The cost of getting an appendectomy with private health insurance has soared since the early 2000s. So has the bill for a knee replacement.
But the secrecy of prices negotiated between health care providers and insurance companies makes it hard for employers to understand what they pay for a knee replacement and whether it’s a good price.
Researchers broadly agree workers suffer for it.
“That’s a cost that comes directly out of how much your employer can pay you,” RAND Corporation policy researcher Christopher Whaley said. “In wages or other types of benefits.”
A new study from RAND, a think tank specializing in defense and public policy, analyzes billions of dollars in medical claims pooled largely by employers desperate to know who’s paying what.
They crave transparency that would let them comparison shop among health plans and hospitals in an industry that can charge vastly different amounts to different people for the same services.
In Kansas, private health plans paid more than twice the rate of Medicare for hospital care in 2018, RAND found. Prices at the University of Kansas Hospital and Overland Park Regional Medical Center were among the highest RAND saw. Not just in Kansas, but across the country.
The KU Health System disputes the think tank’s findings that show KU Hospital charged four times what Medicare would have paid for the 676 insurance claims that RAND managed to get.
“It is not a fair representation of charges at KU Health System,” Vice President of Revenue Colette Lasack said, “compared to our annual volumes of 52,000 inpatients, and nearly 2 million outpatients.”
But Whaley says the health care industry could set the record straight if it chose to.
“If hospitals were more transparent,” he said, “we wouldn’t have to rely on employer claims and could be 100% confident that our prices are correct.”
Hospitals are battling a new federal requirement in court that would make them reveal their prices. They argue doing so would be complex and burdensome because so many different prices exist.
The report is RAND’s third and most ambitious round yet in an ongoing project to pry the lid open on prices.
The undertaking began with Indiana employers banding together in 2017. RAND next gathered medical claims from two dozen states in 2019 and this year studied nearly $34 billion in charges from 49 states.
A fourth round is underway to pull together even more bills to analyze.
