[Senate Hearing 118-442]
[From the U.S. Government Publishing Office]
S. Hrg. 118-442
HEALTH CARE TRANSPARENCY:
LOWERING COSTS AND
EMPOWERING PATIENTS
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HEARING
BEFORE THE
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
WASHINGTON, DC
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JULY 11, 2024
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Serial No. 118-21
Printed for the use of the Special Committee on Aging
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
57-076 PDF WASHINGTON : 2024
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SPECIAL COMMITTEE ON AGING
ROBERT P. CASEY, JR., Pennsylvania, Chairman
KIRSTEN E. GILLIBRAND, New York MIKE BRAUN, Indiana
RICHARD BLUMENTHAL, Connecticut TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts MARCO RUBIO, Florida
MARK KELLY, Arizona RICK SCOTT, Florida
RAPHAEL WARNOCK, Georgia J.D. VANCE, Ohio
JOHN FETTERMAN, Pennsylvania PETE RICKETTS, Nebraska
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Elizabeth Letter, Majority Staff Director
Matthew Sommer, Minority Staff Director
C O N T E N T S
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Page
Opening Statement of Senator Robert P. Casey, Jr., Chairman...... 1
Opening Statement of Senator Mike Braun, Ranking Member.......... 2
PANEL OF WITNESSES
Chris Whaley, Ph.D, Associate Director of the Center for
Advancing Health Policy Through Research, Associate Professor
of Health Services, Policy, and Practice, Brown University
School of Public Health, Providence, Rhode Island.............. 4
Chris Deacon, JD, Principal Owner, VerSan Consulting, LLC,
Moorestown, New Jersey......................................... 6
Cora Opsahl, MBA Health Fund Director, 32BJ Health Fund, New
York, New York................................................. 8
Sophia Tripoli, MPH, Senior Director of Health Policy, Families
USA, Washington, D.C........................................... 10
CLOSING STATEMENT
Closing Statement of Senator Mike Braun, Ranking Member.......... 26
APPENDIX
Prepared Witness Statements
Chris Whaley, Ph.D, Associate Director of the Center for
Advancing Health Policy Through Research, Associate Professor
of Health Services, Policy, and Practice, Brown University
School of Public Health, Providence, Rhode Island.............. 31
Chris Deacon, JD, Principal Owner, VerSan Consulting, LLC,
Moorestown, New Jersey......................................... 38
Cora Opsahl, MBA Health Fund Director, 32BJ Health Fund, New
York, New York................................................. 40
Sophia Tripoli, MPH, Senior Director of Health Policy, Families
USA, Washington, D.C........................................... 42
Questions for the Record
Chris Whaley, Ph.D, Associate Director of the Center for
Advancing Health Policy Through Research, Associate Professor
of Health Services, Policy, and Practice, Brown University
School of Public Health, Providence, Rhode Island.............. 63
Cora Opsahl, MBA Health Fund Director, 32BJ Health Fund, New
York, New York................................................. 65
Sophia Tripoli, MPH, Senior Director of Health Policy, Families
USA, Washington, D.C........................................... 69
Statements for the Record
Statement of 75 Alliances, Unions, and Employers................. 75
Statement of Patient Rights Advocate.Org......................... 77
Statement of Leukemia and Lymphoma Society....................... 78
Statement of American Hospital Association....................... 81
Statement of AHIP................................................ 85
Statement of Healthsystem Association of Pennsylvania............ 90
HEALTH CARE TRANSPARENCY:
LOWERING COSTS AND
EMPOWERING PATIENTS
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Thursday, July 11, 2024
U.S. Senate
Special Committee on Aging
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m., Room
138, Dirksen Senate Office Building, Hon. Robert P. Casey, Jr.,
Chairman of the Committee, presiding.
Present: Senators Casey, Blumenthal, Warren, Warnock,
Braun, Vance, and Ricketts.
OPENING STATEMENT OF SENATOR
ROBERT P. CASEY, JR., CHAIRMAN
Chairman Casey. Good morning. The Senate Special Committee
on Aging will come to order. Today's hearing will examine
transparency in health care, and how it affects the ability of
patients to access affordable health care. This is a very
important topic as the cost of health care continues to rise,
and it is clear we must do more, here in the Senate and
throughout the Congress, to bring down costs for the American
people.
I am proud to say we have made some progress, though we
have more ground to cover, much more to do. Over the last
several years, Democrats have passed several health packages to
lower health care costs for Americans. Through the American
Rescue Plan Act, Democrats reduced health care costs by
bringing down the cost of premiums and expanding eligibility
for health care coverage savings. I was proud to support the
Inflation Reduction Act, so called IRA, which is actively
bringing down health care costs for Medicare beneficiaries. It
is also increasing transparency and affordability as the
federal government, through Medicare, can now negotiate
prescription drug prices under the Medicare program.
The IRA capped insulin costs at $35 a month for seniors,
and then we saw insulin manufacturers extend those savings to
all patients who pay out-of-pocket for insulin.
The IRA also includes a provision that caps prescription
drug costs at $2,000 out-of-pocket each year for Medicare
beneficiaries. This provision, which goes into effect this
coming January 1st, will save Medicare beneficiaries an
estimated $7.4 billion in 2025 alone. This is a lifeline for
older Americans and shows us the opportunity to help Americans
without Medicare who are still subject to high out-of-pocket
drug costs.
That is why I am introducing the Capping Prescription Drug
Costs Act with nine of my Senate colleagues. This legislation
expands on the success of the IRA and extends prescription drug
cost savings to the commercial health care market by capping
out-of-pocket costs at $2,000 annually for individuals and
$4,000 annually for families. Nationwide, 173 million people
under the age of 65 have private health insurance either from
an employer plan or in the non-group market. This legislation,
the Capping Prescription Drug Costs Act will ensure that
prescription drugs are more affordable for these tens of
millions of Americans.
While we have come a long way to make health care more
affordable and accessible, I look forward to hearing from our
witnesses today and discussing how transparency can shine a
light on high health care costs and ways to decrease those
costs for every American.
I turn next to Ranking Member Braun.
OPENING STATEMENT OF SENATOR
MIKE BRAUN, RANKING MEMBER
Senator Braun. Thank you, Mr. Chairman.
Health care costs have risen astronomically from where they
were just a few decades ago, to now approaching 18 percent of
our GDP, and it has all occurred very simply, because the
health care industry has disguised itself as being part of free
enterprise, which embraces transparency, competition, no
barriers to entry, and most importantly, an engaged consumer.
You know that none of that really applies to our current
industry. You heard the Chairman talk about when you do operate
like an unregulated utility you are going to have government
getting involved, so the key is do we go there, when this place
is going broke systematically over the last decade or two, and
in a place that is running $2 trillion deficits, or do we
reform the industry?
For anyone that is a CEO within the industry, I would
suggest that you do what all the rest of us have done that run
businesses--embrace competition. Deal with an engaged consumer
in full transparency.
I mean, if we keep going down this trail, we are going to
end up not only exacerbating the $2 trillion deficits we
currently have, it is going to get even worse.
I was able to keep costs low in my own business. It can be
done. I was so sick and tired of hearing how lucky I was that
it was only going up five to ten percent every year. I found
out how much the insurance companies were making on then what
was a 300-employee plan that hardly had any claims, but they
were making a fortune on it, and that is because even we did
not have the full breath of options, and when I found out how
lucrative it was to be in the insurance business, we self-
insured, and then threw everything and the kitchen sink at
prevention and wellness, and actually on the user side only,
controlled costs. My employees got every wellness and
prevention tool, and they became health care consumers, and in
that method, we cut costs by over 50 percent, and have not had
premium increases in 16 years.
Industry, wake up. It can be done. We need more tools, and
we need you to get with it.
President Trump put in place regulations requiring
hospitals and insurers to disclose prices. President Biden has
continued to support it. The hospitals have tried to skirt it,
mostly from the time that happened.
Today I am releasing a report that highlights the need for
Congress to enact additional transparency across the health
care supply chain. This is not going to go away, and it is a
single place in our Federal Government that if we get it right
we can reduce our deficits, the government will have a bill to
pay that his less, if the providers shrink themselves down to
where it is in most other economies and maybe not do it from a
command system from government but because entrepreneurism and
the markets are working.
The House passed the Lower Costs, More Transparency Act.
That is a huge step to get us where we are needing to go.
I am on Health, Education, Labor, and Pensions. Another
crazy thing about this place, they have got a hearing right
now. It is at the same time this is, and we have never gotten
that straight since I have been here. I will try to jump there.
Bernie Sanders and I introduced the Health Care PRICE
Transparency Act 2.0, a landmark bill to reveal health care
prices for Americans that mirrors the House bill in many ways.
I want to thank Senators Warren and Fetterman, who are members
of this Committee, for joining as cosponsors.
I want to cite someone in the audience here, Cynthia
Fischer, who has been the most passionate individual I know.
She has run a business over the years about keeping this in the
limelight. It requires providers to publish actual prices, not
estimates.
Another major component of the bill states that group
health plans have the right to review and audit their claims
data, and we cannot do that that has got to happen nationally,
and states need to accommodate that. This will allow self-
insured employers and unions to make changes to their plan and
save money for their beneficiaries. Our bill puts the power
back in the hands of Americans, it starts to make it consumer
driven, and it starts to break up the oligopoly, the monopoly
nearly, of how health care is provided currently.
I ask unanimous consent to enter into the record two
statements, one from Power to the Patient and another from
Patient Rights Advocate with 75 signatures in support of this
legislation.
Chairman Casey. Without objection.
Senator Braun. I look forward to continuing to work with my
colleagues on both sides of the aisle to get the Health Care
Price Transparency Act 2.0 to the President's desk.
It is time to deliver for our seniors, our families, and
Americans all across the country.
I would now like to play a video telling just one of the
thousands of stories about the impact price transparency can
have on patients.
Thank you to Patient Rights Advocate for submitting this
story and for their leadership in the fight to bring power to
patients.
[Video plays.]
Chairman Casey. Thank you, Ranking Member Braun.
I will now turn to our four witnesses. I will introduce our
first witness, and Ranking Member Braun will introduce our
second and third, and then I will introduce our fourth.
Our first witness is Dr. Christopher Whaley from
Providence, Rhode Island. Dr. Whaley is Associate Director of
the Center for Advancing Health Policy Through Research at
Brown University. He also serves as Associate Professor in the
Department of Health Services, Policy, and Practice at Brown
University School of Public Health. His research is largely
centered on health care price transparency and evolving market
structure and the effect of such changes on overall health
spending and quality of care for patients.
Doctor, thank you for being with us today and sharing your
expertise with the Committee.
Dr. Whaley. Thank you, Chairman Casey and Ranking Member
Braun.
Chairman Casey. Doctor, we will just introduce all the
witnesses and then I will turn to you, if that is okay.
Senator Braun. It is my pleasure to introduce Chris Deacon.
She is the founder of VerSan Consulting LLC. She advocates for
cost-effective strategies that benefit both employers and
employees. Ms. Deacon has held pivotal roles within the State
of New Jersey, notably as a director of a state employee health
benefits program, and school employee health benefit programs.
Her career in the public sector began with serving as
Deputy Attorney General and then Special Counsel to Governor
Chris Christie. She earned her Juris Doctor from Rutgers School
of Law. Thank you for testifying today.
It is my pleasure also to introduce Cora Opsahl. She is the
director of 32BJ Health Fund. She ensures that member and
families of the union have affordable and high-quality health
care. Under Ms. Opsahl's leadership, the 32BJ Health Fund has
saved more than $35 million annually. That is impressive. She
holds an MBA from St. Louis University. Thank you for being
here today.
I yield back.
Chairman Casey. Thank you, Ranking Member Braun. Our fourth
and final witness is Sophia Tripoli. She is from Washington,
DC. Sophia is the Senior Director of Health Policy at Families
USA, an organization that seeks to achieve accessible and
affordable health care for all Americans. Her work is largely
focused on lowering costs of health care and improving health
care delivery for Americans.
Thank you very much for being here today and for testifying
and for sharing your knowledge with the Committee.
Now we will turn to you, Doctor, for your opening
statement.
STATEMENT OF CHRIS WHALEY, PH.D, ASSOCIATE DIRECTOR
OF THE CENTER FOR ADVANCING HEALTH POLICY THROUGH
RESEARCH, ASSOCIATE PROFESSOR OF HEALTH SERVICES,
POLICY, AND PRACTICE, BROWN UNIVERSITY SCHOOL
OF PUBLIC HEALTH, PROVIDENCE, RHODE ISLAND
Dr. Whaley. Thank you. Chairman Casey, Ranking Member
Braun, and other members of the Committee, thank you for the
opportunity to testify today.
My name is Christopher Whaley. I am an Associate Professor
of Health Care Policy at the Brown University School of Public
Health, where I focus on health care price transparency and the
evolving structure of U.S. health care markets.
The United States leads the world in health care spending
in large part due to high and variable prices. Rising health
care spending strains government finances and erodes worker
wages, particularly for middle-and lower-income Americans.
Prices are opaque, fueling consolidation and leading to patient
frustration with the U.S. health care system.
These challenges have important implications for aging
Americans. First, many elderly individuals receive private
insurance, most commonly from their current or former
employers, and thus are impacted by high and variable prices.
Second, high health care costs and patient financial
burdens lead to reductions in high-value and necessary care.
For the under-65 population to age healthily, it is critical
that they have access to affordable health care.
Finally, high and differential prices drive health care
consolidation, which erodes access to care and the quality of
care for Medicare beneficiaries.
In response, policymakers have undertaken efforts to
increase price transparency. However, many of these efforts are
currently incomplete. Today I will discuss impacts of price
transparency and ways to improve the use of price transparency
data in the U.S. health care system.
First, it is important to recognize that price transparency
is not a cure-all for the health care system but rather is
critical to improve the efficiency and regulatory oversight of
health care markets in the United States. While patients have
an ethical recent to know prices, many do not actually shop for
care. However, my research has shown how entrepreneurs and
innovators can use price transparency to improve health
insurance benefit designs and to create competition in health
care markets.
In addition, price transparency is critical for enabling
employers and other purchases to fulfill their fiduciary
obligations to provide health insurance benefits to the
workforce at fair prices. An appropriate use of price
transparency is to serve as a hub that enables other benefit
design innovation and inform policies that reduce spending and
improve quality.
As a few examples, and as discussed in more detail in my
written remarks, we have collected data from many employers in
the State of Indiana and report what they are paying for
hospital care. After seeing that they were paying some of the
highest prices for hospital care in the country, these
employers have used this type of price transparency data to
both negotiate for lower prices on behalf of the workforce and
also push for state policies to make Indiana health care
markets more competitive.
In other examples, the State of Oregon public employees and
schoolteacher have used price transparency data to implement a
reference-based pricing program that caps prices at 200 percent
of what Medicare pays. This program saved over $100 million in
public funds in the program's first two years.
My co-panelist from 32BJ has used price transparency data
to design a targeted insurance network that excludes
inefficient providers. These savings from this type of program
resulted in a $3,000 bonus for New York City service workers.
To allow for these types of innovations to occur
nationwide, recent Federal policies seek to increase price
transparency through two main requirements. First, hospitals
are required to post prices for 300 shoppable services, and
second, insurers are required to post their full set of
negotiated rates.
The insurer-posted coverage and transparency data
represents probably the most complete view into health care
prices in the United States. While these data have certainly
had a rollout process, researchers such as myself are now using
these data to more completely understand health care markets in
the United States and entrepreneurs are using these data to
drive health care market competition.
While a terrific resource, these data can certainly be
improved by reducing duplicate entries and posting of prices
among providers who do not actually perform services. Requiring
insurers to limit posted prices to providers who actually
perform service or potentially include the number of services
billed would greatly improve data quality and accessibility.
These data could also be centrally hosted by CMS using modern
data base technologies.
Additionally, despite the 2021 Consolidated Appropriations
Act provisions, many employers and purchasers do not have
access to their own plan claims data. Proposed bipartisan
legislation codifies access to self-funded plans' claim data,
and these data are necessary for employers to be responsible
fiduciaries and purchasers of health care services on behalf of
their workforce.
In conclusion, the large variation in health care prices
and opaque nature of prices in the United States drives
frustration with the U.S. health care system. Federal policies
to improve transparency are important first steps, and I
believe that building on these efforts will improve the U.S.
health care system and lower spending, particularly for aging
Americans.
Thank you, and I look forward to your questions.
Chairman Casey. Dr. Whaley, thanks so much for your
testimony.
We will now continue testimony with Ms. Deacon.
STATEMENT OF CHRIS DEACON, JD, PRINCIPAL OWNER,
VERSAN CONSULTING, LLC, MOORESTOWN, NEW JERSEY
Ms. Deacon. Chairman, Ranking Member, and distinguished
members of the Committee, thank you for the opportunity to
testify today on the critical issue of transparency in health
care.
Imagine, if you will, that you are the CFO of a company
where you give the company credit card to your suppliers and
vendors. Instead of receiving an itemized statement at the end
of the month you receive one paper with one number--no
receipts, no details, just the total amount owed. No business
would ever allow such a practice.
Yet this is exactly what happens in our health care system
today. Employers are forced to hand over the company credit
card to Blue Cross Blue Shield, Cigna, Aetna, United, allowing
them to pledge company dollars and member dollars to a health
care system that can charge whatever they want, however they
want, with little to no accountability or oversight. That is
why we are here today. Transparency, or rather lack of
transparency, facing employers and unions that are responsible
for purchasing health care for almost 160 million Americans.
You likely know the statistics and the alarming rate at
which health care costs are growing, but I know the people
behind these statistics. As the former administrator for the
State of New Jersey's public sector health plans, I know
firsthand how the lack of transparency impacts our teachers,
firemen, police officers, and public sector workers.
Sadly, this year in New Jersey, over 200 school positions
will be eliminated due to budget constraints, constraints
largely driven by health benefit costs, and public safety
workers are facing a 16 percent premium hike, eroding years of
wage growth and further stretching scarce public safety
resources.
ERISA, which governs most employer sponsored health plans
in the country, is intended to protect plan participants and
beneficiaries by mandating that plan sponsors act as
fiduciaries. When employers lack access to meaningful claims
data and transparent information on the cost and quality of
care, the promise of ERISA remains unfulfilled.
Let me share three examples that illustrate the magnitude
of this issue.
At the Mayo Clinic in Jacksonville, Florida, if you were to
use your Federal Employee Health Benefits Blue Cross Blue
Shield card for an arthrocentesis procedure it would cost you
and the Federal Government approximately $2,500, but if you
were to not use your card and pay cash, you would pay just
$392. That is six times more.
At the University of Pennsylvania Hospital in Philadelphia,
the cash price for an ACL repair is approximately $9,500, but
if you are a servicemember and you use your TRICARE coverage
your price, and the Federal Government's price, is $37,489.
That is almost a 300 percent markup.
