The Healthcare Pricing Games Must Stop

By Ryan Kelly –

It has long been a concern of mine that healthcare facilities, mainly hospitals, have a “secret list” of charges for each procedure that is never published, never printed, and never known to the consumer prior to entry.  Now, I certainly get the anti-trust aspect of not publishing this list, known to those in the medical community as the ‘chargemaster’ and there is certainly a competitive reason for not publishing.

The chargemaster is a list of negotiated rates for various procedures between the facility and the insurers.  But, since the 90s, the chargemaster has no longer been based on a percentage increase above actual cost for procedures, and it has now been elevated to a semi-fictitious assortment of prices that are based only on what the facility “needs to make” on a procedure to make their bottom line.  Again, I get why it occurs and I would honestly do the same thing if I were them.

Here’s the problem.

The reason facilities are doing this is because the amount of negotiation for their “bottom line cost” is being skimmed down more and more.  So, they must raise their “bottom line cost” up to allow them to still make a profit on procedures.  It is imperative that even non-profit facilities make a profit on procedures, as there are much cost burdens on these facilities that do not properly factor-in to the actual cost of a procedure.  That cannot be underscored enough.

But, when the chargemaster is constantly increasing, and insurers are constantly bargaining for less and less of a percentage of the cost, it both distorts an already messy system and it ends up raising the cost for everyone.

There is a very good article by Modern Healthcare, published just last week, that details this very situation and how the burden of an unrestricted chargemaster inflates the overall cost of the healthcare system tremendously. This article is also linked from our Rural Health News newsletter published today.  Click here to view.

I think that one could argue that both neither side is to blame, and both sides are to blame.  What I would like is to find a common sense solution to the problem.  My dream has been to walk into a hospital in Mississippi, see a list of charges for every procedure possible, and then give them my insurance and see what my actual charge would be BEFORE I elect to undergo a procedure.  This would allow any patient to make an informed decision on which facility they use and to take better control of their own healthcare.

As someone who sees all three sides of the debacle – provider, patient, insurer – I know that a solution that benefits everyone is not easy given the complex healthcare web that we have created.  But, I think if we can work together and find solutions that involve minor sacrifice for the greater good and we can think outside of our pre-set boxes of procedure, we might actually be able to simplify healthcare and make life better for everyone.