When patients walk into PeaceHealth St. Joseph Medical Center in Bellingham for a prostate biopsy, how much their insurance company pays the hospital can be wildly different. And, having insurance doesn’t guarantee a patient will get the lowest price.
Consider: If the patient uses Regence Blue Shield, the insurer pays $7,861 under the contract with the hospital.
If they use an individual Kaiser Foundation plan, the contracted rate is $6,155.16.
If they want to pay cash, the rate is $5,109.65 — significantly cheaper than some insurance plans and roughly $2,700 less than the sticker price for the biopsy.
This is for the same procedure with the same team at the same facility.
In about 37% of the instances where prices were included in the data obtained from PeaceHealth’s website in January, the cash price for 70 shoppable items — services that can be scheduled in advance — are cheaper than the insurance-negotiated prices, according to a CDN analysis of health care costs and price transparency.
“There isn’t a single price for anything in health care,” said Eli Rushbanks, general counsel and director of policy and advocacy for nonprofit Dollar For. The Washington-state-based organization helps patients access charity care nationwide, lessening the burden of medical debt for thousands of people.
A 2021 study of more than 2,000 hospitals nationwide by Johns Hopkins University found that about half of cash prices were lower than negotiated rates.
“Our study actually shows that insurance companies are not doing their job, not doing their job at all,” said Ge Bai, a professor at Johns Hopkins University who specializes in health care accounting, finance and policy.
The primary role of insurance companies is to pool risk and use negotiating power to set lower prices in contracts.
PeaceHealth accepts different payments from insurance companies for a wide variety of procedures, confirmed spokesperson Anne Williams.
“By negotiating rates, hospitals can be included in more insurance networks, providing patients with greater access to care,” Williams said in a statement. “This flexibility helps us maintain financial stability, ensuring that we can offer high-quality, affordable care to all, regardless of their insurance provider. Meantime, self-pay discounts are designed to make healthcare more affordable for those who don’t have insurance coverage.”
The starting point for these negotiations may be the inflated “sticker prices” — similar to what’s on the windshields at a car dealer — explained Johns Hopkins surgeon and public health researcher Marty Makary in his book “The price we pay: What broke American health care — and how to fix it.”
These sticker prices, officially referred to as chargemaster prices, are way beyond what would “be a reasonable market force price, which is cost of goods plus a reasonable profit margin,” Rushbanks said. “That’s never an amount that the hospitals really expect anyone to pay — that’s their opening bid.”
And yet, the CDN analysis revealed that in many cases, insurance companies failed to negotiate a better price at St. Joseph Medical Center. Nationwide, people may end up paying that inflated price. In some instances, negotiated rates — when they are better — won’t kick in until the patient has hit their deductible, forcing them to unwittingly pay the sticker price, according to experts.
Insurers may not always actively push for the lowest prices because they make more money when spending is higher, Bai said. She noted that once a customer is captured, there is a low likelihood of them switching insurance companies.
“They might not give you a good price because they make money for medical spending,” Bai said.
This is particularly important for many consumers as Americans are increasingly relying on high deductible insurance plans that reset at the beginning of the year. It’s a situation that increases the importance of consumer awareness and hospital price transparency, especially for shoppable procedures and services.
“Every medical bill is a surprise if you don’t know the price [ahead of time],” said Cynthia Fisher, founder of Patient Rights Advocate. “It’s basically making anybody today sign a blank check to get health care.”
Being able to shop for the best cash price in these situations can result in significant savings for patients, explained Ilaria Santangelo, the director of research at the nonprofit Patient Rights Advocate.
Battle for hospital price transparency
For decades the cash and insurance negotiated prices at hospitals were kept hidden from the public, making it difficult for proxy shoppers — such as self-insured businesses, cities and unions — to identify the best policies for their people.
That changed years ago when the Hospital Price Transparency Act, passed under the Trump administration, required hospitals to disclose clear, accessible pricing information starting Jan. 1, 2021, eventually including rates privately negotiated with insurance companies, as well as cash rates.
Hospital associations sued the government to block the rule. But they lost.
The rules required hospitals to publicly post a machine-readable list of all standard charges for all items and services. Additionally, hospitals were required to provide at least 300 shoppable services in a consumer-friendly manner. (It’s widely understood that if a patient enters the emergency room, they aren’t in a position to shop around for the best prices.)
“Hospital price transparency regulations drive competition and make health care more affordable,” wrote LaRaye Brown, a spokesperson for Centers for Medicare & Medicaid Services, in an email to CDN. “Choice and competition ultimately provide consumers with higher-value health care.”
The move was lauded by advocates as a historic step toward empowering consumers and decreasing health care costs. However, since the act was signed into law, the majority of the nation’s hospitals remain out of compliance, according to Patient Rights Advocate.
Only 10 of 29 Washington hospitals reviewed were fully compliant with national price transparency rules prior to changes made on July 1, according to a report released by the nonprofit in February. Facilities in the PeaceHealth system, which services Whatcom, San Juan, Skagit, Clark and Cowlitz counties, were not among those reviewed.
“As long as hospitals and insurance companies can hide their prices, they can charge whatever they want,” Fisher said. “And that is exactly what they’re doing.”