Or consider when a third-party administrator, or TPA,
overpays for a claim or pays a claim in error with a self-
funded employer or union's money. If--and I emphasize "if"--the
TPA seeks to correct their error and recover the employer's
funds, it will cost them. TPA's regularly charge employers 25
to 50 percent of the recovered payment. This is the ultimate
fox guarding the henhouse.
Finally, there are the misaligned financial incentives that
play out when a TPA is able to pay providers one price and then
charge the employer or the union many times more for the exact
same claim. In several recently unsealed court documents out of
a case in the Central District of California, it was revealed
that a group health plan paid over $4 million for one claim,
but the provider only received approximately $876,000 of that
$4 million. What accounted for the difference? Cigna kept over
$2.5 million in fees, and their subcontractor, Multiplan, kept
another $678,000. The fees were over three times higher than
what the provider was actually paid.
These examples are just the tip of the iceberg in terms of
the waste, abuse, and inefficiencies in the current market,
driven, in large part, by the lack of transparency and
meaningful access to data for employers.
If we expect employers and unions to exert any type of
market forces to rein in health care costs we must empower them
with actionable data and transparent pricing. The company
credit card has been abused for too long by the PBMs and TPAs.
It should not be unreasonable to demand receipts for payment,
itemized statements, and the ability to protect our businesses
and plan members, and that is what S. 3548 uniquely
accomplishes, in a superior manner, in my opinion, to the Lower
Cost More Transparency Act with respect to access to claims
data. Federal lawmakers must rebalance the information
asymmetry to empower employer purchasers and unions to push
back against egregious pricing, gross overreach, and
profiteering. This will help protect the American workers'
paychecks and ensure a fair, more accountable health care
system for all.
Thank you.
Chairman Casey. Ms. Deacon, thanks very much for your
testimony.
Ms. Opsahl.
STATEMENT OF CORA OPSAHL, MBA, HEALTH FUND
DIRECTOR, 32BJ HEALTH FUND, NEW YORK, NEW YORK
Ms. Opsahl. Good morning. Thank you Chairman Casey,
Ranking Member Braun, and the rest of the Committee on
Aging for inviting me to speak today.
My name is Cora Opsahl, and I am the Director of the 32BJ
Health Fund. The 32BJ Health Fund is a self-insured, Taft-
Hartley benefit fund that provides health benefits to over
200,000 union members and their families. Our members are
essential workers who work in the real estate industry,
security officers, school workers, and airport workers. We are
based primarily in the New York/New Jersey area, but we have
families up and down the East Coast including Pennsylvania and
Massachusetts.
The fund is jointly governed by a board of trustees
appointed by the Union and the Employers, and we provide high-
quality benefits with no premium sharing, $0 in-network
deductibles, and low in-network copays. We believe the fund has
an important role in tackling the problem of health care
affordability, and we have spent years doing just that by
leveraging our data, challenging the status quo, and finding
innovative ways to manage our benefit.
Having access to our claims data is foundational to our
work, and we have been fortunate to have access to our medical,
pharmacy, and ancillary claims data. We use this data to
understand our health care spend, make benefit decisions, and
ensure we are a good steward of the fund's resources, because
of our data, we know the following:
In 2023, we spent $1.4 billion in health care. Of the $1.4
billion, 55 percent is spent on inpatient and outpatient care.
In 2021, we paid 271 percent over Medicare prices for the same
care, which is up from 219 percent of Medicare in 2016, and in
the past 10 years, health care has risen from 17 percent of
total compensation to 37 percent of total compensation. Wages
have gone up 54 percent but health care costs have gone up a
whopping 230 percent, and to put that into a dollar amount, our
members could have had $5,000 more in annual wages had health
care spend risen at just the same rate of inflation.
While having your data and being able to see how your
benefit is being spent is important, as a plan we know this is
only the first step. The next step is taking action on the
data.
In 2018, after spending 10 years looking at our claims
data, it became abundantly clear to us that we needed to
address the prices we were paying. The data showed we were
paying wildly different prices for the same procedures,
depending on what hospitals our members went to. For example,
we were paying approximately $10,000 for a colonoscopy at New
York Presbyterian system versus approximately $4,000 at Mount
Sinai Hospital system. The same pattern was true at other high-
priced systems. Based on our data, we tiered our network on
price beginning in 2019. Members could still access the higher-
priced hospitals, but they would have to pay higher copays to
do so.
While we had won the right to tier our plan in 2019, in
2021, New York Presbyterian told Anthem, Blue Cross Blue
Shield, that they would have to be preferred in all networks,
leveraging a clause in their contract. In 2022, the fund won
permission to remove them from our network. This change has
saved the plan approximately $35 million every year by members
receiving care from lower-priced facilities and providers.
In the most recent contract negotiations, the union and
employers leveraged the savings in our benefits to give union
members a one-time bonus, the largest wage increase in contract
history, and a pension increase, and they were able to limit
employer premium contribution increases to no more than three
percent every year through 2027.
While these benefit changes showcased our ability to
leverage our data, both changes also illuminated the contract
terms between providers and carriers that obstruct, hinder, and
limit the ability for us and other employers to take action on
their data.
Recently, the Health Fund led a procurement for a medical
and hospital benefit third party administrator, or carrier. We
were adversely affected by anti-competitive contract provisions
between providers and carriers, such as requirements to be in
network, anti-steering and anti-tiering provisions, limitations
in how claims are allowed to be paid, and even limitation in
access to claims data. Due to these contract provisions, every
TPA bidder, except one, was unable to meet our network
requirements, including that New York Presbyterian remain out
of network.
Other provisions routinely demanded by hospitals include
restrictions on retroactive claim reviews, exclusion of
"lesser-of" provisions, and limits on payment recoupment. None
of those contract provisions are beneficial to the employer-
sponsored plans or their membership. The experience showcased
how difficult it is for employers and self-funded plans, even
of our size, to have a highly competitive bid process.
We would not be where we are today without access to our
data, allowing the union and employers to give raises and limit
premium increases, ensuing our members can continue to have
access to high-quality and affordable care. Employers having
access to their claims data and the terms in which their
benefits are being managed are essential for them to be able to
do the same thing. That is why we need the Braun-Sanders bill,
and Section seven in particular.
Thank you for having me.
Chairman Casey. Ms. Opsahl, thank you for your testimony.
We will turn to our final witness, Ms. Tripoli.
STATEMENT OF SOPHIA TRIPOLI, MPH, SENIOR DIRECTOR
OF HEALTH POLICY, FAMILIES USA, WASHINGTON, D.C.
Ms. Tripoli. Chairman Casey, Ranking Member Braun, and
members of the Committee, thank you for the opportunity to
testify today. It is an honor to be with you. On behalf of
Families USA, a leading national nonpartisan voice for health
care consumers, I want to thank you for this critical
discussion.
No one in America could have to choose between going to see
their doctor and buying groceries to feed their family. Yet
almost half of all Americans do not get needed medical care
because of the cost, and 48 million older Americans fear they
will not be able to afford lifesaving care.
Every American knows that we pay too much for the health
care we get, but many Americans do not know why--because health
care consolidation, particularly among hospitals, has
eliminated competition and allowed monopolistic pricing to push
our Nation's families to the brink of financial ruin.
Particularly concerning is that health care is one of the
only sectors in the U.S. economy where consumers are blinded to
health care prices until after they have received a service and
a subsequent bill. This lack of transparency is a major barrier
to the health care sector competing based on fair prices and
high-quality care, and there is no question that our Nation's
families are suffering the consequences.
Take the story of Kyunghee Lee from Mentor, Ohio. Once a
year she goes to a rheumatologist for a steroid injection in
her hand to relieve pain associated with her arthritis. Each
round of injections costs her $30, but in 2021, when she
arrived at her usual office for her usual treatment she found
they had moved up one floor in the building. She thought
nothing of it until weeks later she received a bill for nearly
$1,400. Ms. Lee's infusion clinic was moved from an office-
based practice to a hospital-based setting, resulting in a
price increase of almost 4500 percent for the exact same
service, from the exact same provider, or take the story of Ben
Los and his then 5-year-old son from Monument, Colorado. In
2022, Ben and his wife rushed their son to the doctor after he
began experiencing seizures. They were referred to a specialist
and received confirmation that their son's EEG scan would be
covered. Weeks later the Los family received a bill for $2,500.
When they called the hospital about the bill they were told it
was a facility fee, that the physician service was covered, but
now they had to pay the hospital.
Frustrated with a bill he could not pay and grappling with
his son's health, Ben wanted answers about why this happened,
but found it nearly impossible to determine who actually owned
the hospital. It was a giant black box. Ultimately, Ben
discovered that this hospital system raked in billions of
dollars in profits just in the first nine months of 2022, all
while he was struggling to pay his medical bill.
These stories are far too common in the U.S. health care
system, particularly since the role of hospitals in our economy
has shifted drastically over the last 60 years. What were once
local charitable institutions built to serve the community have
now become large corporate entities, focused on maximizing
revenue rather than improving health. Fundamentally, the
business interests of the sector are no longer aligned with the
health and financial security of the patients they serve.
Study after study shows that privately insured consumers
and employers are paying two to three times what Medicare pays
for the same hospital services. Commercial insurance prices for
hospitals and physician services in more monopolistic markets
like Florida, South Carolina, and Tennessee, cost at least
twice as much as the same services in competitive markets.
Take the average price of a knee replacement, which costs
three times more in Sacramento, California, than in Tucson,
Arizona, or the price of an MRI at Mass General Hospital in
Boston, that costs five times more just depending on the
insurance carrier. These higher prices result in higher
premiums, lower take-home pay, and higher cost-sharing for the
more than 176 million Americans who get health insurance
through their employer or directly from a health plan.
Medical monopolies are forming in nearly every state,
whether it is a private equity-backed firm buying up hospitals
and then cutting service lines and laying off workers, as we
see is the case of Steward Health System in Massachusetts, or
price gouging and suppressing wages in the case of UPMC in
Pennsylvania, or the giant medical monopoly that is HCA
Healthcare, which has facilities in 20 states, including
Indiana, Georgia, Florida, and South Carolina. Notably, HCA
Healthcare ended 2023 with more than $5 billion in profits, on
$65 billion in revenues, allowing their CEO to take home a
salary of more than $21 million. These billions of dollars of
profits are made on the backs of people like Ben Kyunghee Lee,
and the one-third of Americans who cannot afford to buy
groceries or pay their rent because of rising health care
costs.
Congress has used its power to rein in the corporate abuses
of Big Oil, Big Tobacco, Big Banks, and Big Tech. Last year,
the Senate examined how to protect people from price gouging
for concert tickets. It is past time to scrutinize big health
care corporations and protect families in America from the
greed of medical monopolies.
We urge this Committee to support well-vetted, bipartisan
solutions, including strengthening and codifying price
transparency rules, implementing site-neutral payment, and
addressing dishonest billing, increasing transparency of
ownership data, limiting harmful contracting terms, and
strengthening FTC and DOJ enforcement of anti-competitive
practices.
This Committee has a responsibility to put the needs of our
Nation's families ahead of the greed of big health care
corporations. Our health is not a game, and no one should be
allowed to play Monopoly with it.
I thank the Committee for your time and look forward to
answering any questions.
Chairman Casey. Ms. Tripoli, thank you for your testimony.
I will start our round of questions.
Dr. Whaley, I will start with you, and I am grateful for
your testimony today. We all know health care costs in the
country are continuing to rise. Hospital costs have risen
faster than health care costs overall. These increasing costs
directly impact Americans' access to health care, and before we
get to solutions, which we are, of course, trying to arrive at
today, we need to understand the underlying causes of these
high prices.
What are the major--and if you can just, and I know this is
part of your testimony, if you can itemize again for us the
major drivers of rising hospital costs, in particular.
Dr. Whaley. We know that in particular hospital costs are
driven by provider consolidation, and are actually not driven
by differences in quality of care, and I think this is
particularly relevant because over the last two decades we have
seen over 2,000 hospital mergers in the United States, which
have resulted in a hospital market that is incredibly
concentrated.
Chairman Casey. 2,000 mergers, in what time period?
Dr. Whaley. Over the last two decades.
Chairman Casey. That is an alarming number.
I wanted to turn next to Ms. Tripoli. As we know, the cost
of health care has implications at all levels of our economy.
Health care spending affects both government and employers. It
affects, obviously, patients and families. As costs rise and
patients continue to struggle to afford care, which often
results in delayed care or care that is actually foregone, in
2022, more than a quarter of adults reported delaying or
foregoing health care due to the costs, so it is a disincentive
to seek out the care they need. Others may still receive needed
care but go into medical debt when they do so.
Here are kind of two questions in one. How do high hospital
costs impact the lives of patients. That is one, and the second
question is what might an unexpected surgery or other medical
expense mean for a family's budget?
Ms. Tripoli. Thank you very much for the question. I think
high hospital costs, what it means is an increasing impact on
our premiums, for example, increasing cost sharing, and what
many folks do not actually realize is that for people in the
commercial market for employees that more of their take-home
pay is going to rising health care costs instead of being able
to come home with them to afford things like buying groceries.
At the same time, premiums are increasing much faster than
workers' wages, so we are creating a real crisis, from workers
who are showing up every single day, doing exactly what they
should be doing, and yet they are continuing to struggle to
afford the skyrocketing costs of health care.
Chairman Casey. Any examples you have, or walk me through,
if you can, the scenario of an unexpected surgery or other
medical expense in terms of a family budget.
Ms. Tripoli. Absolutely. I think data suggests that more
than half of Americans have no emergency savings on hand, and
of the ones that do, they have less than $1,000 on hand at any
given moment, so you are talking about an emergency surgery or
any type of unexpected health care need, that would literally
bankrupt the American family that more than half of Americans
would not be able to afford the care. That is why we are seeing
100 million Americans, and growing, with medical debt.
Chairman Casey. Thank you. I wanted to move to another
question before my time runs out. We have discussed hospital
costs, obviously. I also wanted to focus, as well, on
prescription drugs. We know those costs account for a high
percentage of health care spending. I mentioned my legislation,
Capping Prescription Drug Costs Act. Senator Warnock and I have
introduced that together. That would expand on the success of
the IRA provision on extending prescription drug costs to
patients.
What can high prescription drug costs mean for a family
that is already struggling to make ends meet?
Ms. Tripoli. Absolutely. I mean, we know that 30 percent of
adults do not actually take their prescription drug medication,
either rationing the drug, skipping it, or foregoing it
altogether because they cannot afford it, and that actually
results in 125,000 deaths a year. For most people, not being
able to afford their drugs, not being able to afford their
medical care, is literally a decision between life or death.
Chairman Casey. Give me that number again. You said
125,000----
Ms. Tripoli [continuing]. deaths per year.
Chairman Casey. Caused by----
Ms. Tripoli. Adults not being able to afford their
prescription drugs, either from delaying care, rationing their
medication, or foregoing taking the drug altogether.
Chairman Casey. Mr. Tripoli, thanks for your testimony and
answers to those questions.
I will turn to the Ranking Member.
Senator Braun. Thank you, Mr. Chairman. I am going to start
with Ms. Deacon and Ms. Opsahl. This whole idea of claims data,
for the benefit of the Committee and other listening, on self-
insured plans why has that not been the default that you will
get it? What has the industry done to keep the one thing, when
you do have, like when I formed my own plan we finally got rid
of the profit margin that the insurance company was making.
Give us a little background on why they have been so begrudging
in terms of giving that basic information.
Ms. Deacon, I will start with you, and then Ms. Opsahl will
go next. Go ahead.
Ms. Deacon. I think the example I gave in my opening
remarks is probably the best example of why a carrier or a TPA
would not want a self-funded employer to have access to their
data. What you will see in the data is that you are often
paying above billed charges. You might also see that the rate
you are paying under their negotiated discounts can be six
times, ten times higher than the cash rate, and what they have
done to sort of block access to this data over the years,
anything from draconian NDA provisions, proprietary data
formats, claiming that the data is proprietary and
confidential, limited data sharing provisions, implementing
prohibitive cybersecurity policies in order to access your own
data, and even so far as limiting what data warehouses are able
to share with employers and third-party----
Senator Braun. That is the ultimately behavior of a
monopoly, and remember, they are the supplier, and this is
going against their own customers, and that, to me, is
indicative of why we are in the pickle we are in.
Has this been the general dynamic across all states? Have
some places been able to fix that? Has it just happened
recently, where plans have been able to sue to get the
information? Give me a little kind of background on how long we
have been dealing with this and what has kind of cracked the
ice at this point.
Ms. Deacon. It has been a long time that self-funded
employers are dealing with a lack of access to data, but with
the Consolidated Appropriations Act of 21, we had hoped that
some of the provisions in that act would lead to more access to
claims data. Employers were restricted from entering into
contracts that would limit their access to claims data.
However, in practice, that has not necessarily played out how
we had hoped it would, and employers are still facing these
roadblocks and barriers in getting access to their claims data,
but the sort of crack that you mentioned is we now have this
law so that employers are litigating. They are filing suit to
say this is my----
Senator Braun. Are they winning mostly, or are they losing?
Ms. Deacon. We have not really had a case that has come all
the way to decision. We are at the outset of some of those
cases, and some of them have settled outside of the public
domain, so we do not necessarily know what----
Senator Braun. All insurance companies basically do this.
Ms. Deacon. All of the big ones, yes.
Senator Braun. All of the big ones, so maybe it needs to be
where employers start looking at other than the big guys that
seem to not want to bargain fairly, with information that
should not be theirs in the first place.
Ms. Opsahl, can you kind of explain how you finally cracked
through, how long it took, and are you still wrestling with it?
Ms. Opsahl. Thank you so much for the question. I will
start with, yes, we are still wrestling with it. We just
recently went through a procurement, and still had to reassert
our agreement and right to this claims data.
I look at claims data as receipt for payment. You do not
pay your credit card bill without an itemized list. You should
not be paying claims. As a self-funded employer, it is our
responsibility to pay these claims.
We won the right to get our claims data a little over 15
years ago, but had to do that through leaving a big carrier and
coming back. It should not take employers having to go through
a comprehensive procurement process to have to win enough power
to get access to their claims data, but again, we still fight
that today. If we want to add a new field--we were just talking
about this this morning--add a new field, well, that is in
System A, and we are actually pulling this from System B, and
so it is going to take nine months to add this flag that says
whether or not, you know, which hospital systems and things of
that nature.
It is not simple. It is not easy, and I have eight people
on my staff who look at the data every day to even see how good
it looks.
Senator Braun. Thank you. I am out of time but I do have
another round of questions, but I would like to point out to
the public, I do not know of one other industry where we have
had to bring, at the federal government level, a transparency
bill. Every other industry out there engages with an informed
consumer, and you have got that information on the Web, you
have got it so many places. In my own business I remember it
was so competitive, your customers would put you on speed dial
to see who was going to give the best price, and you could have
accomplished that all within about four or five minutes. We are
so far from that. The industry better take note that it is not
normal to operate the way they do.
