate. Fortunately, we have a new law enacted to protect patients against surprise medical bills, a practice that hospitals have allowed to happen for decades. Medical debt continues to pile up for patients, causing bankruptcy to those with and without health insurance coverage. 
  • Harm to Patients – We have known for years that fatalities due to preventable mistakes made in U.S. hospitals are enormous. In fact, if medical errors were tabulated similarly to other diseases, it is estimated that medical errors would be the third-leading cause of death in this country, behind only heart disease and cancer. It is egregious that death certificates do not list the preventable complications that contribute to the death of patients. The AHA and hospital trade groups whitewash preventable medical mistakes and patient harm as if they don’t happen. Instead, more resources are spent to initiate state laws that implement and enforce tort reforms that protect their backside. Apparently lobbying for such legislation is much easier than actually mitigating the harm they are needlessly causing.
  • Lobbying Power – The hospital and medical community lobbies state legislatures, Congress and federal agencies to influence decisions that benefit themselves, not the public. According to OpenSecrets.org, a nonpartisan, nonprofit, and independent organization that tracks money in U.S. politics,health’ was the top lobbying sector in 2020, spending over $629 million. Since 1998, this sector has dished out over $9.5 billion, edging out ‘Misc. Business’ ($9.4 billion) and Finance/Insurance/Real Estate ($9.36 billion).  ‘Health’ lobbyists represent the American Medical Association, American Hospital Association, pharmaceuticals, and so on. In the $4+ trillion healthcare industry, lobbying efforts can pay off handsomely. The ‘investments’ mentioned above are merely a drop in the bucket for the eventual returns that will come sometime later. 

Bottom Line

The business of medicine should be less about ‘private gain’ and more about ‘public good.’ The monetization of medicine has been designed for the benefit of those who stand to profit at the expense of those who are forced to blindly pay. To be fair, insurance companies are not without fault. However, I see this advertisement as yet another deflection from the real truth. We deserve greater transparency and accountability from those who provide our healthcare and the insurance companies that help pay for such care. Lastly, we must have honest and bold action from those we elect to protect the public’s interests. Unfortunately, patients are an afterthought in this perverse system that too often lacks appropriate accountability.

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Reforming Rx Pricing
First Reform Pharma Campaign Contributions

Both political parties seem to be in agreement that skyrocketing drug costs of specialty drugs and new drugs coming on the market threaten to bankrupt the system. Yet pharmaceutical companies, pharmacy benefit managers (PBMs) and their powerful lobbying efforts have a proven track record in preventing bold measures to address high drug prices.

It’s no mystery why we cannot have an unified national policy on how to control outrageously high prescription medications. It all begins with campaign contributions that impact how national drug policies are made.

According to a recent analysis by STAT, over two-thirds of Congress (374 of 535 voting members) have received campaign contributions from the pharmaceutical industry during the 2020 election cycle. During 2020, the drug industry sector donated $14 million to influence 72 senators and 302 members of the House of Representatives. Overall, however, the Pharmaceutical Research and Manufacturers of America raised nearly $527 million in 2019 and spent roughly $506 million on ‘dark money’ groups, according to OpenSecrets. More specifically, the drug industry focused on those in key committees that impact healthcare legislation. (It should also be noted that Pharma has funded more than 2,400 state lawmaker campaigns in 2020.)

Such campaign contributions must meet certain guidelines to be legal. These contributions can certainly influence those who wish to get elected (or re-elected) to powerful and influential positions to influence government health policy. Quid pro quo is alive and well for those we elect to Congress and our statehouses. I would like to believe that influence cannot be bought, but politics is an ugly process. The lawmakers who accept these contributions represent both sides of the aisle. As STAT mentioned, “Despite the drug industry’s apparent interest in preventing Democrats from controlling both Congress and the White House, contributions were almost evenly split between major political parties: $7.1 million went to Republicans, and $6.6 million went to Democrats.”

Iowa Senators

Have Iowa Senators, Charles Grassley and Joni Ernst, resisted the urge to accept drug-industry money?

According to STAT, Senator Grassley, who has a proposal to fix drug prices, received a total of $32,500 from the drug industry during the 2020 election cycle. The specific donations from each drug company can be found in the STAT analysis. Grassley, it must be mentioned, does not propose that the Health and Human Services Secretary negotiate drug prices with Pharma. Pharma desires to avoid having the federal government directly control drug prices.

As for Senator Joni Ernst, the results are even more pronounced. Sen. Ernst, who was in a re-election dog fight with Theresa Greenfield in 2020, required ‘all hands on deck’ from campaign supporters. Sen. Ernst received $102,000 in campaign contributions from various drug companies. Again, STAT provides the breakout of the specific contributions from each drug company. Sen. Ernst has pressed for “lower prescription drug costs,” but to do so, the U.S. must “adhere to market-driven principles” that would be more pleasing to Pharma than having government-negotiated pricing.

