Many Hospitals Charge More Than Twice What Medicare Pays for the Same Care



The pandemic could make things worse as big hospitals scoop up struggling physician practices or their smaller competitors. In West Virginia, Mountain Health Network is made up of the 2018 merger of two hospitals, after Cabell Huntington acquired its competitor over the objections of federal officials. Cabell was one of the nation’s most expensive systems from 2016 through 2018, according to the study. Mountain Health now reportedly has its eyes on a local physician group. The network said it could not comment on the findings.

Some hospitals argue they charge more because they deliver better care, and there does seem to be some association. “What we see is quality and the ability to charge high prices are intrinsically related,” said Craig Garthwaite, a health economist at the Kellogg School of Management at Northwestern University, who says some hospitals may be taking the extra money to invest in ways of improving quality.

Employers have had mixed success in pushing back against high-priced hospitals. Indiana employers succeeded in pressuring Anthem to take action, according to Ms. Sachdev. The insurer threatened to drop Parkview from its network, before reaching an agreement in July in which the hospital offered significant savings. Two state employees’ plans, in Montana and Oregon, have also been able to negotiate contracts that use Medicare prices as a benchmark for what they will pay, according to the RAND researchers.

But in other areas, the hospitals have been less willing to budge. In Colorado, employers have had productive discussions with some of the specialty hospitals and independent hospitals, said Robert J. Smith, the executive director of the Colorado Business Group on Health. “We’ve made very little progress with health systems,” he said.

Many employers, including some represented by the U.S. Chamber of Commerce, oppose government action, but others are growing more open to the idea of some sort of government intervention, ranging from rate regulation to a public option. “They are increasingly seeing in some cases the need for regulatory intervention because the market is broken,” Ms. Mitchell said.

But the pandemic and the potential threat it poses for many hospitals could put off any discussion, even if the Democrats were to win the White House and the Senate. “The hospitals are the most effective, most sympathetic lobby there is,” said Dr. Robert Berenson, a policy analyst at the Urban Institute.

Democrats will also have to figure out how to design a plan that people find both affordable and comprehensive, in contrast to some of the mid-tier plans sold under the Affordable Care Act, said Rodney Whitlock, a former Republican Senate staffer who now works for McDermott+Consulting. “How can the Democrats create a public option that is not clearly better than private insurance?” he asked. “If they don’t, they will be tagged as failing.”



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