I will yield back for now.
Chairman Casey. Ranking Member Braun, thank you for your
questions, and as you all know, on a Thursday we have got
Senators that are in and out, competing demands, especially
competing hearings, as Senator Braun mentioned. He and I are
both members of the HELP Committee, so we cannot transport
ourselves quite yet, but we are going to be in and out. People
will be in and out today, but I wanted to thank Senator
Ricketts for being here. He might have close to 100 percent
attendance record. There is some prize for him somewhere, but I
will turn next to Senator Ricketts.
Senator Ricketts. Thank you, Mr. Chairman. Thank you,
Ranking Member, and thank you to all of our witnesses for being
here today to provide testimony.
As the population of the United States ages it is vital
that we take a closer look at the institutions and programs
that we trust to take care of them. It is our job to protect
America's most vulnerable citizens and ensure that they are
equipped with the tools to make the best decisions for their
own care. In addition, we must ensure that programs like
Medicare and Medicare Advantage have accurate and easily
understandable information that is accessible for those who
rely on it.
This past February I held an Aging Committee hearing in my
home State of Nebraska, and we focused on educating older
Americans on health plans through Medicare. While there are
resources through Medicare and state health insurance
assistance programs, SHIPS, many older Americans fail to become
properly educated on the wide variety of health plans.
For 2024, it is estimated that there are a total of 8,676
different Medicare Advantage plans. According to a recent
report, one of the biggest challenges with Medicare Advantage
plans is poor patient education. If a person enrolls in
Medicare Advantage when they first become eligible for Medicare
they can switch to original Medicare and Medigap within the
first 12 months of their plan. However, if an enrollee fails to
switch their plan within that first 12 months, there are
additional requirements to switch back to Medicare and a
Medigap plan that can be very challenging.
Ms. Tripoli, it is often the case that older Americans sign
up for plans that do not cover many of their needs and cover
their out-of-pocket costs. Do you have recommendations for
addressing this issue, and maybe education gaps? What can we do
to be able to help folks who are getting ready to make this
decision to be able to make the right plan choice for them?
Ms. Tripoli. I mean, absolutely. I think in general we need
a lot more transparency of information across the health care
system. Medicare Advantage is no different. One of the things
that we often see in Medicare Advantage is a very aggressive
marketing of supplemental benefits, for example, and plans are
using it as a hook to get seniors to sign up for the plan and
then they are enrolled and they actually find out, oh, that is
not exactly the benefit that was marketed to me.
I think one of the solutions both around supplemental
benefit and just in general is we need much more transparency.
We need more data that is accessible for researchers, for the
public, and for policymakers to understand what is actually
happening underneath the hood of the health care system, so we
can have more targeted decisions to make sure that consumers,
the end user of the health care system, are actually getting
the care they need, that is affordable, and it is meeting their
health needs.
Senator Ricketts. As we were talking about this
transparency, is this something where we would be able to
require, like these plans, to be able to provide--I don't know,
we were talking about some of the cost differences in different
procedures. Certainly, there are common things that our seniors
need or get requirements. Is that something that maybe the
plans should have to be able to talk to seniors about and say,
hey, for a typical thing that our seniors are going to need
this is what it may cost you?
Ms. Tripoli. Absolutely. Seniors and older Americans and
just the general public needs much more data about the cost of
care and the quality of care that is associated with that cost,
so they can understand what is the value of what I am getting,
and then they can make more informed choices about plan
selection, whether they need a service, whether they want to
shop for one MRI at this hospital versus another hospital, but
yes, absolutely.
Senator Ricketts. Actually, you bring up a great point
there, because we have talked a lot about costs and
transparency on costs. How do we go about tackling the quality
aspect of it? Some of the folks have mentioned the quality as
an aside, but how do we educate consumers on that quality
aspect of it too, because there is always a cost-quality
tradeoff. How do we measure the providers on that quality?
Ms. Tripoli. I think you are asking probably the million-
dollar question right now. Obviously, we have a lot of quality
reporting requirements, but there are a lot of requirements,
and there is not necessarily a harmonized set of quality
measures that we can pull down and assign to a specific
service, so we actually need quite a bit of work on the quality
side, and CMS, as well as multiple stakeholders from a lot of
different sectors have been working to address this issue, but
it takes time, and much more work is needed.
Senator Ricketts. Great. Thank you.
Ms. Deacon, in 2020, Congress passed legislation to stop
third-party administrators of self-insured employer and union
health care plans from writing contracts that denied plans
access to their data on prices and health services, but it
sounds like, from earlier legislation, this legislation has it
stopped the gag clauses from being implemented?
Ms. Deacon. Thank you for the question. In my experience,
no, it has not. I have worked with multiple employers and
unions that continue to face these roadblocks, and again, some
of the examples that I gave earlier, draconian NDA clauses that
even if they are getting access to the data they cannot do
anything with it. They cannot audit their own claims. They
cannot look for retrospective payment reviews, so it is very
limited even when they are getting access to the data, but that
is when, and I would say that, by and large, we have not had
the sea change that we were hoping for after that law.
Senator Ricketts. Thank you. Mr. Chairman, if I could just
have another minute or so.
Chairman Casey. Sure.
Senator Ricketts. I would like you, Ms. Deacon, to comment
on the quality question, as well.
Ms. Deacon. The quality question?
Senator Ricketts. Yes, because again, there is cost-
quality. How do we tackle that part of it?
Ms. Deacon. Yes. To sort of echo Ms. Tripoli's point, there
is a lot of work that needs to be done on the quality side, as
well. CMS obviously has some star ratings on hospitals. We have
different associations and stakeholders that are also issuing
quality ratings, but what I will say is that the consumer
today, unfortunately, is left with sort of improperly
correlating brand name and high cost with quality, but as Dr.
Whaley would probably attest, there is no direct correlation
between increased price and higher quality. In fact, oftentimes
it is the inverse.
Again, we need to provide consumers and purchasers with
more information on quality so they are not left to make that
decision, an improper correlation on their own.
Senator Ricketts. Yes, and just to be clear, when you are
talking about the star ratings on hospitals, that is the
hospital, in general. It is not about a particular procedure
that hospital may be doing, right?
Ms. Deacon. That is right.
Senator Ricketts. Even that data does not really mean that
much to an individual who is getting a procedure in one
hospital versus another because the hospital may have a high
star rating but it may do this procedure particularly poorly
versus another provider.
Ms. Deacon. Right.
Senator Ricketts. Fair?
Ms. Deacon. Yes, absolutely, and they might be great at
transplants, but, you know, not necessarily cardiac, so we
definitely need more information on the quality side.
Senator Ricketts. Great. Thank you, Ms. Deacon. Thank you,
Mr. Chairman.
Chairman Casey. Thank you, Senator Ricketts. Senator
Warren.
Senator Warren. Thank you, Mr. Chairman, and thank you and
Ranking Member Braun for holding this hearing on price
transparency. For almost every other type of service you can
look up the price before deciding whether or not to purchase,
but when it comes to health care it is virtually impossible,
even though Americans are paying more for health care than any
other country in the world, so when patients need health care
they should be able to easily find out the price of those
services.
Here is something else they should be able to find out
easily--who owns the hospital or the physician practice that
you or a loved one may visit to receive that care? Today nearly
80 percent of doctors are employed by corporate entities,
including private equity firms, and once in control, these
firms raise their prices and cut corners to line their own
pockets while the quality of care suffers.
Let me start with you, Dr. Whaley. You are an expert on
private equity in health care. If a patient wanted to find out
whether a neighborhood hospital or a primary care practice was
owned by private equity, how hard would that be to do?
Dr. Whaley. Senator Warren, I think it is virtually
impossible for a patient to know whether or not their doctor's
office is owned by a private equity company.
Senator Warren. Yes, so virtually impossible, because
private equity firms do not have to report ownership, it is
nearly impossible to find out if the doctor's office you visit
is owned by one of these corporate vultures.
Well, let's ask about the workers. How hard is it for the
workers to find out? Ms. Opsahl, you lead the health fund at
labor union 32BJ. If one of your members wanted to find out if
a potential employer of any kind was owned by a private equity
company, how simple would that be to do?
Ms. Opsahl. Similar to what Dr. Whaley said, next to
impossible, and I would even say as the employer or as the
sponsor of the plan, I do not know who I am writing my self-
funded checks to, as well.
Senator Warren. Okay, so next to impossible, virtually
impossible. I am sensing a trend here. Patients cannot find
this information. Workers cannot find this information. Even
antitrust regulators have a hard time finding this information.
These are the agencies that are responsible for cracking down
on anti-competitive behavior, and they cannot get their hands
on these data, and it matters because private equity ownership
has real consequences for the families and the workers who need
help here.
Dr. Whaley, once private equity firms take over health care
companies what happens to health care costs and quality?
Dr. Whaley. Several studies have shown that when a private
equity company acquires a health care practice, whether it be a
physician or a hospital or other type of health care provider,
prices increase quite substantially. We have also seen
evidence, particularly in nursing homes, that quality goes
down, again quite substantially.
Senator Warren. I just want to relate this to the earlier
line of questions, where you said people are using higher price
as a signal that they are going to get better care, and yet the
data show us that when private equity takes over, price goes up
and quality of care actually goes down. Is that right, Dr.
Whaley?
Dr. Whaley. That is what the host of studies that have
examined the question have said.
Senator Warren. So not just one study. You see it across
the board in all of the studies that have looked at this.
You know, I saw this firsthand in Massachusetts after
private equity drove Steward Healthcare into bankruptcy, and
that is why I introduced the Corporate Crimes Against
Healthcare Act, which, among other things, would require
private equity-owned health care companies to publicly report
mergers, acquisitions, changes in ownership and control, and
financial data, so at least the information would be out there.
Let me ask, Dr. Whaley, would these data help state and
federal regulators prevent crises like the Steward failure in
the future?
Dr. Whaley. I think having accurate and transparent data on
ownership is incredibly important and can help both state and
federal regulators monitor health care markets and get ahead of
what is happening in many cases.
Senator Warren. Yes. It is shameful that these firms can
hide in the shadows while patients and workers suffer. My
Corporate Crimes Against Healthcare Act would shine a light on
private equity's most parasitic practices. I would also claw
back compensation from private equity executives that drive
portfolio companies into bankruptcy. It would impose criminal
penalties on executives when their failure result in patient
deaths, and it would empower regulators to prevent crises like
Steward from ever happening again.
There is a lot of work we need to do here, Mr. Chairman.
Thank you.
Chairman Casey. Senator Warren, thanks for your questions.
I will turn to Senator Vance.
Senator Vance. Thank you, Mr. Chairman, and thanks to you
and the Ranking Member for your work on this, and thanks to the
four of you for being here with us.
I have to sort of give special credit to both the Ranking
Member and also to President Trump's administration for, I
think, working a lot and getting a lot done on the question of
price transparency, and obviously there is a lot more to do. I
know Senator Braun has a bill that has done a lot on this
space, and hopefully we can get some work on it.
I wanted to direct my questions to you, Ms. Deacon, and ask
a little bit about just the connection between price
transparency and actual price, because it is something that,
you know, as somebody who has never worked in the health care
space, at least not directly, I do not fully understand this
entirely.
The basic argument, as I get it, is that if you provide
more price transparency it gives people more information to
negotiate better prices for certain services and so forth, but
then obviously if you are an individual, self-insured, maybe
small group insurance, it is going not be a little harder for
you to negotiate a price than if you are part of a large group
plan where effectively the insurance company is negotiating the
price for you, so I am just very curious. Walk me through the
interaction here between, especially for smaller consumers,
between price transparency and hopefully lowering health care
prices.
Ms. Deacon. Great. I think for a small business that
provides health insurance for their members, whether self-
funded or fully insured, they have an incentive and a financial
reason to ensure that their members are going to the most cost-
effective hospitals or providers in their area, and so that
does not just mean the cheapest or lowest price but that is
price and quality.
If a small employer, that might not be able to have the
weight of negotiation power with a big hospital or with a
carrier, has this information they might be able to direct
their members to the high-value provider that is in their
community. Perhaps they have to drive an additional five miles
or maybe even 10, but if they are able to send their members to
high-value providers that they have access to they can
dramatically lower their costs, without having to have the
might of hundreds of thousands of lives behind them.
Senator Vance. Got it, and so part of this, effectively, is
employers, especially small employers, effectively using their
claims data effectively, right. What are some of the barriers
to using that claims data? Why don't we already just have the
system? Why can't they do it already?
Ms. Deacon. I mean, I believe that most of the carriers
today do not have an incentive. In fact, they have a
disincentive to provide access to that information to
employers, because they know what employers will see and they
know what employers can do with that.
Senator Vance. When you say carriers, do you mean insurers?
Ms. Deacon. Yes, third-party administrators in the case of
a self-insured employer, or a carrier in a fully insured
product, but absolutely, you know, especially for small
employers, one of the reasons that the Braun-Sanders bill is so
important is because it makes this data available in a
standardized format that we know every carrier and/or TPA has
access to, and it has the capability of providing that
information in specifically standardized formats that they are
using today, so small employers will really benefit from access
to tools and technology that can leverage that standardized
formatting in the claims data to really do a good job managing
their health care costs for their businesses and their
employees.
Senator Vance. Got it. Well, thank you, Ms. Deacon. It
sounds like a good endorsement of the Braun-Sanders bill, and
apologies to the other three for not getting to you. Thank you
all for being here. Thanks.
Chairman Casey. Thank you, Senator Vance. I will turn next
to the Ranking Member.
Senator Braun. Thank you, Mr. Chairman. Ms. Tripoli, I
would like you to talk about another aberration in the hospital
system--site neutrality, in this whole business of when
hospitals buy clinics. Explain to the American public, to the
Committee what that is about.
Ms. Tripoli. Absolutely. Site-of-service payment
differentials really originate in Medicare payment, where
Medicare pays more for services performed in an outpatient
department than it does for the same service and the same
quality if it is performed in a physician's office, and what
this does is it does two things. First, it creates this
incentive to push patients to higher costs of care settings,
which, of course, increases the cost for everybody, and second,
it creates a financial incentive, an economic incentive, for
hospital systems to actually buy up physician practices,
rebrand them as outpatient department, and all that is really
happening is they change the sign on the door to name it a
hospital outpatient clinic.
Senator Braun. That average jack in price is about 40
percent?
Ms. Tripoli. Yes.
Senator Braun. That is why hospitals now comprise about 45
percent of the health care dollar because they have bought up
so many clinics, and as soon as they buy the clinics the prices
go up. That is another ripoff that happens nowhere else. Thank
you for explaining it.
I want to expose this part of what was really essentially
when I fixed it in my own business. The consumer is really
disengaged, and then complains about the bill, holds his or her
breath, three to four months later when you get it, and hope
that the plan was right, and I have never seen a business
either, for the folks that can afford it, and when the
insurance companies told me that it is minor health care, and
the overutilization of it, and the fact that there is no skin
in the game among consumers, that that has driven costs high.
I mentioned earlier, insurance should be for indemnifying
against critical illness or accident. I would like your
opinion, Dr. Whaley and Ms. Deacon, on how do we get what
drives most markets would be unfettered competition, no
barriers to entry, price transparency, but an engaged consumer?
How important is that part of the equation on the people that
can afford it to be shopping around for their primary health
care and to where we take insurance out of it completely?
That is what I did. That was a key element that actually
brought it into line, because my employees became health care
consumers and they exercised their power in doing it. Dr.
Whaley?
Dr. Whaley. I think that aspect is critical. I think one
really good example actually comes from the California Public
Employees Retirement System, or CalPERS, which recognized the
huge variation in price that was not tied to quality and the
exact same site-of-care differentials that we just discussed,
and so what they did is they decided to give consumers skin in
the game and said to patients, "We know that there are low-
priced providers and we are going to fully cover those
providers. If you want to go to a higher-priced, inefficient
provider then you are going to have to pay that difference."
What we have seen in several studies with CalPERS is that
over 90 percent of patients chose the lower-priced provider,
and there is a huge reduction in prices, an improvement in
quality, and substantial savings.
Senator Braun. Ms. Deacon?
Ms. Deacon. Yes. I definitely believe that there is a
greater role that the consumer can play if and when they get
access to good information and actual price. Again, this is one
of the reasons that real prices, as opposed to estimates, are
so important. When you get access to real prices, as opposed to
estimates, you are much more likely to rely on those for your
financial well-being and making decisions, so there is a set of
what we will call shoppable services that you are able to do,
that engage in that consumerism, but then there is the other
sort of set of services, and more have to do with inpatient
stays and sort of unplanned services, and that is really when
the employer or plan sponsor has to step in and take a role in
terms of making better decisions and choices in who are they
letting into their network, what they are paying for that
network rate, and the value that they are getting for their
members and for their business.
Senator Braun. By the way, before my time runs out, back in
2008, the insurance companies told me that if you can create a
market and an engaged consumer you will save so much money. By
then dealing with the slim amount of information--that was 16
years ago--it happened every time. When you had to pick up the
phone, get on the Web, you were experiencing 30 to 70 percent
savings.
They also told me you would save so much money you can
protect your employee with not having to engage in the
coinsurance, which is when you have a significant illness or
accident you blow outside the deductible and that is what takes
you to bankruptcy court. We got rid of that, and also got rid
of copayments, and that has held everything flat since then, so
they became health care consumers. People love it, because
sooner or later you have a critical illness or a bad accident,
and when you never have to pay outside your deductible and you
help save money by shopping within a broken system, imagine if
providers would make that easy what we could do to lower health
care costs.
Thank you.
Chairman Casey. Thank you, Ranking Member Braun. I knew
that Senator Warnock was on his way, and he appeared exactly at
the right time. Senator Warnock.
Senator Warnock. Thank you very much, Chair Casey and
Ranking Member Braun. Great to work with both of you on so many
important things. Chair Casey, I am especially grateful to be
working with you on the Capping Prescription Costs Act, so we
can finish the job of the Inflation Reduction Act when it comes
to lowering drug costs. That means so much for the populations
that we are discussing in this hearing.
Nearly 15 years after the passage of the Affordable Care
Act, 10 states have not extended access to affordable Medicaid
coverage for nearly three million Americans, in my own State of
Georgia more than 600,000 Georgians. Ms. Tripoli, there is a
lot of mischaracterizations about who is left in the coverage
gap. Can you paint a picture for us about those who are left
behind? Who are these people?
Ms. Tripoli. Absolutely. These are people who are very
poor, who do not currently meet the eligibility or category
requirements to qualify for Medicaid in states that have not
expanded, in the 10 states, but they also fall underneath the
Federal poverty level, so they do not qualify for subsidies in
the marketplace either, and these are disproportionately people
of color, disproportionately people with disabilities, and
without access to health care it is very difficult road. They
essentially have to forego or delay care, and we know that that
often exacerbates their health conditions and can be often a
life-or-death situation.
