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If Ohio can’t pass a simple transparency law, how can Congress curb surprise bills?

If Ohio can’t pass a simple transparency law, how can Congress curb surprise bills?

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If what happened in Ohio this summer is any clue, it’s going to be a tough slog to pass Congressional legislation regulating those surprise medical bills that have been heaped on Americans in recent years. And it may be just as hard to enact even the simplest of disclosure laws letting patients in on how much their health care really costs.

In mid-July, Gov. Mike DeWine, a Republican, vetoed several health care bills including one that would have required health care providers to notify patients’ insurance companies within 24 hours of scheduling a procedure and disclose what the service would cost. The insurer would then automatically give patients an estimate of those costs.

The bill’s sponsor Jim Butler, speaker pro tempore of the Ohio House of Representatives, said patients would not have to ask for the price information. Requiring people to ask isn’t a good strategy, he argued, since most people don’t do that. He cited a 2012 Massachusetts law that required hospitals to disclose to patients within two business days the amount their insurer would pay for a procedure — but only if patients asked. As it turns out, very few people did.

In his veto message, DeWine said his rejection of these laws was in the “public interest” because the federal government had already begun to address the problem, and it was important that the state not put “duplicative or burdensome regulations on health care providers.”

All this sounds like thin cover for killing state legislation that Ohio’s health care industry, especially the hospitals, had mightily opposed. As Butler’s bill was being debated, the Ohio Hospital Association issued its own justification for opposing these laws, insisting that hospitals “wish to empower patients to fully understand cost obligations and, quite aside from any law or regulation, are providing more information to patients.” The statement added that “meaningful information” needed to be “written in a way hospitals and other providers can comply with the law.”

For Butler, it was his second defeat on price transparency. He had sponsored a transparency law in 2015 that would have required hospitals and other providers to  

give patients a cost estimate no later than the same day a procedure or medical intervention took place. The hospitals objected and health care providers sued to prevent the law from taking effect. That suit is still in the Ohio courts, and Butler expects the state supreme court will have the last word.

Butler’s 0-2 record here is emblematic of how hard the medical establishment will fight to prevent even the simplest consumer price disclosure laws from reaching the public. They offer a cautionary tale for what might happen this fall to federal surprise billing legislation and other efforts to make health care prices more transparent and open to patient scrutiny.

I asked Butler what the hospital industry is really afraid of and why they are fighting so hard to maintain the status quo. His answer was simple. “Hospitals don’t want transparency because it will create competition,” he said. If Hospital A offers gallbladder surgery at a lower price than Hospital B, patients might choose Hospital A, and Hospital B could lose business. As it stands right now, Hospital A may well be cheaper than Hospital B but patients have no easy way of knowing that. And with patients assuming higher out-of-pocket expenses through larger deductibles and larger coinsurance obligations, these price differences are not trivial and can throw the family budget way out of whack.  

These days hospitals have become big businesses with profit maximization a major objective, as Axios’s Bob Herman continually points out. Those profits are fueled by dwindling competition as hospitals continue to consolidate into larger health systems. A recent study by United Health Group, the insurance giant, found that hospital prices for inpatient care increased by 19% and physician prices by 10% between 2013 and 2017.

I asked Ohio's Jim Butler what the hospital industry is really afraid of and why they are fighting so hard to maintain the status quo. His answer was simple. “Hospitals don’t want transparency because it will create competition,” he said.

No wonder “price secrecy is a calculated strategy,” said Jeanne Pinder, founder of ClearHealthCosts, a digital start-up that works with news outlets to disclose the cost of medical care. “All that money collected from overpriced care and mysterious bills goes into lobbying and behind-the-scenes pressure,” Pinder said. “They lobby lawmakers and regulators to protect the current system and to skew it even further to their benefit.”

All this also helps explain DeWine’s veto of the second bill — the one that would have required insurers to reimburse consumers for out-of-network services when performed in an in-network facility. DeWine gave the same reasons for vetoing this bill that he used to justify nixing the hospital price disclosure law.

Legislative fixes to the problem of surprise billing has proven especially tough, despite widespread journalistic efforts to bring this to public attention especially by Kaiser Health News and Vox’s Sarah Kliff, now at The New York Times. Furthermore, JAMA Internal Medicine has just reported the number of surprise bills for emergency and inpatient services is going up, even at in-network hospitals that employ out-of-network physicians. The size of those bills is increasing too. The top 10% of inpatient visits cost more than $3,000.

As Congress returns to take up the issue of surprise medical bills, legislators face a highly motivated phalanx of lobbyists for doctors, hospitals, insurance carriers, and air ambulance companies that have turned surprise billing into a lucrative business model. Changes that would give patients more financial protection face an uncertain future. One obvious reason these groups are so opposed to such legislation is that they stand to lose money if they can’t bill out-of-network rates in these cases. But there’s a larger issue as well. At the crux of the dispute in Congress is a larger fear of anything resembling rate setting, aka government-set price controls, on medical services, which are part of most other nation’s health systems and what makes it possible for them to provide health care to everyone at a reasonable price tag. Health care industry stakeholders with deep pockets don’t want surprise billing legislation to open the door for more stringent price controls later on.

As I’ve often argued, mere disclosure of prices isn’t likely to lower the price of individual procedures or the overall cost of medical services in the U.S. Serious cost containment through federally regulated prices, the kind the mighty industry groups are fighting against, will have to do that. Still, patients are being asked to shoulder more and more of the cost of their care and need help now, and that’s what Rep. Butler was trying to bring to Ohioans.

It’s always possible Congress will dish up a surprise of its own and pass strong legislation fixing the mess of unexpected medical bills and require health care providers to be more candid about their prices. But the show of hospital strength to defeat essentially modest attempts at consumer protection in Ohio reinforces Pinder’s argument that price secrecy is a profit strategy. Next time you hear health care businesses say they’re all for transparency, take their comments with a grain of salt.

Veteran health care journalist Trudy Lieberman is a contributing editor at the Center for Health Journalism Digital and a regular contributor to the Remaking Health Care column.

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