Last month, the federal government revealed that the U.S. spent $4.1 trillion on healthcare in 2020, over 20% of GDP and twice as much as the developed-world average. While hundreds of billions of dollars were spent fighting Covid-19, the overwhelming majority went to propping up the country’s broken healthcare system. National healthcare spending has doubled, adjusted for inflation, since 2000.
New research by PatientRightsAdvocate.org reveals how outrageous and arbitrary hospital prices, which can vary by ten times depending on the payer or hospital, burden Los Angeles-area consumers. Our findings reinforce the need for U.S. Health and Human Services, led by Secretary Xavier Becerra, to robustly enforce its hospital price transparency rules. Doing so will allow patients to protect themselves from price gouging and empower them to take control of their health finance decisions.
Hospitals currently blind consumers, including patients, employers, and unions, from prices, then blindside them with massive bills weeks and months later. This price opacity enables hospitals to engage in overcharging, waste, and vast price differences for the same care – even at the same hospitals. This status quo is responsible for saddling 20% of Californians with problematic or unpayable medical debt.
To remove the hospital price veil, a federal price transparency rule took effect last year requiring hospitals to publish their discounted cash and all secret contracted rates by plan and payer. Armed with actual prices, consumers can identify the highest quality care at the lowest possible prices and enjoy substantial healthcare savings. Unfortunately, this law has been marred by widespread noncompliance.
Our researchers recently examined the websites of U.S. News and World Report’s top 30 Los Angeles-area hospitals. We found accessible price information at only four: Cedars-Sinai Medical Center, Torrance Memorial Medical Center, Huntington Hospital, and Pomona Valley Hospital Medical Center. Yet even these limited price disclosures reveal how vulnerable Southland consumers are to the predatory American healthcare system.
Consider the wild price fluctuations at these hospitals for just one service: a standard outpatient non-contrast brain MRI (billing CPT code 70551). The price of this treatment at Cedars-Sinai varies by approximately ten times depending on the payer, from $367 for Blue Cross Blue Shield Medicare plans to $4,043 for commercial Kaiser plans.
The price for consumers with Blue Cross HMO coverage is $2,162, nearly half Kaiser’s price. These prices do not include additional facility and physician fees that patients must pay.
Brain MRI prices also vary wildly across nearby hospitals. The price disclosures indicate patients covered by a Blue Cross HMO at Torrance Memorial pay just $127 — 17 times less than Blue Cross HMO patients pay for the same scan at Cedars-Sinai just 20 miles away.
In other words, prices can vary by more than ten times for the same service at the same hospital with different insurance coverage. And prices can vary by more than ten times for the same service at different hospitals with the same insurance. Consumers lose either way.
If you include Medicaid prices — Huntington Hospital lists the Medi-Cal Los Angeles plan price for this same brain MRI at just $39 — prices can vary by 100 times.
Pomona Valley lists a cash price for this procedure: just $450. This reasonable price begs the question: What’s the point of paying thousands of dollars in healthcare premiums every month if hospitals charge insured patients thousands of dollars more than those paying cash? The Cigna price at Pomona Valley for the same treatment: $6,500.
Standalone, cash-based MRI centers in Los Angeles offer brain MRIs for as low as $225 with no additional facility fees. This cash discount demonstrates how health industry bureaucracy and profiteering drive up prices.
Patients can protect themselves from such wild hospital price fluctuations and identify the best care at the best prices when all hospitals comply with price transparency law and clearly post their prices.
The Biden Administration implemented a new rule on January 1 significantly increasing fines to more than $2 million per year on hospitals that violate the law and don’t publish their prices. Timely and strong enforcement of this rule will encourage more hospitals to disclose their prices so that consumers can more easily protect their health and wealth.
When prices are known, no patient or employer will tolerate paying ten times more for the same care at the same hospital than the person in the next room. Consumers, who are often willing to drive out of their way to save a few cents per gallon of gas, will certainly drive to competing hospitals to save thousands of dollars on their healthcare.
Price-empowered patients will usher in a functional, competitive marketplace that reverses runaway healthcare spending and revolutionizes American healthcare for generations to come.