Senator Warnock. Disproportionately people of color.
Ms. Tripoli. That is right.
Senator Warnock. Disproportionately the working poor.
Ms. Tripoli. That is right.
Senator Warnock. Working people, and I underscore that
because we hear a lot of moralizing in this space, in so many
of our government spaces, about people needing to work, but
often our policy literally gets in the way of people who are
quite literally dying to get to work, and I say that, and I am
thinking about Heather Payne, a traveling nurse in Dalton,
Georgia. I have gotten to know Heather. She was my guest at the
State of the Union address. I talked to her this morning. She
is a relatively young woman who has had a series of strokes
that literally changed her life. She was a traveling nurse, and
sometimes she had health care and sometimes she did not, so she
has found herself in a terrible situation, and the tragic irony
that here she is a traveling nurse who has dedicated her whole
career to caring for people, and she has had to put off
essential medical procedures because she simply cannot afford
to pay out-of-pocket costs and cannot afford plans on the
Marketplace because she does not qualify for subsidies.
I literally talked to her about this this morning. I could
both hear and feel her stress around these issues, even as she
is trying to get her life together. She wants to go on and get
another nursing degree and hopefully get her health back I
order, but she cannot see the specialist she needs, so that is
why today I am introducing the Bridge to Medicaid Act, with
Chair Casey's support, which would temporarily extend subsidies
to people in the coverage gap to buy private insurance.
Ms. Tripoli, how does access to affordable health care
benefit people like Heather who are in the coverage gap?
Ms. Tripoli. I mean, simply it is a lifeline. It allows
them to have access to the preventive services--cancer
screening, prescription drug medication, diabetes management--
--
Senator Warnock. They want to get back to work.
Ms. Tripoli. Exactly
Senator Warnock. I am encouraged by recent developments,
and I believe we are closer than ever to closing the coverage
gap in all 50 states, for those who want to make this a red/
blue issue. Most of the states have expanded, blue states and
red states, but as those conversations continue, people like
Heather are caught in the crosshairs, so my legislation would
give vulnerable Americans access to affordable health care
while state politicians, I hope, move closer to making the
right decision for their constituents.
I am a pastor, but those who are not moved by the moral
argument, you know, that would be sad.
Let me underscore the economic argument. A report from the
Georgia Health Initiative, in March 2024, found that closing
the coverage gap would create 51,264 jobs statewide, and boost
economic output by $9.3 billion during the first three years of
full expansion. That is just in the State of Georgia. Not to
mention that we saw $3 billion of uncompensated care that our
hospitals had to carry in Georgia in 2021 alone, while
politicians play this game.
Can you talk about how states have benefited economically
from Medicaid expansion?
Ms. Tripoli. Absolutely. I think that is exactly right, and
I think the other economic benefit for states who have
expanded, particularly states with a lot of rural hospitals, is
that we have seen, in states that have expanded Medicaid, we
have seen a reduction in the amount of rural hospitals that
have had to close their doors, so Medicaid expansion is very
important, obviously important for people to get access to
care, and important for the economy, as well.
Senator Warnock. Thank you so very much, Ms. Tripoli, and
thanks to all of our witnesses. Georgians and Americans in nine
other states cannot afford to wait around for state leaders to
make the right choice, and that is why today I am proud to
introduce, along with Chair Casey, the Bridge to Medicaid,
which temporarily extends subsidies to the millions of
Americans in the coverage gap. This legislation is not a
replacement for full Medicaid expansion, but we are doing it
because people like Heather Payne cannot wait.
Georgia still, by the way, has the option to fully expand,
and $1.2 billion in additional Federal funding will be waiting
for Georgia when it finally does the right thing.
Thank you so very much.
Chairman Casey. Thank you, Senator Warnock, and thank you
for your work on these issues, especially Medicaid, all these
years.
Senator Braun, the Ranking Member, just went to the HELP
hearing, so I want to make sure that we have time to close so I
can get to the same hearing. We are juggling today.
I want to note for the record, as well, that Senator
Blumenthal joined us earlier, and as I said today, it is a busy
Thursday, but we are grateful for those who attended the
hearing. We are certainly grateful for the expertise and
experience brought to this Committee by the witnesses.
As we heard today, rising health care costs are a terribly
significant problem for so many Americans, and this issue has
to be addressed. As hospital prices rise, individuals are
increasingly faced with the unacceptable decision, the awful
decision to delay or forego necessary care or go into medical
debt to receive lifesaving health services. Improving
transparency is one of the many policy proposals that has the
potential to help lower costs for patients.
As we heard today, especially from Ms. Tripoli, a broader
rethinking of economic incentives in the health care sector is
necessary to better meet the goal that we all share to improve
health for both patients and families. Along with transparency
measures we must continue efforts to address all factors
impacting health care costs.
We have heard from our witnesses today about the various
factors driving up hospital costs, and we know that patients
also struggle with costs associated with prescription drugs,
costs associated with doctor visits, and health insurance
premiums.
I look forward to working with my colleagues to address
rising health care costs and ensure that all Americans can
afford quality care.
I will have Ranking Member Braun submit his closing remarks
for the record, and I want to thank again all of our witnesses
for being here, for taking the time to be with us, and to
provide your expertise to the Committee.
If any Senator has additional questions for the witnesses
or statements to be added to the hearing record, the record
will be open for seven days, until next Tuesday, July 18th.
Thank you all for participating today. We are adjourned.
[Whereupon, at 11:20 a.m., the hearing was adjourned.]
CLOSING STATEMENT OF SENATOR
MIKE BRAUN, RANKING MEMBER
Thank you, Chairman Casey. Thank you to our witnesses for
sharing your testimonies and personal experiences.
Today, we heard about the importance of health care price
transparency and how access to this information will lower
costs for Americans. We need policies that empower patients and
provide employers with the information necessary to create the
best health care benefit for their employees. With transparency
throughout the health care supply chain, Americans will be able
to see the cost of health care services before they receive
them. This will increase competition and lower prices as
patients have the ability to shop around for the best price and
highest quality.
I hope today we recognized that there are bipartisan
solutions that thoughtfully address this issue.
I am encouraged by the work being done by all of our
witnesses here today, and I appreciate our Committee's focus on
this issue.
I yield back.
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APPENDIX
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Prepared Witness Statements
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U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Prepared Witness Testimony
Dr. Chris Whaley
Chairman Casey, Ranking Member Braun, and members of the
Committee, thank you for the opportunity to testify today. My
name is Christopher Whaley. I am an associate professor of
Health Policy at the Brown University School of Public Health
and Associate Director of the Center for Advancing Health
Policy through Research (CAHPR). My research focuses on health
care price transparency, the impacts of evolving health care
markets, and studying employer and purchaser innovations that
are enabled by price transparency information.
In the United States, employers and purchasers of health
care play a significant role in shaping the U.S. healthcare
system. Employers provide health insurance for over 160 million
Americans the largest source of health insurance in the United
States.\1\ In most cases, employers select employee plan
offerings and thus determine the types of health plans
available to their employees and their families. Employers also
play a critical role in financing the U.S. healthcare system.
Collectively, employer-sponsored insurance accounts for
approximately $1.4 trillion in health care spending.\2\The
average premium for an employer-sponsored family health
insurance plan is now nearly $24,000. As health care spending
has increased over the last two decades, employers have reduced
wages for workers.\3\ \4\ \5\ \6\
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\1\ Employer Health Benefits Survey. KFF. Published October 18,
2023. Accessed July 8, 2024. https://www.kff.org/health-costs/report/
2023-employer-health-benefits-survey
\2\ Centers for Medicare & Medicaid Services. Historical/CMS.
https://www.cms.gov. Published December 13, 2023. https://www.cms.gov/
data-research/statistics-trends-and-reports/national-health-
expenditure-data/historical
\3\ Arnold D, Whaley CM. Who Pays for Health Care Costs? The
Effects of Health Care Prices on Wages. RAND Corporation; 2020. https:/
/www.rand.org/pubs/working--papers/WRA621-2.html
\4\ Baicker K, Chandra A. The Labor Market Effects of Rising Health
Insurance Premiums. Journal of Labor Economics. 2006;24(3):609-634.
doi:10.1086/505049
\5\ Brot-Goldberg Z, Cooper Z, Craig SV, Klarnet LR, Lurie I,
Miller CL. Who Pays for Rising Health Care Prices? Evidence from
Hospital Mergers. Published online June 2024. doi:10.3386/w32613
\6\ Anand, Priyanka. 2017. Health insurance costs and employee
compensation: Evidencefrom the national compensation survey. Health
Economics, 26(12): 1601 1616.
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Particularly for lower-income households, rising health
care costs for employer-sponsored insurance create financial
burdens when receiving care, which can limit access to care,
because health benefits are financed from wages, employers have
both a legal and moral obligation to be responsible fiduciaries
when they purchase health benefits on behalf of their
employees.
Unfortunately, many employers face challenges purchasing
affordable health care coverage that provides real value for
their workers, as more often than not they are having to make
decisions while blind to prices for services in the
marketplace. Many employers cannot access plan claims data,
limiting their ability to monitor prices negotiated on their
behalf and prudently design plan offerings. Furthermore, even
when employers can access comparative cost information, they
far too often face consolidated provider markets with limited
access to lower-price, high-quality providers. The combination
of a lack of price transparency and health care consolidation
has made fulfilling their fiduciary obligations challenging for
even the most engaged employers and purchasers.
My testimony today will focus on why making price
information transparent is critical for addressing health care
affordability and ensuring efficient health care markets. I
will make three main points:
1. Health care prices in the United States are high and
variable and are driven by provider consolidation and market
power, and those high prices are not linked to increases in
quality.
2. Rather than placing the responsibility of navigating
the US healthcare system on patients, effective price
transparency can be a hub that enables impactful programs and
policies developed by employers and policymakers that improve
access to lower-priced, high-quality providers and ensure
health market competition.
3. There are potential steps Congress and the federal
government could consider to increase both transparency on
prices and ownership structure in health care markets and
enable price transparency to reach its cost-containment
potential.
U.S. Health Care Prices are High and Variable
The United States leads the world in health care spending,
largely due to high prices.\7\ Prices also vary considerably,
both within and across markets. Several studies document
substantial variation in U.S. health care prices. My recent
research shows employer and private insurance prices for
hospital care average 254 percent of Medicare. However, prices
are below 200 percent of Medicare in states like Arkansas,
Iowa, and Michigan, but over 300 percent of Medicare in states
of West Virginia, Florida, and Georgia.\8\ In addition, both
Medicare and commercial insurers pay roughly twice as much for
common services, such as laboratory tests, diagnostic imaging
services, and outpatient surgeries, performed in hospital-based
settings than non-hospital sites of care.\9\
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\7\ Anderson GF, Reinhardt UE, Hussey PS, Petrosyan V. It s The
Prices, Stupid: Why The United States Is So Different From Other
Countries. Health Affairs. 2003;22(3):89-105. doi: doi. https://
www.org/10.1377/hlthaff.22.3.89
\8\ Whaley CM, Kerber R, Wang D, Kofner A, Briscombe B. Prices Paid
to Hospitals by Private Health Plans: Findings from Round 5 of an
Employer-Led Transparency Initiative. RAND Corporation; 2024. Accessed
July 8, 2024. https://www.rand.org/pubs/research--reports/RRA1144-
2.html
\9\ Robinson J, Whaley C, Dhruva S. Prices and Complications in
Hospital-Based and Freestanding Surgery Centers. The American Journal
of Managed Care. 2024;30:179-184. Accessed July 8, 2024. https://
www.ajmc.com/view/prices-and-complications-in-hospital-based-and-
freestanding-surgery-centers
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High and variable health care prices are often not linked
to quality and are driven by provider consolidation and market
power. Over the last two decades, U.S. health care provider
markets have experienced three main types of consolidation. The
first involves horizontal consolidation, primarily driven by
hospital and health system acquisition of other hospitals. U.S.
health care markets have seen over 2,000 hospital mergers.
Hospital mergers lead to meaningful increases in prices,
without improvements in quality.\10\ \11\ The second form of
consolidation involves vertical consolidation, where large
entities, primarily hospitals and health systems, acquire
intermediaries, primarily physician practices. Over the last
decade, the share of U.S. physicians employed by a hospital or
health system has approximately doubled. Currently, over half
of U.S. physicians are employed by a hospital or health system.
Driven by site-of-care payment differentials in both Medicare
and commercial payment rates, this form of consolidation
changes referral patterns for many downstream services, thereby
increasing both Medicare and commercial spending.\12\ \13\ A
more recent form of vertical integration involves insurers
directly acquiring both physician practices and other types of
providers.\14\ Particularly for Medicare Advantage populations,
this form of consolidation raises concerns about access to care
and payment gaming.\15\ Finally, the latest wave of health care
consolidation is driven by private equity, which owns a growing
share of U.S. physician practices. Studies show private equity
acquisition leads to price increases without commensurate gains
in access or quality. Importantly, these models of
consolidation disadvantage the healthcare workforce, with
physicians and nurses receiving lower pay following
consolidation.\16\ \17\
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\10\ Cooper Z, Craig SV, Gaynor M, Van Reenen J. The Price Ain t
Right? Hospital Prices and Health Spending on the Privately Insured. Q
J Econ. Published online 2018. doi:10.1093/qje/qjy020
\11\ Liu JL, Levinson ZM, Zhou A, Zhao X, Nguyen P, Qureshi N.
Environmental Scan on Consolidation Trends and Impacts in Health Care
Markets. RAND Corporation; 2022. Accessed January 19, 2024. https://
www.rand.org/pubs/research--reports/RRA1820-1.html
\12\ Whaley C, Paul DRL, Perkins J. Addressing Site-of-Care Payment
Differentials in the United States Health Care System. Brown University
School of Public Health 2024.Accessed July 8, 2024. https://
www.cahpr.sph.brown.edu/sites/default/files/documents/
Site%20Neutral%20Payment%20Policy%20Brief-2.pdf
\13\ Richards MR, Seward JA, Whaley CM. Treatment consolidation
after vertical integration: Evidence from outpatient procedure markets.
Journal of Health Economics. 2022;81:102569. doi:https://www.doi.org/
10.1016/j.jhealeco.2021.102569
\14\ Zhao X, Richards MR, Damberg CL, Whaley CM. Market Landscape
and Insurer-Provider Integration: The Case of Ambulatory Surgery
Centers. Health affairs scholar. 2024;2(6). doi:https://www.doi.org/
10.1093/haschl/qxae081
\15\ Rooke-Ley H, Shah S, Fuse EC. Medicare Advantage and
Consolidation s New FrontierThe Danger of UnitedHealthcare for All. New
England Journal of Medicine. Published online July 6, 2024. doi:https:/
/www.doi.org/10.1056/nejmp2405438
\16\ Prager E, Schmitt M. Employer Consolidation and Wages:
Evidence from Hospitals. American Economic Review. 2021;111(2):397-427.
doi:https://www.doi.org/10.1257/aer.20190690
\17\ Whaley CM, Arnold DR, Gross N, Jena AB. Physician Compensation
In Physician-Owned And Hospital-Owned Practices. Health Affairs.
2021;40(12):1865-1874. doi:https://www.doi.org/10.1377/
hlthaff.2021.01007
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While high and variable prices directly impact those with
commercial insurance, they also have important implications for
aging Americans. First, many over-65 individuals receive
private insurance, most commonly from current or former
employers, and are thus impacted by high and variable prices.
Second, numerous studies show the health impacts of high
healthcare costs for patients in the form of reductions in
high-value and necessary care. For the under-65 population to
age healthily, it is critical that they have access to
affordable health care. Finally, high and differential prices
drive health care consolidation, which erodes access to and
quality of care for Medicare beneficiaries.\18\ \19\ \20\
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\18\ Beaulieu ND, Dafny LS, Landon BE, Dalton JB, Kuye I,
McWilliams JM. Changes in Quality of Care after Hospital Mergers and
Acquisitions. New England Journal of Medicine. 2020;382(1):51-59.
doi:https://www.doi.org/10.1056/nejmsa1901383
\19\ Levin JS, Komanduri S, Whaley C. Association Between Hospital,
Physician Vertical Integration and Medication Adherence Rates. Health
Services Research. Published online October 22, 2022. doi:https://
www.doi.org/10.1111/1475-6773.14090
\20\ Whaley CM, Zhao X, Richards M, Damberg CL. Higher Medicare
Spending On Imaging And Lab Services After Primary Care Physician Group
Vertical Integration. Health Affairs. 2021;40(5):702-709. doi:https://
www.doi.org/10.1377/hlthaff.2020.01006
What is the role of price transparency in addressing rising
---------------------------------------------------------------------------
health care costs?
Due to the high and variable nature of U.S. health care
prices, improving price transparency has been a potential
policy option for several years. Early price transparency
models relied on patient-driven use through apps and online
tools.\21\ Despite initial promise, these models had little
success.\22\ \23\ Relying on patients to navigate the
complexities of the U.S. healthcare system with even the best
price transparency tools is a challenging task.\24\ However,
the lack of usable price transparency limits the ability of
researchers to understand health care markets, entrepreneurs
from adding competition to healthcare markets, and regulators
from monitoring market conduct and competition. Rather than
placing the responsibility of navigating the US healthcare
system on patients, effective price transparency can be a hub
that enables impactful programs and policies. Several employers
and purchasers have used price transparency to redesign
benefits.
---------------------------------------------------------------------------
\21\ Whaley C, Chafen Schneider J, Pinkard S, et al. Association
Between Availability of Health Service Prices and Payments for These
Services. Journal of the American Medical Association. Published online
October 22, 2014.
\22\ Desai S, Hatfield LA, Hicks AL, Chernew ME, Mehrotra A.
Association Between Availability of a Price Transparency Tool and
Outpatient Spending. JAMA. 2016;315(17):1874-1881. doi:10.1001/
jama.2016.4288
\23\ Desai S, Hatfield LA, Hicks AL, et al. Offering A Price
Transparency Tool Did Not Reduce Overall Spending Among California
Public Employees And Retirees. Health Affairs. 2017;36(8):1401-1407.
doi:10.1377/hlthaff.2016.1636
\24\ Chernew M, Cooper Z, Hallock EL, Scott Morton F. Physician
agency, consumerism, and the consumption of lower-limb MRI scans. J
Health Econ. 2021;76:102427. doi:10.1016/j.jhealeco.2021.102427
Example 1: California Public Employees Retirement Systems
---------------------------------------------------------------------------
(CalPERS)
The California Public Employees Retirement System
(CalPERS), which provides health benefits to approximately 1.4
million individuals, recognized the wide variation in prices
within their network that was not tied to clinical outcomes.