It’s worth noting that House Representative Richard Hudson, Republican from North Carolina, was the top recipient for drug industry funds – $139,500 in 2020. Rep. Hudson is on the influential Energy and Commerce Health subcommittee, which oversees a large portion of healthcare legislation in Congress.

Summary

The drug industry has hastened yet another addiction crisis – the reliance on campaign contributions that compromises objectivity toward fixing a long-standing problem in our healthcare system.

Understanding the drug pricing policy in our country must first begin with how our congressional representatives are funded during their campaigns. Yes, this may sound too simplistic, but in our government – specifically with healthcare – it boils down to following the money trail. This is the ugliness of how policymaking works in Washington and our statehouses. Until campaign financing can be ethically cleansed, we are mere pawns in a game that will largely be decided by others – regardless of how we vote.

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Almost One-Third of Hospitals Not Compliant
with Price Transparency Requirements

According to Guidehouse, a consulting services firm, 30 percent of hospitals analyzed across 27 states are not compliant with either of the two price transparency rules required by the Centers for Medicare & Medicaid Services (CMS).

The price transparency rules became effective January 1, and U.S. hospitals are required to disclose their pricing with payers two different ways:

  1. Comprehensive machine-readable file – This consists of a single file that contains five types of standard charges for all the items and services provided by the hospital. Acceptable formats include .XML, .JSON, and .CSV formats. The five standard charges include:
    1. Gross charges
    2. Payer-specific negotiated charges
    3. Discounted cash price
    4. De-identified minimum negotiated rates
    5. De-identified maximum negotiated rates
  1. Consumer-friendly shoppable services file – This consists of a set of at least 300 shoppable services, which includes 70 CMS-specified services and 230 hospital-selected services. Hospitals can opt to use a patient price estimator tool to fulfill this requirement.

What Guidehouse Found

More than 1,000 hospitals were recently analyzed across 27 states by Guidehouse. Overall, about 70 percent of the hospitals were compliant with at least one of the two files, while the other 30 percent of providers were not compliant with either. According to Guidehouse, non-compliant hospitals have expressed “they either have significant resource constraints to meet these requirements (COVID-19 or otherwise) or have a lack of understanding of the ruling.”

Guidehouse analysis also found that:

  • 60 percent of hospitals that were analyzed were compliant with the consumer-friendly shoppable services file, while 40 percent were not.
  • 48 percent of hospitals were compliant with the machine-readable file, while 52 percent were not.
  • Larger hospitals and health systems were most likely to be compliant and were often using existing tools to comply with the shoppable services portion of the law.
  • The machine-readable files that do exist are inconsistent in terms of format and content, which often requires significant data transformation and enhancements necessary to make the data usable to consumers and researchers.

By the way, non-compliant hospitals would be penalized $300 per day and face withholding of Medicare payments if they are not in compliance with the CMS.

Des Moines Hospitals – MercyOne and UnityPoint Health

As mentioned in my January blog, two Des Moines hospitals – MercyOne and UnityPoint Health – did not comply with the machine-readable file requirements, and, according to a more recent review, non-compliance continues. However, both hospitals do offer a personalized cost-estimator online tool. To what extent these tools comply with the CMS requirements is unknown at this writing.

I did attempt to perform a personalized cost-estimation on the MercyOne website, but when I was prompted to select a Blue Cross plan in a drop-down box, I could not find an option similar to my plan – Wellmark (BC/BS) PPO – the largest health plan offered within Iowa. Other BC/BS plans were offered as alternatives, but none would fit my requirements – a confusing process.

As for UnityPoint Health, I provided my Wellmark identification and group number, but was booted out of the cost-estimator page and suggested that I call a phone number for further assistance. Both Mercy One and UnityPoint, in my estimation, are successfuly making it difficult for the public to gain access to their coveted negotiated prices with commerical payers. But this is no different than what is happening around the country.

Why Does this Matter?

Most Iowans are covered by employer-based health coverage, and 150 million Americans have coverage through employers. Because of this, employers are forced to find new ways to ensure they are receiving the best prices for their employees’ health coverage. Currently, the gold standard of hospital prices is what Medicare pays hospitals. It is extremely difficult, however, for employers to learn how much they (or their selected insurance companies) are paying hospitals when compared to Medicare reimbursement prices.

In the past, employers were assured by insurers that hospital prices were ‘discounted’ by a handsome amount. But this approach can be rather disingenuous. Negotiated ‘discounts’ off grossly-elevated chargemaster prices do not help employers keep costs affordable. Instead, employers now see the need to negotiate prices UP from the publicly-known Medicare prices, rather than DOWN from the irrelevant chargemaster prices that nobody pays.

Summary

In short, the compliance with price transparency requirements appear to be comparable to a ‘cat and mouse’ game between some hospitals and the enforcement efforts of CMS. Yes, healthcare pricing is both complicated and secretive, but this is by design. It is quite apparent that hospitals have little desire to reveal their negotiated prices with the public. This subject matter will continue to evolve over time and will be included in future blogs as more information becomes available.

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