Provider Consolidation, Out-of-Network Fees Blamed for High Health Costs

During a hearing with the Senate Health Education Labor & Pensions Committee, policy experts explained that high health care costs could potentially decrease by curbing out-of-network charges and consolidation in hospitals.

“Research has consistently shown provider consolidation in the health care industry raises prices,” Melinda Buntin, PhD, Vanderbilt University School of Medicine health policy department chair told the Committee.

According to the Director of Harvard Global Health Institute, Ashish Jha, MD, in order to curb consolidation, the Federal Trade Commission and Justice Department should have a larger staff in place to challenge the mergers that are likely to be anti-competitive and harmful to consumers.

“The costs of these mergers are enormous. Less competitive markets have both higher prices and lower quality,” Dr Jha explained.

David Hyman, MD, a professor at Georgetown University Law Center, explained that Congress plays a role in creating an environment in which providers have sought out acquisitions.

“Federal payment policy can also encourage consolidation, so you might want to look closer to home,” he said to the Committee.

Another factor of high health costs, according to Dr Jha, is that Medicare’s administrative costs are too low and that the system is spending too little on controlling fraud and overbilling.

Of the Senate Health Committee, both the chair, Tennessee’s Lamar Alexander and Patty Murray, the lead Democrat Senator for Washington State, expressed that one of the biggest health care expenses that Americans experience is surprise bills from out-of-plan doctors—particularly from emergency room visits.

In response, Dr Jha explained that a Medicare patient’s emergency room out-of-pocket expenses should be capped at in-network rates, and if the hospital is in-network, any physician who works in that hospital has to accept in-network rates.

Aside from consolidation and out-of-network fees, the panel also explained that pricing transparency may help lower these health care costs. Dr Jha used the example that an MRI at one hospital might cost twice as much as the one across the street, but price transparency alone won’t work without providing patients a way to understand what they are paying for.

“Without quality information, there’s reason to believe it will make things worse,” he said.

Despite this large rise in costs, Dr Buntin explained that health care cost growth has slowed in recent years in part because the rate Americans are developing chronic diseases has declined.

The current estimates of the average family’s out-of-pocket spending for health care annually is roughly around $2,750. The solutions for lowering these high health care costs are still being examined.

“There’s nobody I know that has all the answers, and what we need is lot more experimentation,” Dr Jha expressed.

—Julie Gould

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