Rather than implementing a punitive high-deductible plan, they
worked in conjunction with their labor representatives to
design a steerage program that uses financial incentives to
encourage the use of lower-priced providers and non-hospital
providers. Across several services, this program reduced
spending by approximately 20 percent and improved care
quality.\25\ \26\ \27\
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\25\ Robinson JC, Brown TT. Increases In Consumer Cost Sharing
Redirect Patient Volumes And Reduce Hospital Prices For Orthopedic
Surgery. Health Affairs. 2013;32(8):1392-1397. doi:https://www.doi.org/
10.1377/hlthaff.2013.0188
\26\ Robinson JC, Brown TT, Whaley C, Finlayson E. Association of
Reference Payment for Colonoscopy With Consumer Choices, Insurer
Spending, and Procedural Complications. JAMA Internal Medicine.
2015;175(11):1783. doi:https://www.doi.org/10.1001/
jamainternmed.2015.4588
\27\ Robinson JC, Brown TT, Whaley C. Reference Pricing Changes The
Choice Architecture Of Health Care For Consumers. Health Affairs.
2017;36(3):524-530. doi:https://www.doi.org/10.1377/hlthaff.2016.1256
Example 2: State of Oregon Hospital Reimbursement Caps and
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All-Payer Claims Database
A similar example comes from the State of Oregon.
Recognizing the wide variation in hospital prices, Oregon
passed legislation that caps the prices of hospital care at 200
percent of the Medicare rates for Oregon's public employees and
educators. My colleagues have demonstrated that this program
led to over $100 million in savings in the first two years of
the program, without impacts on the quality of care or the
provider workforce.\28\ If adopted among other states, we
estimate that this model could reduce public employee spending
by approximately $7 billion, which could be used to increase
public employee pay or returned to taxpayers, and nearly $90
billion if expanded to the broader commercial market. Oregon
also invested in an all-payer claims database, which allows
state authorities to monitor price and spending trends.
---------------------------------------------------------------------------
\28\ Murray RC, Brown ZY, Miller S, Norton EC, Ryan AM. Hospital
Facility PricesDeclined As A Result Of Oregon s Hospital Payment Cap.
Health Affairs. 2024;43(3):424-432. doi:https://www.doi.org/10.1377/
hlthaff.2023.01021
Example 3: 32BJ Health Fund - Private-Sector Adoption of
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Innovations
These innovations are also being adopted by private-sector
organizations. In one notable example, the 32BJ Health Fund,
which provides health benefits to approximately 200,000 service
workers, reviewed its claims data and realized some providers
had exceptionally high prices. After several attempts at
negotiation, 32BJ excluded a single hospital from its network.
This decision saved the Health Fund approximately $100 million
per year, which it returned to its workers in the form of the
largest worker pay increase in its history and a $3,000 bonus
for each member.\29\
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\29\ SEIU 32BJ Healthcare Savings Case Study.
PatientRightsAdvocate.org. Accessed July 8, 2024. https://
www.patientrightsadvocate.org/seiu-32bj-healthcare-savings-case-study
Example 4: Indiana employers using data to push for policy
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changes
Another example comes from employers in the state of
Indiana. Through the Employer s Forum of Indiana, we worked
with Indiana employers to analyze their claims data and found
they were paying some of the highest prices in the country.\30\
In addition to using price transparency data to monitor prices
negotiated on their behalf and to inform both benefit design
and purchasing decisions, Indiana employers pushed for
legislation that limits facility fees and adds additional
transparency to Indiana health care markets.\31\ These efforts
use price transparency data to add oversight into an opaque
market and inform policies that improve market competition.
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\30\ Abelson R. Many Hospitals Charge Double or Even Triple What
Medicare Would Pay. The New York Times. https://www.nytimes.com/2019/
05/09/health/hospitals-prices-medicare.html. Published May 9, 2019.
\31\ Mathews AW. These Employers Took On Healthcare Costs, and the
Fight Got Nasty. WSJ. Published September 28, 2023. https://
www.wsj.com/health/healthcare/these-employers-took-on-healthcare-costs-
and-the-fight-got-nasty-54674114
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These are notable examples and there are many more
entrepreneurs and innovators that are using price transparency
data to develop similar programs that steer patients to lower-
priced providers,\32\ modernize payment methods in ways that
align incentives between patients, providers, and payers,\33\
and add competition to health care markets.
---------------------------------------------------------------------------
\32\ Whaley CM, Vu L, Sood N, Chernew ME, Metcalfe L, Mehrotra A.
Paying Patients To Switch: Impact Of A Rewards Program On Choice Of
Providers, Prices, And Utilization. Health Affairs. 2019;38(3):440-447.
doi:https://www.doi.org/10.1377/hlthaff.2018.05068
\33\ Whaley CM, Dankert C, Richards M, Bravata D. An Employer-
Provider Direct Payment Program Is Associated With Lower Episode Costs.
Health Affairs. 2021;40(3):445-452. doi:https://www.doi.org/10.1377/
hlthaff.2020.01488
---------------------------------------------------------------------------
While these policies and programs are designed to fit the
needs of each group's market and population, a common theme is
that each group relied on price and network data, most commonly
from medical claims data, to innovate. These organizations also
take seriously their responsibilities as health care purchasing
fiduciaries. These types of models are critical to ensure
affordable access to high-quality providers across the aging
lifecycle.
What more can be done to enable price transparency to reach
its cost containment potential?
In recognition of the importance of price transparency,
recent federal policies have sought to expand access to price
transparency information. On January 1, 2021, requirements for
hospitals to negotiate their prices for all items and services
went into effect.\34\ Following that, on July 1, 2022, a
federal rule went into effect that requires health plans to
disclose the negotiated prices they pay physicians and
facilities for each item they provide, known as Transparency-
in-Coverage (TiC) data.\35\ Both of these policies greatly
expand health care price transparency.
---------------------------------------------------------------------------
\34\ Department of Health and Human Services. 45 CFR Part 180.
Published November 27, 2019. https://www.ecfr.gov/current/title-45/
subtitle-A/subchapter-E/part-180#180.40
\35\ FAQS about Affordable Care Act and Consolidated Appropriations
Act, 2021 Implementation Part 49.; 2021. https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-49.pdf
---------------------------------------------------------------------------
While there have been some concerns with the implementation
of the rules, there have been significant positives to each.
The insurer-posted (TiC) data provides the most comprehensive
view of U.S. health care prices currently available. There were
initial concerns about the TiC data usability, but researchers,
including myself, have been able to use data to measure price
variation. Entrepreneurs are also using these data to improve
benefit design innovations.
While these data are important, they, like most things, can
also be improved. There are several steps Congress and the
federal government could consider to increase price
transparency in health care markets and enable price
transparency to reach its full cost-containment potential.
Increase compliance enforcement and standardization of
hospital-posted price transparency data
The hospital-posted price transparency data represent an
initial step into expanding access to price transparency.
However, compliance with requirements to post negotiated rates
for 300 shoppable services could have been better, largely due
to more enforcement. While recent enforcement has increased,
compliance still needs to improve, with estimates suggesting
that only 16 to 35 percent of hospitals are fully
compliant.\36\ \37\ Other studies find strategic non-compliance
is related to a hospital s market environment.\38\ Even among
complying hospitals, data formats, reported services, and price
measurements vary widely. To ensure that these data are useful
for informing policy decisions, it is important for CMS to
enforce compliance and standardize data submission.
---------------------------------------------------------------------------
\36\ MRF Tracker. Turquoise Health.Accessed July 8, 2024. https://
www.turquoise.health/mrf--tracker
\37\ Patient Rights Advocate. Sixth Semi-Annual Hospital Price
Transparency Report February 2024. Patient Rights Advocate; 2024.
https://www.patientrightsadvocate.org/semi-annual-report-feb2024
\38\ Mittler JN, Abraham JM, Robbins J, Song PH. To be or not to be
compliant? Hospitals initial strategic responses to the federal price
transparency rule. Health Services Research. Published online November
6, 2023. doi:https://www.doi.org/10.1111/1475-6773.14252
Reduce the duplicative prices and prices for providers that
do not perform listed services from the TiC data and centralize
---------------------------------------------------------------------------
data posting
The TiC data include many duplicative prices and prices for
providers that do not perform listed services. These features
greatly inflate the size of the TiC data, reducing its
applicability and accuracy. Second, the TiC data are completely
updated on a monthly basis, which further adds barriers to data
use. To further improve this innovative resource, CMS could
require insurers to only post prices for providers with
submitted claims for a given procedure. CMS could also limit
monthly updates to new or changed prices, rather than a
complete data refresh.
Additionally, the TiC data are currently hosted
individually by plans and insurers. CMS could centralize TiC
data by acting as a central hub for hosting these data. The
data are also currently posted in non-standard data formats,
which contributes to inflated data size. CMS could use common
modern database technologies to allow a broad set of users to
access the data and substantially reduce data size and
complexity without losing any valuable data.
Require a centralized national database to enhance
transparency of provider ownership and control
While existing transparency efforts primarily focus on
prices, provider ownership and affiliation arrangements are
often complex and opaque. Existing data resources do not
adequately track ownership structure, limiting appropriate
measurement of consolidation activities and policies to guard
against adverse impacts of consolidation.\39\ Researchers, and
importantly, policymakers, lack comprehensive data on who owns
or controls health care entities and physician practices. Many
provider organizations are organized through complex corporate
structures that obscure the identity of the owner or control
entity and prevent accountability.\40\ Patients often have
little information on their physician s actual employer. As a
result, estimates of both the extent and impacts of
consolidation are limited and incomplete. Ownership
transparency could be improved by requiring provider
organizations to report not just direct ownership but also
management, joint venture, and related arrangements. Developing
a centralized national database to enhance the transparency of
provider ownership and control will allow for a more complete
understanding of the true extent and effects of consolidation
in US health care markets, including changes in prices,
utilization, and quality of care.
---------------------------------------------------------------------------
\39\ The Perils Of PECOS: Using Medicare Administrative Data To
Answer Important Policy Questions About Health Care Markets. Forefront
Group. Published online January 7, 2021. doi:https://www.doi.org/
10.1377/forefront.20201222.615286
\40\ Hearing on Strengthening U.S. Economic Leadership: The Role of
Competition in Enhancing Economic Resiliency. Published online 2024.
https://www.judiciary.senate.gov/committee-activity/hearings/
strengthening-us-economic-leadership-the-role-of-competition-in-
enhancing-economic-resiliency
Ensure that self-funded purchasers have access to data on
---------------------------------------------------------------------------
price, utilization, and quality
While these efforts have been primarily focused on
expanding access to publicly-available price transparency data,
many employers and self-funded purchasers rely on medical
claims data to measure prices, track quality, and ensure access
to efficient providers. Yet, many employers and purchasers face
barriers in accessing their medical and pharmacy claims data.
The 2021 Consolidated Appropriations Act (CAA) removes many
restrictive and anti-competitive clauses from plan contracts,
but does not ensure that self-funded purchasers have access to
their claims data.\41\ As a result, many employers have had to
sue to get access to their own data.\42\ It is important that
purchasers have access to data on price, utilization, and
quality that these data provide. Proposed bipartisan
legislation codifies access to these data, which are necessary
for self-funded plans to be responsible fiduciaries and monitor
prices negotiated on their behalf.\43\
---------------------------------------------------------------------------
\41\ Consolidated Appropriations Act, 2021 (CAA)/CMS. https://
www.cms.gov. https://www.cms.gov/marketplace/about/oversight/other-
insurance-protections/consolidated-appropriations-act-2021-caa
\42\ Kraft Heinz Co. Employee Benefits Administration Board, et
al., v. Aetna Life Insurance Company, 2:23-cv-00317, District Court,
E.D. Texas, June 30, 2023, https://www.versanconsulting.com/post/kraft-
heinz-co-employee-benefits-administration-board-et-al-v-aetna-life-
insurance-company; Massachusetts Laborers Health & Welfare Fund v. Blue
Cross Blue Shield of Massachusetts, 66 F.4th 307 (1st Cir. 2023), April
25,2023, https://www.casetext.com/case/mass-laborers-health-welfare-
fund-v-blue-cross-blue-shield-of-mass-1; Owens & Minor, Inc. and Owens
& Minor Flexible Benefits Plan v. Anthem Health Plans of Virginia,
Inc., 3:23-cv-00115, February 13, 2023, https://
www.millerchevalier.com/sites/default/files/resources/General--Alerts/
2023-02-13--Owens-v-Anthem--Complaint.pdf; Bricklayers, Craftworkers,
Sheet Metal Workers Unions v. Elevance, 3:22-cv01541-VLB, December 5,
2022, https://www.documentcloud.org/documents/23378734-bricklayers-
craftworkers-sheet-metal-workers-unions-v-elevance.
\43\ 118th Congress S.3548 - Health Care Prices Revealed and
Information to Consumers Explained Transparency Act. https://
www.congress.gov/bill/118th-congress/senate-bill/3548/all-info
---------------------------------------------------------------------------
Conclusion
Health care prices in the United States are high, variable,
and opaque. High prices are both a cause and a consequence of
health care consolidation, which has left many communities with
a single provider system and worsened access to high-quality
care. Arguably, the most significant bipartisan federal
agreement in recent years has centered on enhancing
transparency in healthcare pricing. In combination with
expanded insight into provider ownership and management,
broadened transparency can help employers and health care
purchasers fulfill their fiduciary obligations to provide
access to high-quality and affordable care. It also aids
regulators and policymakers in overseeing healthcare market
competitiveness and ensuring patient access to high-quality,
cost-effective care. While not a cure-all for the U.S.
healthcare system, given the widespread impact on all
individuals navigating the healthcare system, these initiatives
enjoy substantial public backing. To accomplish these goals,
Congress can improve the existing Transparency-in-Coverage
policies that provide substantial insight into US health care
prices, ensure transparent reporting of provider ownership and
management, and codify self-funded employer and purchaser
access to their claims data.
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Prepared Witness Testimony
Chris Deacon
Chairman, Ranking Member, and distinguished members of the
Committee,
Thank you for the opportunity to testify today on the
critical issue of transparency in healthcare. Imagine, if you
will, you are the CFO of a company where you give the company
credit card to your vendors and suppliers. Instead of receiving
an itemized statement at the end of the month, you are handed a
sheet of paper with one number-no receipts, no details, just
the total amount owed. No employer would ever allow such a
practice. Yet, this is exactly what happens in our healthcare
system today. Employers hand over the company credit card to
Blue Cross Blue Shield, Aetna, United, Cigna, Optum and CVS,
allowing them to pledge company dollars to a healthcare system
that can charge whatever they want, however they want, simply
because they can.
Where are the checks and balances in healthcare? Balance
necessarily requires equal access to information, and that is
why we are here today.
Transparency. Or rather, the lack of transparency facing
employers and unions that are responsible for purchasing
healthcare for over 160 million Americans.
You likely know the statistics and the alarming rate at
which healthcare costs are growing, but I know the people
behind these statistics. As former administrator for the State
of New Jersey employee health plan I know first-hand how the
lack of transparency impacts our teachers, firemen, police
officers, and public sector workers. Sadly, this year in New
Jersey over 200 school positions will be eliminated due to
budget constraints, driven in large part by the cost of health
benefits.\1\
---------------------------------------------------------------------------
\1\ https://www.nj.com/education/2024/07/nj-schools-are-cutting-
hundreds-of-jobs-this-summer-heres-why.html
---------------------------------------------------------------------------
ERISA, which governs most employer sponsored health plans
in the country, is intended to protect plan participants and
beneficiaries by mandating that plan sponsors act as
fiduciaries. When employers lack access to their own data and
transparent information about the cost and quality of care,
they are unable to fulfill ERISA's promise.
Let me share three examples to illustrate the magnitude of
this issue:
At Mayo Clinic in Jacksonville, if you were to use
your Federal Employee Health Benefit BCBS card for an
arthrocentesis procedure it would cost you and the federal
government $2,516.\2\ If you were to pay cash for the same
procedure, you would pay just $392.60. That is six times more
than the cash rate. At University of Pennsylvania Hospital, the
cash price for an ACL repair is $9,523.36,\3\ but if you are a
service member covered by TRICARE, your price is $37,489.74,
that is 294% more than the cash rate.
---------------------------------------------------------------------------
\2\ https://https://www.turquoise.health/health--systems/mayo-
clinic/services/?q=Arthrocentesis+%28drainage%29+of+joint&service--
name=arthrocentesis-drainage-of-joint
\3\ https://https://www.turquoise.health/health--systems/
university-of-pennsylvania-health-system/service--category/
musculoskeletal/
---------------------------------------------------------------------------
Or consider when a third-party administrator, or
TPA, pays twice for a claim in error, or pays for an improperly
upcoded claim, because TPAs act as middlemen, similar to a PBM,
and uses the employer's funds to pay claims, they bear none of
the risk. And when a TPA pays the inflated or improper bill
with the employer or unions' funds, there is no obligation for
the TPA to recover those payments. If, and I emphasize IF, the
employer is lucky enough to benefit from an attempted recovery,
it will be less the TPA's savings fee, ranging anywhere from
25-50%. This is the ultimate fox guarding the hen house.
But TPA's are not always "overpaying;" in fact,
quite often they are paying providers one sum, and then
charging the employer many times more for the same claim. In
several recently unsealed court documents it was revealed that
an employer sponsored health plan paid $4,078,652.42 on a
claim, but the provider only received $875,809.76.\4\ What
accounted for the difference? Cigna took $2,524,898.98 in fees,
and their subcontractor Multiplan took $677,943.68. The fees
were 2.9 times the provider's payment.
---------------------------------------------------------------------------
\4\ htttps://https://www.dockets.justia.com/docket/california/
cacdce/8:2020cv00269/772742 See attached TML Recovery Services, Ltd.
unsealed exhibit
---------------------------------------------------------------------------
These examples are the tip of the iceberg in terms of the
waste, abuse and inefficiencies in the current market, driven
in large part by lack of transparency and meaningful access to
data. Though we may increasingly be able to pull up the
hospital prices, and carrier negotiated rates, unless and until
employers are able to have access to run their own numbers,
identifying this type of conduct will remain elusive to
employers and unions.
If we expect employers and unions to exert any type of
market forces to reign in healthcare costs, we must empower
them with actional data and transparent pricing. The company
credit card has been abused for too long by the PBMs, TPAs and
other industry players. It should not be unreasonable to demand
for receipts of payment, itemized statements, and the ability
to protect their members. This is what S3548 uniquely
accomplishes, in a superior manner, in my opinion to the Lower
Cost More Transparency Act. Federal lawmakers must rebalance
the information asymmetry to empower employer purchasers and
unions to push back against egregious pricing, unfair billing
practices, gross overreach, and profiteering. This will help
protect the American workers' paychecks and ensure a fairer,
more accountable healthcare system.
Thank you.
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Prepared Witness Testimony
Cora Opsahl
Good morning. Thank you Chairman Casey, Ranking Member
Braun, and the rest of the Committee on Aging for inviting me
to speak this morning.
