Airline travelers hate it when they pay hundreds of dollars more than their seat mate for a plane ticket. Same goes for car buyers who think they got a fair deal until they learn that a different dealer charged thousands of dollars less for the identical auto.
The fact that the same thing happens in hospitals is proof of America’s dysfunctional system of health care. President Barack Obama’s Affordable Care Act won’t fix it, and in this region a renewed contract between Highmark and UPMC won’t fix it — unless it’s a very different kind of contract.
The disturbing details came in a report last Sunday by the Post-Gazette’s Steve Twedt on what Highmark, the insurance carrier for Steven Gray of Butler, was charged and ended up paying for his outpatient chemotherapy. Johns Hopkins Hospital in Baltimore charged $2,545 for treatment Mr. Gray received in January 2013, for which Highmark paid $2,493. Two weeks later UPMC Passavant charged $13,790 — five times as much — to give Mr. Gray the same service and was paid by Highmark $7,704 — three times as much.
Both UPMC, the region’s dominant network, and Johns Hopkins are major teaching hospitals, which typically come with higher cost structures. Even so, all hospitals must strive for efficiency.
Another comparison in the Post-Gazette story showed wildly differing charges, based on federal data, at four hospitals in Allegheny County for implanting a pacemaker; they varied from $22,365 at Heritage Valley Sewickley, to $41,345 at St. Clair Hospital in Mt. Lebanon, to $56,334 at Allegheny General on the North Side, to $89,763 at UPMC Presbyterian-Shadyside.
That range is outrageous, and when insurers unquestioningly pay the bulk of the charges it fuels the upward spiraling cost of care. There must be a way, through greater government regulation or stricter accountability by insurance companies, for a standard charge for common treatments to be recognized and reimbursed by health insurers. Otherwise, insurance companies — and the individuals and employers who buy their policies — end up paying for inflated and unnecessary administrative overhead that becomes part of the bill. That’s no way to make health care more economical.
Harold Miller, president of the Center for Healthcare Quality and Payment Reform and a columnist for the Post-Gazette, points out that Maryland is the only state to regulate inpatient hospital rates. Pennsylvania lawmakers and insurance regulators should study the result there and consider imposing similar limits.
If the nation is to have a rational system of health care and health insurance, rather than a market based on the Wild West, consumers must have transparency, monopolies must be resisted, and insurers must pay only reasonable charges to cover the cost of care.