Crunching PeaceHealth’s numbers
A CDN review, using public data on PeaceHealth St. Joseph Medical Center’s website available in January, found that the organization fell short of meeting national rules at the time, when using the same criteria as Patient Rights Advocate. This exact data is no longer publicly available, as the hospital has adjusted to meet new federal guidelines that took effect on July 1.
Santangelo described data posted on PeaceHealth’s website in January as “nonsensical.” However, once the primary issue with how the data was stored was resolved, the information included was “compliant,” according to Santangelo.
When asked about its price transparency policies, Williams said: “PeaceHealth is committed to providing high quality, affordable care to all. Price transparency is an emerging issue nationwide as consumers take a more active role in their healthcare decision-making and providers seek to drive down costs and unnecessary utilization.”
The data reviewed by CDN revealed a spectrum of insurance-negotiated prices that were both above and below the hospital’s cash price.
This ranged from some insurance-negotiated prices being more than $4,000 over the cash price for a heart procedure to patients with Washington Medicaid undergoing a C-section saving more than $1,000 when compared to the cash price.
While cash prices are more expensive than all the insurance prices for a C-section at the hospital, a stark discrepancy exists between prices paid based on insurance-negotiated rates. For example, Aetna negotiated a rate of about $1,640 for the procedure for an insured patient, while Medicaid Washington pays roughly $700.
How those end-of-day costs are passed on to the individual patient depends on other elements of their insurance plan — deductible, copay or co-insurance, and so on.
“People fear to go to hospitals,” Fisher said. “They put off and delay care because they have no idea what they’re going to have to pay.”
The 2023 Health Care Affordability Survey by the Commonwealth Fund revealed that a substantial number of Americans, whether covered by employer insurance, individual-market plans, Medicaid or Medicare, reported that they or a family member had delayed or skipped necessary health care or prescription drugs due to affordability concerns.
“It’s understandable that even people with insurance avoid getting needed care, since so many leave their provider’s office with bills they could be paying off for years — hampering their ability to get further care, afford basic living expenses, and save for the future,” the survey findings stated.
The survey also found that 32% of working-age adults were dealing with medical, dental or some other health care debt.
Access to both the insurance-negotiated price and the cash price is vital to making informed decisions for shoppable services, according to price transparency advocates and medical economic experts.
Patients should not only ask for the cash price at hospitals but also see what ambulatory surgical centers prices are for the same services, Bai said.
Access to prices not only allows patients to make informed decisions about where to receive non-emergency care, it also allows them to determine whether or not a medical bill is accurate, Fisher said.
Price transparency rules have not solved the system’s problems. Even if prices are available, they need to be easily comparable from hospital to surgical center to self-standing radiology center, for example — as airline ticket prices are.
And it’s not only prices. Other aspects of the U.S. system punish people, said Jeanne Pinder, founder of ClearHealthCosts, a journalism company bringing transparency to health care.
“Publicizing the prices alone is not a solution,” she wrote. “People need to know not just what the prices are, but also that they can ask for a different price, and how to ask.
“And the underlying problems persist: Health costs are high, and insurance premiums and deductibles are also high and rising. Insurance companies keep denying care. Pouring data into the internet doesn’t mean we have fixed the problem.”
How consumers find help
An estimated $49 billion of outstanding medical debt is in collections — affecting 15 million Americans, according to a U.S. Consumer Financial Protection Bureau report published in April. On the heels of the report, Vice President Kamala Harris and CFPB Director Rohit Chopra announced a proposal to prohibit medical bills from being included in credit reports and called for states to take further actions to reduce medical debt.
The new action is slated to remove medical debt from credit reports of more than 15 million Americans, raising credit scores by an average of 20 points and leading to the approval of approximately 22,000 additional mortgages every year, according to a release by the White House.
In addition, various organizations, including Dollar For, can help patients navigate the medical billing system and reduce out-of-pocket costs.
So far in 2024, Dollar For has handled more than 5,500 cases nationally, saving people a total $17.6 million through medical debt forgiveness with an additional estimated $59 million in the pipeline.
“The number is definitely higher than that, but that’s what we know for sure,” said Eli Rushbanks, general counsel and director of policy and advocacy for nonprofit Dollar For, noting that they only know about debt forgiven when a patient reports it back to them.
The Washington-based organization helps patients access charity care nationwide, lessening the burden of medical debt for thousands of people. It estimates that the total ungranted amount of charity care in the U.S. is $14 billion annually.
“I would never just assume that the bill is accurate,” Rushbanks said, noting that a good first step in negotiating a bill is seeing whether or not a patient qualifies for charity care. “It’s the biggest, most powerful tool in your tool belt.”
About half of all Washingtonians are eligible for free or reduced-cost care at hospitals in Washington, according to the Office of the Attorney General.
The screener on the Dollar For website allows someone to quickly tell whether or not they might be eligible for charity care under a hospital’s specific policies. If so, they can get help from Dollar For to navigate that system.
There are also for-profit companies that will negotiate medical bills for a fee. These include Goodbill and Resolve Medical Bills.
“Outside of charity care, it’s calling up the hospital and making an offer,” Rushbanks said. “Really at the end of the day, all of this stuff at most hospitals is totally negotiable.”
Isaac Stone Simonelli is CDN’s enterprise/investigations reporter; reach him at isaacsimonelli@cascadiadaily.com; 360-922-3090 ext. 127.