My name is Cora Opsahl, and I am the Director of the 32BJ
Health Fund. The 32BJ Health Fund is a self-insured, Taft-
Hartley benefit fund that provides health benefits to over
200,000 union members and their families. Our members are
essential workers who work in the real estate industry,
security officers, school workers, and airport workers. We are
based primarily in the New York/New Jersey area, but we have
families up and down the East Coast including Pennsylvania and
Massachusetts. The Fund is jointly governed by a board of
trustees appointed by the Union and the Employers, and we
provide high-quality health benefits with no premium sharing,
$0 in-network deductibles, and low in-network copays. We
believe the fund has an important role in tackling the problem
of healthcare affordability, and we have spent over a decade
doing just that by leveraging our data, challenging the status
quo, and finding innovative ways to manage our benefit.
Having access to our claims data is foundational to our
work. For almost 20 years, we have been fortunate to have
access to our medical, pharmacy, and ancillary claims data. We
use this data to understand our healthcare spend, make benefit
decisions, and ensure we are a good steward of the Fund's
resources, because of our data, we know the following:
In 2023, we spent $1.4 billion in healthcare.
Of the $1.4B we spend in healthcare, 55% is spent on
inpatient and outpatient care
In 2021, we paid 271% over Medicare prices for the same
care, which is up from 219% of Medicare in 2016
In the past 10 years, healthcare has risen from 17% of
total compensation to 37% of total compensation; wages have
gone up 54% but healthcare costs have increased 230%; and to
put that into a dollar amount, our members could have had
$5,000 more in annual wages had healthcare spend risen at the
same rate of inflation
While having your data and being able to see how your
benefit is being spent is important, as a plan we know this is
only the first step. The next step is taking action on this
data.
In 2018, after spending over 10 years looking at our claims
data, it became abundantly clear to us that we needed to
address the prices we were paying. The data showed we were
paying wildly different prices for the same procedures,
depending on what hospitals our members went to. For example,
we were paying approximately $10,000 for a colonoscopy at NY
Presbyterian system versus approximately $4,000 at Mount Sinai
Hospital system. The same pattern was true at other high-priced
hospitals. Based on our data, we tiered our network on price
beginning in 2019. Members could still access the higher priced
hospitals, but they would have to pay higher copays to do so.
While we had won the right to tier our plan in 2019, in
2021, NY Presbyterian and our carrier, Anthem, were up for
their network renewal. During that renewal, NY Presbyterian
told Anthem they would have to be preferred in all networks,
leveraging a clause in their contract. Eventually, NY
Presbyterian granted the Fund permission to remove them from
our network only in 2022. This change has saved the plan
approximately $30M every year by members receiving care from
lower priced facilities and providers. Additionally, in the
most recent contract negotiations, the union and employers
leveraged the savings in our benefits to give union members a
one-time bonus, the largest wage increase in contract history,
a pension increase, and limit employer premium contribution
increases to no more than 3% every year through 2027.
While these benefit changes showcased our ability to
leverage our data, both changes also illuminated the contract
terms between providers and carriers that obstruct, hinder, and
limit the ability for us or any employers to take action on
their data.
Recently, the Health Fund led a procurement for a medical
and hospital benefit third party administer, or carrier. We
were adversely affected by anti-competitive contract provisions
between providers and carriers. The provider contracts included
items such as requirements to be in network, anti-steering and
anti-tiering provisions, limitations in how claims are allowed
to be paid, and even limitation in access to claims data. For
us, the network inclusion and other contracting demands of
hospitals limited participation of TPA bidders in our
procurement process. Every TPA bidder, except one, was unable
to meet our network requirements, including that NY
Presbyterian remain out of network. Other network provider
contract provisions routinely demanded by hospitals include
restrictions on retroactive claim reviews, exclusion of lesser-
of provisions, and limitations on overpayment recoupment. None
of those contract provisions are beneficial for employer
sponsored plans or their membership. This is just one example
of how difficult it is for employers and self-funded plans,
even of our size, to have a highly competitive bid process.
While our bidding process faced limitations by the anti-
competitive contracting provisions in provider and carrier
contracts, we would not be where we are without access to our
data, allowing the Union and Employers to give raises and limit
premium increases ensuing our members can continue to have
access to high quality and affordable care. Employers having
access to their claims data and the terms in which their
benefits are being managed are essential for them to be able to
do the same thing. That s why we need the Braun Sanders bill,
and section seven in particular.
Thank you for having me.
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Prepared Witness Testimony
Sophia Tripoli
Chairman Casey, Ranking Member Braun, members of the
Committee, thank you for the opportunity to testify at this
critical hearing focused on health care affordability and the
harmful impact of medical monopolies that flourish under our
health care system's lack of transparency and healthy
competition. It is an honor to be with you today.
My name is Sophia Tripoli, and I am the Senior Director of
Health Policy at Families USA. For more than 40 years, Families
USA has been a leading national, non-partisan voice for health
care consumers working to achieve our vision of a nation where
the best health and health care are equally accessible and
affordable to all. In October 2022, we launched the Center for
Affordable Whole Person Care to affirm and enhance our
commitment to revolutionize America's health care system to
hold the health care industry accountable for delivering
affordable, equitable, high-quality and person-centered health
care.
We greatly appreciate the work of this Committee to examine
and advance bipartisan solutions to lower costs and improve
health system transparency for aging Americans and families
across the country. This work is urgently needed: Our health
care system is in crisis, evidenced by a severe lack of
affordability and poor quality. It is going to take
all of us working together, across political party and health
policy philosophy, from rural and urban communities alike, to
fix it.
You have the support of the American public as you work to
address these issues. Ninety-three percent of Americans agree
that our country is paying too much for the quality of health
care we receive, and more than half of adults in that same poll
said that their most recent health care experience was not
worth the cost.2 The majority of Americans now rate
the quality of health care as subpar, including 31% saying it
is `only fair' and 21% calling it `poor.'3 Recent
polling shows that almost 90% of voters say it is important for
this Congress to take action to reduce high health care prices,
particularly hospital prices, including 95% of Biden voters and
85% of Trump voters.4
The U.S. Health System in Crisis: Harming Families, Workers,
Employers, and Taxpayers
The United States is in the midst of a health care
affordability and quality crisis. High and rising health care
prices, particularly for hospital stays and prescription drugs,
are a direct threat to the health and wellbeing of every
American, negatively impacting our access to health care, our
ability to earn a living wage, and the health of our national
and local economies. At its core, this crisis is driven by a
fundamental misalignment between the business interests of the
health care sector and the health and financial security of our
nation's families - a business model that allows industry to
set prices that have little to do with the quality of the care
they offer.
Broken incentives within our current system reward building
local monopolies and price gouging instead of rewarding success
in promoting the health, wellbeing and financial security of
families and communities.5 This is particularly
acute when looking at the shifting role of hospitals in our
economy over the last 60 years.6 What were once
local charitable institutions built to serve the community have
now become large corporate entities focused on maximizing
revenue rather than improving health.7 Americans in
far too many communities have watched as their local hospitals
became health systems, and those health systems were bought by
large health care corporations. What many in the public and
policymaking community are beginning to realize is how much
this has destroyed any real competition in our health care
sector, allowing hospitals to dramatically increase their
prices every year with little to no transparency into the true
costs associated with delivering care.8 And health
care consumers have been left holding the bag.
Impact on Families and Workers
More than 100 million Americans face medical debt; a
quarter of all Americans forgo needed medical care due to the
cost; and a third of Americans indicate that the cost of
medical services interferes with their ability to secure basic
needs like buying groceries and paying rent.9 In
addition, more than a quarter of older Americans, who spend
more on health care than any other age group, report being very
concerned they will be unable to pay for lifesaving health care
in the future.10
Not only do consumers and patients experience high health
care prices in the form of expensive medical bills, but high
health care costs also affect the economic vitality of middle-
class and working families by crippling the ability of working
people to earn a living wage. Rising prices are a major
contributor to skyrocketing health insurance costs, which come
directly out of workers' paychecks as annual increases in
premiums and cost sharing.11 This results in
stagnating wages, rising income inequality, and ultimately
leaves workers with less in take home pay over time, making it
more difficult for them to afford housing, pay their regular
expenses, send their children to school, and
retire.12
Today's real wages - wages after accounting for inflation -
are roughly the same as four decades ago, yet employer health
insurance premiums have risen dramatically.13 The
total cost of a family employer-sponsored insurance (ESI) plan
increased an astounding 272% in the past two decades, rising
from $6,438 annually in 2000 to $23,968 in 2023.14
As a result, a U.S. family of four with a median income of
roughly $95,000 annually is estimated to have lost more than
$125,000 in wages over roughly the same time
period.15 A recent analysis by Families USA found
that if policymakers do not take action to rein in high and
rising hospital prices and the harmful business practices of
large heath care corporations, low- and middle-income workers -
a group that disproportionately includes people of color -
could lose another $20,000 in wages by 2030.16 At
the same time, nearly 90% of large employers say that rising
health care costs will threaten their ability to provide health
care benefits to employees over the next five to 10 years if
costs are not lowered.17 The rising costs of health
care have already contributed to record numbers of businesses
no longer providing critical worker benefits, including retiree
health benefits, disproportionately harming older adults who
rely on these benefits during retirement. As a result, older
Americans are increasingly exposed to high and rising health
care costs. In fact, out-of-pocket health care spending for
older Americans grew a staggering 41% between 2009 and
2019.18
To make matters worse, workers are increasingly subjected
to health insurance plans with larger cost-sharing
requirements, including higher-deductible health plans, in an
effort to contain rising health care spending and costs.
Deductible-related costs for workers have grown significantly,
with the average annual deductible for an individual employee's
coverage nearly doubling in just a decade, from $1,025 in 2010
to $2,004 in 2021.19 Importantly, the 153 million
Americans who rely on ESI for health insurance cannot always
access the care they need, with more than a quarter putting off
or postponing needed medical care due to the high
cost.20
Impact on Taxpayers and Our Economy
High and rising health care costs not only threaten the
health and financial security of American individuals and
families but are also a critical problem for the federal
government, state governments, and taxpayers. National health
expenditures (NHE), which includes both public and private
spending on health care, have grown from $27.1 billion in 1960
to nearly $4.5 trillion in 2022.21 Relative to the
size of the economy, NHE grew from 5% of gross domestic product
(GDP) in 1960 to 17.4% in 2022.22 The largest
proportion of this spending is on hospital care, which accounts
for a 30 percent share at a whopping $1.4 trillion
annually.23
The situation is expected to get much worse, with NHE
projected to climb to $7.2 trillion by 2031, and high and
rising health care costs projected to continue to grow faster
than the economy, hitting nearly 20% of GDP by
2031.24 That means a fifth of our economy will be
spent on health care. This far outpaces what similarly situated
countries spend on health care: On a per capita basis, the U.S.
spent $12,555 in 2022 - over $4,000 more per person than any
other peer nation.25
Notably, the excessive cost of health care does not
generally buy Americans higher-quality care or even higher
volumes of care. In fact, the opposite is true. Despite
spending two to three times more on health care than other peer
countries, the United States has some of the worst health
outcomes, including some of the lowest life expectancy and
highest infant mortality rates.26 These health
outcomes are even worse for people of color who experience
higher rates of illness and death across a range of health
conditions compared with their white counterparts.27
And the vast majority of our nation's seniors have at least one
chronic health condition, with many dealing with multiple
health issues.28
Lack of Transparency Provides Cover to Medical Monopolies and
their Unjustifiably High Prices
Importantly, America's health care affordability crisis
stems from high, rising, and variable prices across a wide
range of health care goods and services, particularly for
hospital care and prescription drugs. For example, the price of
Humira - a drug used to treat arthritis - is more than four
times as expensive in our country as in the United Kingdom and
almost twice as expensive as in Germany.29 The
average price of a hospital-based MRI in the United States is
$1,475,30 while that same scan costs $503 in
Switzerland and $215 in Australia.31
What's more, health care is one of the only markets in the
U.S. economy in which consumers are blinded to the price of a
service until they receive a bill after the services are
delivered.32 Consumers and employers, who are the
ultimate purchasers of health care, have limited insight into
what the prices of health care goods and services are. For the
majority of Americans (66%) who receive health care through
private insurance, health care prices are established in
closed-door negotiations between large hospital corporations
and health plans based on who has more market
power.33 These health care prices, often referred to
as the negotiated rate, are buried in proprietary contracts
without insight into or oversight over the price of health care
services by the public and policymakers.34
These exorbitant, opaque, and unjustifiable prices are
largely due to trends in health care industry consolidation
across the U.S. that have eliminated healthy competition and
allowed monopolistic pricing to flourish.35 This
consolidation has taken place without meaningful regulatory
oversight or intervention, and is becoming more
acute.36
The end result is a system with few truly competitive
health care markets left: 95% of metropolitan statistical areas
(MSAs) having highly concentrated hospital markets, nearly 80%
of MSAs having highly concentrated specialist physician
markets, and 58% of MSAs having highly concentrated insurer
markets.37 Consolidation has been particularly
pronounced among hospitals, drug companies, and pharmacy
benefit managers and is made worse by the increasingly harmful
role of private equity firms in the U.S health care system:
Hospitals, health systems and other providers have
rapidly consolidated, via horizontal and vertical integration,
into large health care corporations, amassing outsized market
power in order to increase prices for hospital care year after
year. In fact, over 1,500 hospital mergers have occurred
between 1998 and 2017, with an estimated 40% of those mergers
taking place from 2010 to 2015.38 Moreover, between
2013 and 2021, the percentage of physician practices that were
hospital-owned rose from 15% to 53%, and the percentage of
physicians employed by a hospital rose from 27% to
52%.39
Drug manufacturers have increasingly engaged in anti-
competitive behavior and transactions to similarly amass
significant market power, regularly buying up or paying off
their competition in order to game the U.S. patent system and
price gouge our nation's families for prescription medications.
The vast majority (70%) of drug industry profits now go to only
a small number (25) of the top prescription drug companies in
the country.40
Pharmacy benefit managers, as third-party administrators
designed to serve as middlemen between health insurers and drug
makers, have increasingly merged with insurers and pharmacies
to increase their own market power to negotiate pricing
structures that serve their financial interests, often to the
detriment of securing more affordable prescription medicines
for consumers. This has led to the top three PBMs controlling
80% of the PBM market.41
Health insurers are increasingly consolidated. Between
2006 and 2014, the four-firm concentration ratio - the extent
of market control held by the four largest firms, Aetna, Anthem
Blue Cross Blue Shield, UnitedHealthcare and Cigna - for the
sale of private insurance increased from 74% to
83%.42 This results in monopolistic health care
prices that lead to unaffordable health care and poorer
quality.43 There is also growing vertical
integration between insurers and health care providers;
UnitedHealthcare for instance now employs almost 50,000
physicians as of 2021, and their reported share of medical
expenses that flow to employed providers or other related
businesses increased nearly 250% between 2016 and
2019.44
Widespread consolidation across the health care system has
been compounded by the growing role of private equity (PE)
firms over the last decade. Once largely uninvolved in the U.S.
health care system, PE firms are increasingly purchasing and
reselling a variety of health care provider organizations in
order to make short term profit, largely to the detriment of
the financial wellbeing of those providers and ultimately to
health care access and affordability in a community. In 2020,
health care became the second largest sector for private equity
investment, accounting for 18 percent of all reported deals, up
from 12 percent in 2010.45 Private equity investors
spent more than $750 billion on health care acquisitions
between 2010 and 2019.46
The business model of private equity firms is fundamentally
misaligned with ensuring that our nation's families have the
high-quality, affordable, and equitable health care they need
and deserve. PE firms often apply a very short-term profit
driven business model (a three-to-seven- year period) to their
investment strategy, characterized by buying a health care
entity that is struggling financially or offers short-term
growth potential, investing in it, saddling it with debt, and
then selling their stake to generate profit.47
Further, recent studies show that PE ownership was
associated with a number of harmful health care impacts,
including but not limited to:
Decreases in health care quality and patient safety: PE
owned hospitals experience a 25% increase in hospital-acquired
conditions, including a 27% increase in patient falls and an
almost 38% increase in infections.48 Researchers say
that these outcomes may be partially due to "decreased
staffing, changes in operator technique, poorer clinician
experience," among other potential causes;49
Increases in health care prices and charge-to-cost
ratios: PE owned hospitals charge $400 more per inpatient day
on average compared to non-PE owned hospitals;50 and
Increased out-of-network costs due to PE firms buying up
specialty physician staffing firms.51
Without question, widespread and largely unchecked health
industry consolidation has led to the deterioration of healthy
competition across and within U.S. health care markets and has
had a significantly negative impact on the affordability and
quality of American health care.52 Importantly, most
health care consolidation has not resulted in reduced costs
through economies of scale, improved care coordination or
quality oversight as industry proponents have
argued.53 In fact, the evidence overwhelming
confirms that consolidation has produced exploitative markets
that drive high prices and costs without improving the quality
of care.54
In many cases, consolidation is actually associated with
reductions in health care quality.55 For instance,
one study found that mortality risk among heart attack patients
is significantly higher in more concentrated hospital
markets.56 On top of that, consolidation often leads
to reduced geographic access to needed providers, which can
contribute to longer travel times and serious health
consequences, particularly for rural communities.57
For example, rural hospitals that merge with larger hospital
systems are more likely to eliminate key service lines in
primary care, maternal and neonatal health, surgery, mental
health, and substance use disorder services post-merger,
significantly reducing access to critical health care services
and threatening the health and wellbeing of rural
communities.58 Moreover, increasing the distance to
the nearest site of health care can result in people living in
all types of communities not getting the care they need due to
a lack of transportation or the time needed to get there,
disproportionally affecting older Americans, racially and
ethnically marginalized groups, those with low incomes, and
people with disabilities.59
A Closer Look at Hospital Consolidation
Nowhere is the negative impact of consolidation more
evident than the rising cost of hospital stays and services,
which have increased dramatically in the last decade and make
up a large portion of increasing health care costs
overall.60 These cost increases have occurred
despite lower hospital utilization and are largely due to
escalating prices, which are the result of hospitals buying
other hospitals and community doctors to eliminate competition
and form big health care corporations and medical
monopolies.61
Between 1990 and 2023, hospital prices increased 600%, and
just since 2015, hospital prices have increased as much as 31%
nationally, now accounting for nearly one-third of U.S. health
care spending, and growing more than four times faster than
workers' paychecks.62 Importantly, hospital prices
are not only high, but have become essentially irrational:
In 2020, across all hospital inpatient and outpatient
services, employers and private insurers paid on average 224%
of what Medicare pays for the same services.63:
Prices at hospitals in concentrated markets are 12%
higher than those in markets with four or more rivals without
any demonstrated improvement in quality or access to
care.64
Prices for the exact same service vary widely, sometimes
even within a single hospital system:
A colonoscopy at a single medical center in
Mississippi can range from $782 to $2,144 depending on
insurance.65
At one health system in Wisconsin, an MRI costs
between $1,093 and $4,029 depending on level of
insurance.66
Across the country, the average price for a knee
replacement ranges from $21,976 in Tucson, Arizona to $60,000
in Sacramento, California.67
The price of an MRI at Mass General Hospital in
Boston Massachusetts ranged from $830 to $4,200, depending on
the insurance carrier.68
Importantly, America's health care workers are also
suffering ill-effects of being trapped in this greed-driven
system. Following hospital mergers, wages for nurses and
skilled workers stagnate: Wage growth was found to be 1.7%
below the average national wage growth for these workers
following horizontal mergers.69 Research on high-
impact mergers shows that over the four years post-merger,
wages might be 6.8% lower for nurses and pharmacy workers and
4% lower for other skilled workers, in comparison to what wages
could have been without the merger.70 This is
compounded in rural areas: Research from 2015 showed that after
a merger some rural hospitals decreased their spending on
employee salaries by more than $1000 per full-time equivalent
employee.71 Hospital consolidation has also been
shown to have negative impacts on staffing ratios. Following an
acquisition in North Carolina by HCA Healthcare in 2019, nurses
in that system experienced nurse-to-patient ratio changes and
staffing cuts, in addition to closures of primary care offices
and cutbacks of other services.72 This left nurses
and other health care workers caring for more patients with
less time and fewer resources, which the Federal Trade
Commission (FTC) cautioned would lead to patient harm in the
form of "higher health care costs, lower quality, reduced
innovation and reduced access to care."73
Congress Should Root Out Corporate Greed and Fix our Broken
System
It does not have to be this way. We know what the major
drivers of high and irrational health care prices are, and we
know how to fix them. This Committee has previously examined
potential abuses in health care and taken steps to conduct
oversight over the quality of care delivered in nursing homes
and explore root causes of high prescription drug prices. Since
the late 1800's Congress has leveraged its power to break up
harmful monopolies, rein in corporate abuses and drive improved
transparency across a wide array of other industries and
sectors, ranging from big oil to big tobacco to big banks to
big tech.74 Last year the Senate even examined how
to promote healthy competition in entertainment and protect
consumers from the monopolistic pricing practices exhibited by
Ticketmaster.75 Now is the time to turn full
attention to the health care industry and ask the hard and
necessary questions about the impacts of medical monopolies on
health care affordability that pose a direct threat to the
health and wellbeing of every American.
