Houston employers have been paying hospital double and sometimes
quadruple what Medicare would pay, a new national study has found.
Houston employer-based health plans are paying
hospitals more than double, and in some cases quadruple, what Medicare would pay
for the same treatment, a new national study has found.
The findings by the RAND Corporation, released
last week, examined what hospitals charged employer health plans in 25 states
from 2016 to 2018. The biggest gap came in out-patient payments, which in
Houston were as high as 448 percent of Medicare. That means a procedure that be
might cost Medicare $1,000 would cost an employer-based plan $4,480.
This is significant as the trend continues
toward out-patient care over traditional in-patient hospitalization. The study
also comes as health pricing and medical billing under heightened scrutiny by
lawmakers.
Across Texas, prices paid for privately-insured
patients by their employers were on average 240 percent of what federal
Medicare would have paid, the study showed. That puts Texas among the highest
of employer-paid health costs among states studied.
Houston employers fared slightly better, but
still paid more than double what Medicare does, said Chris Skisak, executive
director of the Houston Business Coalition on Health, a nonprofit that represents
employers purchasing health plans. Medicare is often considered a benchmark in
medical pricing.
"They're paying more than what's reasonable
to hospitals," he said on Thursday. "Employers should be pushing
harder for better pricing."
Data from payments to 29 Houston area hospitals
by nine large Houston employers was studied, Skisak said. That translated to
about 200,000 people seeking care.
Health care providers, including hospitals, have
long complained that comparisons to Medicare pricing is flawed because the
federal payment is unrealistically low. Skisak, however, rejected that
argument, saying that hospitals are overcharging and should be forced to be
more cost-efficient.
Typically, negotiated rates of payments to
hospitals and other providers are a closely-guarded secret. The RAND study was
the first time pricing on such a broad swath of hospitals has been revealed.
"The widely varying prices among hospitals
suggests that employers have opportunities to redesign their health plans to
better align hospital prices with the value of care provided," said Chapin
White, the RAND study's lead author and senior policy researcher, in a
statement.
The Texas Hospital Association has previously
said factors, such as individual insurance contracts and market forces, make
accurate price comparisons for procedures difficult if not impossible.
Only self-funded plans were included in the
Houston data, which means that companies make the payments to hospitals and
contracted insurers manage plans and negotiate rates.
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