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Changing the Playbook on Hospital Prices: Highlights and Insights
Policymakers, consumer advocates, employers, clinicians, and other stakeholders converged on The Big Apple to explore actionable tactics urgently needed to improve access to care at lower prices.
The event kicked off with a keynote from Mark Cuban, co-founder of Mark Cuban Cost Plus Drug Company, PBC. Some highlights:
Trust is paramount and foundational, lead with transparency to build trust. Let people see costs, markup and pricing on drugs.
Ask questions and demand answers from your TPAs, PBMs, and brokers. In most cases, short-winded “it’s proprietary” responses are unacceptable.
Demand an audit of your claims. Don’t settle for restrictive audits. If you run into this problem, find a new partner.
"Why have a contract with someone who is taking advantage of you and others around you? Stop doing business with them."
High deductibles are a quick way to push people away from care. Instead of making patients feel like they have skin in the game, this approach has led to delayed care, soaring costs, and reduced insurance use. Consider ~40% of Americans can’t cover a $400 unexpected expense.
Cuban told a personal story about his daughter who needed an X-ray after sustaining an injury to her hand while playing basketball. He paid for the service on arrival, allowing him to secure a price lower than his insurer had negotiated.
Cuban has 8400+ direct contacts with healthcare providers in place across his companies. His Cost Plus Wellness program will be published publicly in the near future, allowing other employers to take advantage of it!
“If you’re using rebates, you are getting ripped off.” Real returns don’t come in the form of rebates; they come from realizing a competitive unit cost.
Health system leaders and financial executives who have a firm grasp on their cost accounting are the exception.
Knowing healthcare prices is a prerequisite to changing any market dynamic.
Several of the points above point to an important need for any individual or business: Predictability in pricing.
Business owners and families need a sense of future expenses to budget appropriately. Seeing a full, detailed claims data feed is a good start. Employers can then begin to compare their payments to Medicare reimbursements to gauge the fairness factor.
Employers need to scrutinize their contracts with carriers and PBMs. Those in need of a replacement can find 25-26 transparent PBMs listed on the Cost Plus Drugs website.
NYC Council member Julie Menin shared an example of a C-section at one NYC hospital costing $55k versus $12k at a different facility.
Mark Hage leads benefits for the state of Vermont. They have statewide commercial market price caps coming into effect in 2027. The 640k Vermont residents pay the highest prices on outpatient medications and infusions.
He shared that 800 residents (0.1% of the state population) accounted for 55% of the total statewide pharmacy spending.
A Milliman trend report from claims data on New York City’s largest PPO plan (which covers 75% of the population) unveiled one NYC health system charging 945% of Medicare in their ER. Pricing variation can come from many factors represented in system contracting strategy (think patient volumes, system strengths, and complexity of care delivery).
Several other insights from the Milliman report include:
Overall city spending averages 245% of Medicare, with 234% being inpatient care and 278% being outpatient care
The price variation between facilities ranges from 150% of Medicare to more than 900%
Emergency department charges average 588% of Medicare
In 2024, the average allowed amount for an ER visit of moderate severity across NYC was $2,571
In 2024, the average allowed amount for colonoscopy and biopsy charges was $2,813 per service
deborah cornavaca shared that it’s unacceptable for people with health insurance to not want to seek out healthcare. This reminds me of Wendell Potter talking about the insured people he met at a Remote Area Medical - RAM® event. RAM is a non-profit health clinic delivering free medical, dental, and vision care across the United States. Having health insurance and being able to afford care are not synonymous.
Cora Opsahl shared the importance of employers reading, understanding, and questioning insurance contracts. Contractual clauses that set the rights for each party matters just as much as rates/prices. With control and power being siblings, it’s important to know all contract details stating what can and cannot be done.
Some direct quotes from Cora Opsahl:
"Every employer needs to be asking for the same contract terms."
"Too much healthcare contracting and purchasing is done in the dark."
"If you’re not in the room to make the decision, someone is making the decision for you."
"We make change by bringing policy, litigation & direct contracting together."
Lee Lewis talked about the innovative work being done by large employers within the Health Transformation Alliance, a self-insured employer-owned cooperative consisting of 70+ companies that represent some of the largest and most influential brands in the U.S.
The power of the Cooperative: Lewis spoke on observing healthcare innovation in the marketplace and discerning the extraordinary solutions from the vaporware as part of the process of integrating products into their employer group.
Diffusion of innovation: In their Cooperative, it’s common for one employer to follow a new and successful program implemented by another. The network effect from this is powerful.
Employers, apps & marketplaces need to steer patients to high-value provider groups and health systems. This will put pressure on under performers and benefit the entire industry. No matter what industry or area a company operates in, the greatest performers welcome competition as opposed to fearing, avoiding, or attempting to control it.
The American public deserves to have hospital administrators who are held to success metrics that include ensuring lowest prices alongside excellent outcomes for patient retention.
Some direct quotes from Lee Lewis:
"The most expensive price you will pay is the price you can’t see."
"If you can’t see the price or the terms, it’s the worst deal ever."
"Employers looking to direct contract can start with a non-committal simple agreement on price with no strings attached at 1.5-2x Medicare."
The 32BJ health fund serves over 185k+ frontline, property service workers mainly in the Northeast. Their healthcare spending exceeds $1.5B annually.
Manny Pastreich, President of 32BJ SEIU, shared two thoughts that he hopes their members have when reflecting on the organization: (1) “I’ve been able to afford to live in the most expensive city in the world,” and (2) “I really appreciate the family healthcare my plan provides with no deductible.”
The theme across all the speakers on the topic of hospital prices and reigning in healthcare spending was the importance of transparency, accountability, ownership, and urgent action.
Shoutout to the 32BJ SEIU Health Fund, 32BJ Labor Industry Cooperation Fund, and City & State New York for hosting and organizing.