The House of Representatives has already advanced well-
vetted, bipartisan, and commonsense legislation that would
remedy some of the most obvious health system failings. The
Lower Costs, More Transparency Act, which passed the House in
an overwhelming bipartisan vote in December 2023, would make
crucial progress by codifying and strengthening price
transparency rules, expanding site neutral payments, and
advancing billing transparency, among other reforms. Several
Members of Congress have introduced other meaningful solutions,
including Ranking Member Braun's legislation: S. 3548, the
Health Care PRICE Transparency Act 2.0 and S. 1869, the Site-
based Invoicing and Transparency Enhancement (SITE) Act. Some
of these provisions, in addition to other important policy
solutions, are discussed in further detail below.
Strengthen Price Transparency
Unveiling prices is a critical step towards achieving truly
affordable health care, improved health, and more competitive
health care markets across the U.S. health care system. Price
transparency pulls back the curtain on prices so that
policymakers, researchers, employers, and consumers can see how
irrational health care prices have become and take action to
rein in pricing abuses.76 Further, unveiling prices
can specifically inform where the highest and most irrational
prices are occurring in the health care system, so policymakers
can implement targeted policy solutions to bring down the cost
of health care.77 All Americans, and particularly
older Americans who heavily rely on the health care system,
should be able to easily access the price of health care
services at a hospital or health care facility before they
receive care.
Consumer advocates have long sought transparency in health
care prices. Following years of consumer advocacy, the Center
for Medicare and Medicaid Services (CMS) finalized the Hospital
Price Transparency Rule and the Transparency in Coverage Rule,
which require hospitals and insurers respectively to disclose
health pricing information, including their negotiated rates,
and to provide consumer-friendly online tools to allow
consumers to compare prices and estimate out-of-pocket
costs.78 But many large hospital corporations have
bucked the federal requirements and are actively working to
keep their prices hidden.79
The Lower Costs, More Transparency Act makes clear, without
any exception, that all hospitals and insurers are required to
post the underlying price of health care services, in a machine
readable and consumer-friendly format. The Health Care PRICE
Transparency Act 2.0 would advance transparency by taking bold
steps to:80
Impose data sharing standards.
Require machine-readable files of all negotiated rates
and cash prices between plans and providers, not estimates.
Expand price transparencyquirements to clinical
diagnostic labs, imaging centers, and ambulatory surgical
centers.
Require pricing data standards including all billing
codes for services.
Require actual prices for 300 shoppable services with
all services by 2025.
Require attestation by executives that allices are
accurate and complete.
Increase maximum annual penalties to $10,000,000
(includes specific minimum and maximum penalties according to
number of hospital beds in the facility).
Prevent pre-emption of state price transparency laws,
except for ERISA group health plans.
Codify the Transparency in Coverage (TIC) rule.
Provide group health plans the right to access, audit,
and review claims encounter data.
The American public is in broad agreement about the need
for action on price transparency, with polling showing that a
large majority (95%) of the public say it is important for
Congress to pass a law to make health care costs more
transparent to patients, including 60% who call this a top
priority.81
Enact Site Neutral Payment and Billing Transparency
Market inefficiencies that stem from site-specific payment
rates in Medicare are a significant problem which, if
addressed, could save American families and health care payers
billions of dollars.82 Since commercial insurance
and Medicaid often adopt Medicare payment policies, the broken
payment incentives in Medicare are amplified across payers.
These site-of-service payment differentials drive care delivery
from physician offices to higher-cost hospital outpatient
departments.83 This shift is a major driver of
higher spending on health care services which require lower
resources such as office visits and minor
procedures.84 Importantly, these payment
differentials create a financial incentive for hospitals to
consolidate by buying physician offices and rebranding them as
off-campus outpatient hospital departments (HOPDs) and
facilities in order to receive higher payments.85
This type of consolidation - vertical integration between
hospitals and physicians - leads to a growingly anticompetitive
market where hospitals increase market power to demand even
higher prices from commercial payers.86 These higher
commercial prices are then passed on to American families and
come directly out of workers' paychecks, typically as monthly
health insurance premiums.87
Currently, hospitals that own doctors' offices that have
been rebranded as off-campus HOPDs are allowed to charge a
"facility fee" in addition to the higher fees they bill for the
physician services they provide.88 The result is
that consumers not only receive a bill for the visit with the
physician but also for the use of the hospital facility where
the visit occurred.89 These bills together (the
physician fee and the facility fee) amount to a higher total
cost for the consumer than if the service was provided in the
physician's office.90
We are encouraged that Members of Congress are working to
address payment differentials across sites of service that
incentivize further consolidation and are a major driver of
unaffordable care for America's families. The Lower Costs, More
Transparency Act takes important steps toward fostering
healthier competition in health care markets by advancing
billing transparency reforms and expanding site neutral
payments for drug administration services to help ensure
consumers pay the same price for the same service regardless of
where that service is performed. It would enact billing
transparency reforms so that off-campus hospital outpatient
departments are required to use a separate identifier when
billing to Medicare or commercial insurers to ensure large
hospital systems do not overcharge for the care they deliver in
outpatient settings. It would also enact site neutral payments
for physician-administered drugs in outpatient settings, which
is estimated to save the highest-need chemotherapy patients
more than $1,000 on cost sharing a year.91 The
Congressional Budget Office (CBO) estimates that site neutral
payments for physician-administered drugs and billing
transparency reforms would generate $3.74 billion and $403
million in savings, respectively, over ten years.92
These policies are welcome first steps to addressing misaligned
payment incentives that lead to higher costs for patients
without meaningfully improving quality.
Bipartisan legislation introduced by Ranking Member Braun,
S. 1869 Site-based Invoicing and Transparency Enhancement
(SITE) Act, would go even further to expand site neutral
payments for outpatient services, end exemptions in Medicare
billing rules that keep many facilities from having to charge
the same price for the same service, and require that health
systems establish and bill using a unique National Provider
Identifier number for each and every off-campus outpatient
department.93 The bill is projected to save the
government as much as $40 billion based on previous CBO
estimates.94
Ultimately, Congress could make significant strides in
addressing medical monopolies by implementing comprehensive
site-neutral payment policies as recommended by MedPAC in 2023,
and eliminating site-dependent reimbursement distortions that
indirectly incentivize acquisition of non-hospital patient
access points.95 CBO estimates that this policy
could save Medicare approximately $140 billion over the next
decade.96 And the Committee for a Responsible
Federal Budget projects that these policies could reduce health
care spending by $153 billion over the next decade, including
lowering premiums and cost-sharing for Medicare beneficiaries
by $94 billion and for those in the commercial market by $140-
466 billion.97
Ban Anticompetitive Contracting Practices
We also urge Congress to take a close look at
anticompetitive practices and clauses in health care
contracting agreements between providers and insurers that give
large entities in highly consolidated markets the upper hand in
contract negotiations to build networks and set prices. Many of
these contracts include terms that limit patient access to
alternative sources of higher-quality, lower-cost care.
Congress made important progress by banning gag clauses in
executed contracts between insurance plan issuers and providers
or provider networks as part of the Consolidated Appropriations
Act of 2021. This policy has the potential to enable consumers
and employers to be more informed purchasers of health care and
to unveil fundamental information that policymakers, employers,
researchers and other stakeholders need to identify health care
markets with the highest prices and build policy that
encourages healthier competition.
Congress should further prohibit large hospital systems
from using their monopoly power to employ anti-competitive
contracting practices when negotiating with insurers and other
health care providers, as this is one of the primary ways
medical monopolies are able to charge high and rising
prices.98 These prohibitions should include the use
of "all-or-nothing," "anti-steering," and "anti-tiering"
clauses in contracts between health care providers and
insurers. "Anti-tiering" and "anti-steering" clauses restrict
the plan from directing or incentivizing patients to use other
providers and facilities with higher quality and lower prices;
and "all-or-nothing" clauses require health insurance plans to
contract with all providers in a particular system or none of
them.ese contracting terms too often limit consumers from
accessing higher-quality and lower-cost care.99
Bipartisan legislation led by Senate HELP Committee
Chairman Sanders, S.2840, the Bipartisan Primary Care and
Health Workforce Act,100 includes provisions to ban
anticompetitive terms in facility and insurance contracts,
estimated by CBO to increase revenues by $3.2 billion over a
10-year window.101
Ensure Transparency in Ownership
Additionally, we urge the Committee to continue to explore
opportunities to improve transparency around the ownership
interest of health care corporations, particularly when it
comes to private equity. We support legislative provisions
considered by committees of jurisdiction in the U.S. House of
Representatives that would require providers to annually report
changes in ownership, and hope that Congress will consider
integrating these or similar provisions back in to any final
health care transparency legislation that is sent to the
President's desk. Without insight into how profits from health
systems are ultimately being funneled it is very difficult to
identify potential abuses, leaving private equity firms free to
purchase health systems in order to drive profits through
upcoding, surprise billing, and other questionable business
practices.
Strengthen FTC Oversight Authority
Policymakers should prevent future horizontal, vertical,
and cross-market mergers that undermine healthy competition in
health care markets and drive unaffordable care by ensuring the
Federal Trade Commission (FTC) and the U.S. Department of
Justice (DOJ) are fully applying federal antitrust laws to
horizontal integration, such as mergers between hospitals and
other health systems, pharmacy benefit managers and drug
companies; and vertical integration, such as mergers between
physician practices and hospitals, health plans and pharmacy
benefit managers. Specifically, Congress should improve the
infrastructure needed to monitor anti-competitive mergers and
contracting practices among health care corporations by
increasing FTC and DOJ funding for anti-trust enforcement, and
by giving the FTC authority to investigate and rein in anti-
competitive practices by non-profit health care entities,
including non-profit hospitals. Special attention should be
given to PE firms and the smaller transactions that may
traditionally fall below existing thresholds of review.
Congress should increase the number of health care transactions
reported to FTC and DOJ and subject to anti-trust review and
enforcement by reducing the Hart-Scott-Rodino Act reporting
threshold.102
Congress has the Power to Fix our Broken System - And Families
Can't Afford to Wait
Over the last year there has been growing bipartisan
momentum in Congress to advance policies that improve health
care system transparency, end pricing abuses, and deliver on
promises to make health care more affordable. Congress has a
clear and immediate opportunity to put the needs of families
ahead of the demands of corporate greed, and people all across
the country are desperately awaiting action.
Consider the story of Ben Los from Colorado, whose
encounter with our health care system's lack of transparency
came at the most vulnerable time for his young family:
In September of 2022, Ben Los's 5-year-old son began
experiencing seizures. After rushing him to the doctor, Ben and
his wife were referred to a specialist within their insurance
network, an hour and a half away from their Colorado Springs
home. They got the EEG scan for their son and were in and out
of the specialist's office in 45 minutes where they were
assured, "yes, absolutely this is covered."t two months later,
the Los family received a bill for $2,518 for the appointment.
After calling the hospital to find out why they were being
charged for something they had confirmed multiple times was
covered, the hospital claimed this was for "facility fees." The
appointment itself was covered, but now the hospital was
defending the charge stating, "Well, you paid the clinic staff,
but now you also have to pay the hospital."
After extensive efforts, Ben was able to speak to
somebody near the top of the hospital's administration, who
negotiated the bill down to a 75% reduction under a
classification of charity care. During this time Ben engaged
with an investigative journalist in Denver and found out the
hospital is owned by one company, which is owned by another
company, and so on. When they finally identified the
overarching owners of the health system, they discovered those
owners profited billions of dollars in the first nine months of
2022 alone. "You can't tell me that there is no way for the
hospitals to pay their employees when they're raking in the
kinds of net profits that they're claiming every single year,"
said Ben.103
Patients experience egregious price hikes for the very same
services they've previously received in the very same
outpatient settings. For instance, Kyunghee Lee, a then 72-
year-old retiree who lives in Mentor, Ohio:
Kyunghee Lee has arthritis and once a year she would go
to a rheumatologist for a steroid injection in her hand to
relieve pain in her knuckles. For a few years, each round of
injectionspara.st her $30. In 2021, she arrived at her usual
office and the rheumatologist she regularly saw had moved to a
new floor of the building - just one floor up. She didn't think
anything of it, as the rest of the appointment went as usual,
until she received a bill for $1,394. The infusion clinic that
Lee went to had been moved from an office-based practice to a
hospital-based setting, and as a result the price of the same
service she had been relying upon increased a staggering
4,546%. Lee's bill had a $1,262 facility fee attached, making
up the majority of the increase in cost, even though she saw
the same doctor and received the same treatment as the years
prior. Lee and her family didn't know what they would do about
the shot in the following year when the story was
reported.104
In some cases, patients receive bills for facility fees
when they never even set foot inside a medical facility of any
kind. Take the story of Brittany Tesso and her then 3-year-old
son Roman from Aurora, Colorado:
In 2021, Roman's pediatrician referred him to Children's
Hospital Colorado to receive an evaluation for speech therapy.
With in-person visits on hold due to the COVID-19 pandemic, the
Tessos met with a panel of specialists via videoconference. The
specialists, who appeared to be calling from their homes,
observed Roman speaking, playing, and eating. Later, Mrs. Tesso
received a $700 bill for the one-hour video appointment. Then,
she received another bill for nearly $1000. Thinking it was a
mistake, Mrs. Tesso called to question the second bill. Despite
the fact that the Tessos never set foot inside the hospital,
she was told the bill was a "facility fee" designed to cover
the costs of being seen in a hospital-based
setting.105
In addition to jeopardizing financial security for
individual patients and their families, widespread health
system consolidation risks the health and economic security of
entire communities:106
Hahnemann University Hospital opened in Philadelphia,
Pennsylvania in 1885. For more than 130 years, it served
primarily lower income residents, until 2018 when it was
purchased by Paladin Healthcare, a private equity firm. Over
the course of about 18 months, Paladin Healthcare laid off
physicians, nurses, and other workers, while steering the
hospital towards bankruptcy and closure.107
Questions and concerns were raised by local, state, and
national officials as to whether the motivation for these
decisions came from the value of the land on which the hospital
sat being seen as more valuable to the private equity firm than
the nearly 500-bed charity hospital itself.108
Despite the local community's longstanding reliance on this
centrally located hospital, Hahnemann University Hospital
closed its doors in August 2019. Shortly thereafter, the land
was put up for sale. addition to residents losing access to
care, thousands of employees lost their jobs and 550 medical
residents were displaced.109
A broad range of stakeholders have endorsed and supported
critical policy solutions to address consolidation and improve
transparency, including organizations representing consumers,
patients, workers, small and large employers, and primary care
clinicians.110 Large majorities of voters support a
range of policies to lower prices. Voters from both sides of
the aisle broadly support:111
Requiring hospitals to provide real prices in advance,
not estimates (93%)
Limiting outpatient fees to the same price charged by
doctors in the community (85%)
Preventing hospitals from engaging in business tactics
that reduce competition (75%)
Limiting mergers and acquisitions (74%)
Beyond these immediate steps, policymakers should focus on
a broader redesign of the economic incentives of the health
care sector to align with consumers and families. Ultimately,
policy solutions should reorient health care payment and
delivery to the goal that we all have - improved health for
ourselves and our families that is affordable and economically
sustainable.
Thank you again for holding this hearing today and for your
leadership in addressing the challenges posed to older
Americans and their families by our health care system's lack
of transparency and affordability. Congress should seize this
momentum to immediately implement commonsense policies that
rein in abusive health care prices and make health care more
affordable for everyone: patients, workers, and taxpayers
alike. The journey to fully transform our health care system is
long, but Congress holds the power to take the next critical
steps. Families USA stands ready to support you in this
essential and urgently needed work.
Footnote References
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Questions for the Record
=======================================================================
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Questions for the Record
Dr. Chris Whaley
Senator Kirsten Gillibrand
Question:
A recent report showed that less than 36 percent of
hospitals were fully compliant with transparency requirements
issued by the Centers for Medicare and Medicaid Services
Hospital Price Transparency Rule. Dr. Whaley, what should the
Federal government do to increase and enforce compliance?
Response:
Starting in 2021, hospitals have been required to post
negotiated rates for 300 shoppable services. However,
compliance with this policy has been low, in part due to lax
enforcement. To date, fewer than 20 hospitals have been
penalized for not posting prices.\1\ To further increase
compliance, an immediate step for CMS is to fully enforce
penalties for non-compliance. Ensuring compliance through
complete enforcement will provide a greater degree of
transparency and accountability around U.S. healthcare prices.
