OK…so I know the Titanic sunk, but humor me for a moment. To say the healthcare insurance industry is wildly volatile and extremely overcomplicated might just be an understatement. To me, it’s like the Titanic…sinking slowly and we’re all on it.

I recently read an article titled “Secret Contracts Between Insurers and Providers — Who Benefits?“ The article is spot on. Everything about it is accurate…sadly.

If you were to ask any hospital executive or insurance executive if they believe in cost transparency, they will always adamantly say, “Yes!” After all, an answer other than that would create outrage. However, if you were to then say, “Great, I’d love to see the contract you have in place with each other,” I can 100 percent guarantee you will get something along the lines of, “Unfortunately, we can’t provide that as we are bound by confidentiality clauses.” Here’s the thing, if you’re a self-funded employer, that is YOUR money they’re playing with…so, in other words, you’re being told you don’t have access to a contract that talks about YOU. That’s a very big problem.

According to the article I mentioned above, lawsuits are now occurring around the country regarding these restrictive contracts. The Justice Department is suing a large North Carolina hospital network, Atrium Health, because it “uses its market power to impede insurers from negotiating lower prices with its competitors…”. Sutter Health, a large hospital system in northern California is being sued by the California attorney general for anticompetitive practices.

This article is bringing to light some very big issues. How can we not have transparency into a contract that discusses how and why OUR dollars are being spent? Are you shaking your head in frustration? Well, I’m about to lay it on even thicker.

For purposes of this blog, I’m going to highlight two states…Iowa and Texas, and the No. 1 procedure done using Medicare (because the pricing is available) — a knee or hip replacement with no complications. This means the patient has the procedure done, stays one night, and is home the next day.

Iowa

Based on data from 2016:

• The billing average for a knee or hip replacement was $43,690. The highest-priced hospital charged $56,019, and the lowest-priced hospital charged $29,780.
• Medicare covered, on average, $13,510.
• Percentage wise, the hospital system billed on average 328 percent more than Medicare.

If on the surface that sounds terrible, it’s because it is. However, from the Captain’s seat of the Titanic, Iowa actually has the best seat. Unfortunately, the end result is still the “sinking.”

Texas

Based on the same data as Iowa, in 2016:

• The billing average for a knee or hip replacement with no complications was $78,239. If you want your stomach to turn, though, the highest-priced hospital in Texas charged $235,983. That means they billed 18 times what the actual cost was and did 142 of those procedures in 2016. The lowest-priced hospital charged $26,157.
• Medicare covered, on average, $14,106.
• Percentage wise, the Texas hospital system billed 560 percent more than Medicare.

If you’re feeling a little sea sick now, join the club. We don’t all have the luxury of Medicare, so this is a very real issue. We’re all being manipulated, and at this point, the only thing that’s transparent is consumers are taking a major hit.

As we head into 2019, we need to continue to press for better. At Holmes Murphy, we are very real with our customers about the challenges of the industry, and we are doing what we can to push for real change. Until that change happens, we’ll continue to plug the holes on the ship and try to slow the sinking.