---------------------------------------------------------------------------
\1\ Centers for Medicare & Medicaid Services (CMS). Enforcement
Actions . www.cms.gov. Published September 10, 2024. www.cms.gov/
priorities/key-initiatives/hospital-price-transparency/enforcement-
actions
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Question:
How would increased transparency in healthcare pricing
specifically benefit small employers who struggle the most to
access their data? What impact could this have on their ability
to provide competitive benefits?
Response:
Health care costs come directly from worker paychecks and
other benefits, employers who provide health benefits to their
workforce have a legal and moral fiduciary obligation to be
responsible fiduciaries and purchasers. It is not possible to
fulfill this fiduciary obligation without insight into prices
and contracts negotiated on behalf of employers and purchasers.
Access to both medical claims data and contract information is
the clearest way for employers and purchasers to ensure prices
align with received value.
With access to their data, employers and purchasers have
innovated, including:
The California Public Employees Retirement System
(CalPERS), which uses targeted financial incentives to steer
patients to lower-priced, high-quality providers. For a range
of shoppable services, my work shows that this program reduces
spending by approximately 20% and leads to quality
improvements.\2\
---------------------------------------------------------------------------
\2\ Robinson JC, Brown TT, Whaley C. Reference Pricing Changes The
Choice Architecture Of Health Care For Consumers. Health Affairs.
2017;36(3):524-530. doi:doi.org/10.1377/hlthaff.2016.1256
---------------------------------------------------------------------------
The of Oregon public employees and school teacher s
plan, which limits hospital prices to 200 percent of Medicare.
By limiting hospital prices, this program reduced annual
spending by approximately four percent for the plan.\3\
---------------------------------------------------------------------------
\3\ Murray RC, Brown ZY, Miller S, Norton EC, Ryan AM. Hospital
Facility Prices Declined As A Result Of Oregon s Hospital Payment Cap.
Health Affairs. 2024;43(3):424-432. doi:https://doi.org/10.1377/
hlthaff.2023.01021
---------------------------------------------------------------------------
Question:
The average drug price increase between January 2022 and
2023 was 15.2 percent. The Capping Prescription Costs Act of
2024 would cap individual cost-sharing for prescription drugs
to help those with limited incomes and high costs. Dr. Whaley,
which sector of the health care market has benefitted the most
from higher drug prices? Which sector has suffered the most?
Which sector would a patient out-of-pocket cap affect?
Response:
Many studies show high patient out-of-pocket costs for
prescription drugs reduce adherence to medication management.
Particularly for chronic conditions, reductions in medication
management due to cost leads to increases in hospitalizations,
emergency department visits, and overall healthcare
spending.\4\ \5\ Thus, policies, including limits on out-of-
pocket costs for chronic condition medications, that limit
patient financial burden for medication management can improve
health and reduce spending. These policies are particularly
important for lower-income Americans and those with multiple
chronic conditions. However, a key challenge with these
programs that limit patient out-of-pocket burden is that they
are borne by a patient s pharmacy benefit, while savings due to
improved health accrue to a patient s medical insurer. Aligning
incentives between prescription drug and medical insurance
coverage could spur programs that reduce patient financial
burden for chronic condition medications.
---------------------------------------------------------------------------
\4\ Congressional Budget Office (CBO). Offsetting Effects of
Prescription Drug Use on Medicare's Spending for Medical Services.;
2012. www.cbo.gov/sites/default/files/cbofiles/attachments/43741-
MedicalOffsets-11-29-12.pdf
\5\ Goldman DP, Joyce GF, Zheng Y. Prescription Drug Cost Sharing:
Associations With Medication and Medical Utilization and Spending and
Health. JAMA. 07;298(1):61 69. doi:10.1001/jama.298.1.61
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U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Questions for the Record
Cora Opsahl
Ranking Member Mike Braun
Question:
As detailed in the Wall Street Journal, the 32BJ Health
Fund's decision to remove a large hospital system, New York-
Presbyterian, from its network in 2022 and the subsequent
payment demands made by New York-Presbyterian are emblematic of
the outsized market influence of hospitals. As you state in
your testimony, these contracting practices ultimately impact
not just cost, but transparency and the member experience. Can
you describe how the events reported by the Wall Street Journal
influenced the health fund's ability to select a benefit
administrator, and any other consequences that resulted?
Response:
New York-Presbyterian's demands as described in the Wall
Street Journal article limited the 32BJ Health Fund's ability
to select a third part administrator (TPA) vendor during a
standard procurement process. This is the latest example of New
York-Presbyterian's anti-competitive practices, which the 32BJ
Health Fund has been challenging for years.
As our testimony references, in 2018, we sought to tier our
network after our claims data showed certain hospitals,
including New York-Presbyterian, charged significantly more for
some services without relation to quality. The Health Fund's
TPA at the time indicated their contract with New York-
Presbyterian prohibited the tiered arrangement. After a public
campaign, New YorkPresbyterian agreed to be placed in a non-
preferred tier with a significant copay differential.
In 2021 New York-Presbyterian informed the 32BJ Health
Fund's TPA that the TPA would have to reduce its non-preferred
co-pay structure. Targeted programs accessible through
hospitals selected on the basis of competitive bidding and
superior quality performance, including our Maternity Program
could not be continued in their current design. In 2022, the
32BJ Health Fund was able to remove New York-Presbyterian from
its network after their refusal to negotiate directly with the
Health Fund to provide participants with high-quality care at
affordable prices and another public campaign.
In 2023, the 32BJ Health Fund embarked on a standard
procurement process to select a TPA vendor that could
administer the 32BJ Health Fund's hospital and medical
benefits.
In April 2024, after months of deliberation, the 32BJ
Health Fund Trustees terminated final contract negotiations
with its newly selected TPA vendor after the vendor reported
they could no longer maintain New York-Presbyterian as an out-
of-network facility unless the 32BJ Health Fund complied with
New YorkPresbyterian's demand for additional payments amounting
to tens of millions of dollars that New York-Presbyterian
claimed it was owed for out-of-network emergency services
provided to 32BJ Health Fund participants in 2023. No
documentation or list of claims was provided at that time with
this demand, and the 32BJ Health Fund's review of its records
determined that the payment demand was without merit, and no
additional payment was made.
Instead of using the arbitration processes that the federal
law provides through the No Surprises Act to resolve this type
of payment disputes, New YorkPresbyterian attempted to make
this additional payment part of the contract negotiations
between the TPA vendor and the 32BJ Health Fund.
After this demand by New York-Presbyterian, the 32BJ Health
Fund terminated its contract negotiations with that TPA vendor.
This left the 32BJ Health Fund no choice other than selecting
the only TPA vendor with an existing agreement with New York-
Presbyterian to be out-of-network for the 32BJ Health Fund. The
Health Fund has been told that New York-Presbyterian intends to
remove this provision in the agreement when its contract with
the newly selected TPA vendor is up for renewal in 2025.
Question:
You mention in your testimony that hospitals use their
market power to make contract demands that impact the ultimate
terms agreed upon between your third-party administrator of the
medical and hospital benefits provided by your health fund.
Based on the news reported by the Wall Street Journal, is this
essentially what happened with New YorkPresbyterian? Can you
share more about the impact of this on the Fund?
Response:
Yes, the demands made by New York-Presbyterian impacted the
32BJ Health Fund's ability to select a vendor during our 2023
medical and hospital benefit third party administrator (TPA)
procurement. New York-Presbyterian demanded additional payments
they claimed they were owed for out-of-network emergency
services provided to 32BJ Health Fund participants in 2023 with
no documentation or list of claims provided at that time. In
April 2024, the 32BJ Health Fund's newly selected TPA vendor
reported they could no longer maintain New York-Presbyterian as
an out-of-network facility unless the 32BJ Health Fund complied
with this additional payment demand by New York-Presbyterian.
This left the 32BJ Health Fund no choice other than selecting
the only TPA vendor with an existing agreement with New York-
Presbyterian to be out-of-network for the 32BJ Health Fund.
Question:
What further policy recommendations do you have beyond
transparency proposals?
Response:
Prohibiting anti-competitive contracting practices in
hospital provider contracts is an important step to realign
healthcare system incentives to enable employer-sponsored
health plans like 32BJ Health Fund to better steward their
resources for the benefit of plan participants.
The 32BJ Health Fund recommends Congress expand on recent
legislation that bans certain anti-competitive contracting
clauses in hospital provider contracts. In the Consolidated
Appropriations Act (CAA) of 2021, Congress enacted a
prohibition of gag-clauses that restrict certain information
sharing with health plans and health insurance issuers.\1\
While the CAA enactment of the gag-clause prohibition was a
positive step forward, more action is needed to regulate other
common anti-competitive contracting practices.
---------------------------------------------------------------------------
\1\ Rochman, Harvey. (November 29, 2023). The Gag Clause
Prohibition Compliance Deadline Is Approaching: What Plans and Issuers
Need to Know. https://www.manatt.com/insights/newsletters/health-
highlights/the-gag- clause-prohibition-compliancedeadline-is
---------------------------------------------------------------------------
State legislatures have also made attempts to ban or
regulate anti-competitive contracting practices but have
encountered resistance from the hospital lobbies when proposals
are filed. The Hospital Equity and Affordability Legislation
("HEAL") Act, which passed in New York State in 2022, bans
health plan and provider contract provisions that restrict the
disclosure of provider claims cost, price, or quality
information. However, other anti-competitive contracting
practices -- "all-or-nothing" and "anti-tiering" clauses --
were removed from the final version of the HEAL Act following
opposition by the Greater New York Hospital Association.
Congress should pursue enacting Federal regulations to
prohibit "most favored nation, "anti-tiering/anti-steering,"
and "all-or-nothing" clauses in provider and insurer contracts.
Given the opposition experienced in State legislatures, further
action is needed by Congress to protect employers and self-
funded plans from these anti-competitive contracting practices
by providers and carriers that impact the ability to steward
health plan resources effectively. We strongly encourage
Congress to continue advancing proposals that ban anti-
competitive contracting practices.
Question:
What actions can we take to decrease health costs?
Response:
There is no silver bullet for decreasing health care costs,
but rather targeted policies that can help to lower healthcare
costs. One policy in particular that would provide constructive
relief for employer-sponsored health is enacting site neutral
payment policies.
Under current Medicare fee schedules, reimbursement is
typically higher for routine procedures provided at a hospital
outpatient department versus a freestanding doctors' office.
Site-neutral payment policies seek to eliminate downstream
incentives for hospital acquisition and mergers by instituting
price regulation on routine services that are safe to be
delivered at a freestanding doctor's office.
There are multiple site-neutral proposals before Congress
today. Introduced in the U.S. Senate in June 2023, the Site-
based Invoicing and Transparency Enhancement Act (the SITE
Act), proposes updating Medicare reimbursement at off-campus
hospital outpatient departments to follow site-neutral
requirements these facilities were previously exempted from in
the 2015 Bipartisan Budget Act.\2\ Also in the current session,
in December 2023, the U.S. House of Representatives passed the
Lower Costs, More Transparency Act, which would ensure Medicare
pays the same prices for physician-administered drugs in
different settings.\3\ However, in March 2024, the bipartisan
legislation stalled in Congress.\4\
---------------------------------------------------------------------------
\2\ Key Takeaways from the Site-based Invoicing and Transparency
Enhancement (SITE) Act-2023-06-13 (crfb.org)
\3\ Lower Costs, More Transparency Act (2023). House Committee on
Energy and Commerce. https://energycommerce.house.gov/LCMT
\4\ Sullivan, P. (March 5, 2024). Hospitals and PBMs seem to have
dodged big federal reforms, for now. Axios Health. https://
www.axios.com/2024/03/05/hospitals-pbms-dodge-reforms-congress
---------------------------------------------------------------------------
There are potential savings across commercial payers if
site-neutral payments were enacted beyond Medicare fee
schedules. The Committee for a Responsible Federal Budget
estimates commercial payors could save between $140 and $466
billion in the next 10 years if a site-neutral payment policy
were implemented nationwide.\5\
---------------------------------------------------------------------------
\5\ Equalizing Medicare Payments Regardless of Site-of-Care
(February 21, 2021). Committee for a Responsible Federal Budget.
https://www.crfb.org/papers/equalizing-medicare-payments-regardless-
site-care
---------------------------------------------------------------------------
We strongly encourage Congress to continue advancing
proposals that enact siteneutral payment policies for Medicare
and commercial insurers and self-funded plans.
Question:
What impacts have you experienced because of health care
consolidation?
Response:
As the hospital markets where 32BJ Health Fund
participants' care is provided are becoming increasingly
consolidated, participants are experiencing shifts in where
their routine care is provided.
New York State and City, where a majority of 32BJ Health
Fund participants' healthcare is provided, has experienced
hospital market consolidation. One 2018 study reviewing
hospital consolidations in New York State found the 12 largest
systems now control half of all the acute care hospitals in New
York and 70 percent of the inpatient acute care beds.\6\ New
York hospitals continue to pursue consolidation. In February
2024, Northwell Health announced a proposal to acquire the
Nuvance Health system, which operates seven hospitals in
Connecticut and New York State. The proposed merger would
expand the Northwell System to include 28 total hospitals
valued at $20 billion.\7\
---------------------------------------------------------------------------
\6\ Uttley, L., Hyde, F., HasBrouck, P. and Chessen, E. (May 2018).
Empowering New York Consumers in an Era of Hospital Consolidation
\7\ Gagne, M. (March 4, 2024). Will patient care, costs in CT
improve with Nuvance-Northwell merger? `Cautiously optimistic.'
Newstimes. https://www.newstimes.com/news/article/danbury-norwalk-
hospital- nuvance-northwell-merger18695997.php.
---------------------------------------------------------------------------
While large hospital systems are merging in New York, their
net financial assets are also growing. From 2016-2022,
collectively, six academic medical centers in the New York City
region (New York-Presbyterian, Northwell Health, New York
University Langone, Mount Sinai Hospital, Catholic Health
Services of Long Island, and Montefiore Health System)
increased its total net assets from $16 billion to $24 billion.
New York-Presbyterian recorded the highest total net assets
among these hospitals in 2022 at nearly $11 billion.\8\
---------------------------------------------------------------------------
\8\ Audited Financial Statements for FY 2022, as posted on
Electronic Municipal Market Access (https://emma.msrb.org/)
---------------------------------------------------------------------------
At the same time net financial assets increased for large
hospital systems in the New York City region, the site of care
for some routine procedures also shifted for 32BJ Health Fund
participants. The 32BJ Health Fund reviewed its claims to
examine changes in billing from office settings to hospital
outpatient departments. The analysis showed a shift over time
in the site of care for many routine procedures like allergy
shots, acupuncture, and glaucoma screenings from doctors'
offices to hospital outpatient departments. In 2016, 29% of
nonemergency CT scans for 32BJ Health Fund participants in New
York were conducted in hospital outpatient departments, meaning
71% took place in doctors' offices. By 2022, the number of
these CT scans conducted in hospital outpatient departments
rose by 12 percentage points, and the number in doctors'
offices decreased by the same amount.
Without further regulatory action from Congress to reduce
incentives for hospital consolidation, 32BJ Health Fund
participants may continue to experience changes in their
location for routine care and navigate concentrated hospital
markets.
Senator Kirsten Gillibrand
Medicare for All Act
The current medical system is complicated and is not
patient friendly. The Medicare for All Act would simplify this
process and ensure every American has access to quality,
affordable health care regardless of income.
Question:
Ms. Opsahl, would Medicare as a uniform health care
insurance plan simplify the health care process for union
members and their families?
Response:
The 32BJ Health Fund strives to simplify access to and
maintain affordable healthcare for our plan participants. We
also value efforts to do the same for all working Americans.
Containing hospital prices is a critical prerequisite for
success in any global healthcare delivery, access and cost
reform effort. Policies to maintain affordable healthcare for
both the payer or purchaser and the patient, like regulating
inflated hospital prices, is a foundational step to achieving
broader healthcare reform.
Capping Prescription Costs Act of 2024
The average drug price increase between January 2022 and
2023 was 15.2 percent. The Capping Prescription Costs Act of
2024 would cap individual cost-sharing for prescription drugs
to help those with limited incomes and high costs.
Question:
Ms. Opsahl, how much of the overall Health Fund costs do
prescriptions contribute to the 32BJ Health Fund?
Response:
In 2023, the 32BJ Health Fund spent $1.4B in total on
medical and pharmacy benefits. Of the $1.4B the 32BJ Health
Fund spent in 2023 on medical and pharmacy benefits, 18%
($262M) was spent on pharmacy benefit costs.
Question:
How would a cap on out-of-pocket costs affect the union
members'and their family's health care costs?
Response:
Price caps, and other drug pricing mechanisms, are but one
way for the 32BJ Health Fund to manage prescription costs. The
32BJ Health Fund is responsible for creating and implementing a
cost-effective plan design that offers plan participants
accessible and affordable prescription drug benefits. We
contract with vendors, such as pharmacy benefit managers (PBMs)
to provide benefits to plan participants. Maintaining
affordable prescription drug benefits for our participants is a
guiding principle in our vendor partnerships. In 2021, the 32BJ
Health Fund transitioned our PBM vendor to OptumRx with the
CoreTrust Group Purchasing Coalition. After the first year of
this change, the 32BJ Health Fund saved 15% on prescription
drug cost spend and 10% in the second year. The 32BJ Health
Fund will continue to prioritize access and affordability in
the prescription drug benefits provided to our participants.
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Questions for the Record
Sophia Tripoli
Senator Kirsten Gillibrand
Compliance
A recent report showed that less than 36 percent of
hospitals were fully compliant with transparency requirements
issued by the Centers for Medicare and Medicaid Services
Hospital Price Transparency Rule.
Question:
Ms. Tripoli, how would patients benefit from hospitals
posting price transparency data in a standardized format?
Response:
The United States is in the midst of a severe health care
affordability and quality crisis, stemming from high, rising,
and variable prices across a wide range of health care goods
and services, particularly for hospital care.\1\ Large health
care corporations have destroyed competition in the health care
sector, and hospitals are dramatically increasing their prices
year after year without any oversight from policymakers.\2\
This practice has become a central strategy in the business
model of health care corporations: generate profit by buying up
other hospitals and doctors' offices to become large corporate
health care systems that can increase health care prices, and
then block policymakers and the public from seeing those
prices, while maximizing service volumes of the highest-priced
services.\3\ The ability of hospitals to increase prices year
over year is the direct result of their ability to keep the
underlying price of health care service hidden from public
oversight and scrutiny.
---------------------------------------------------------------------------
\1\ Robert A. Berenson et al., Addressing Health Care Market
Consolidation and High Prices, The Urban Institute https://
www.urban.org/sites/default/files/publication/101508/addressing--
health--care--market--consolidation--and--high--price s--1.pdf. See
also, Naomi N. Levey, "100 Million People in America are Saddled with
Health Care Debt," Kaiser Health News, June 16, 2022, Health https://
khn.org/news/article/diagnosis-debt-investigation-100-million-
americans-hidden-medical-debt/
\2\ Health Care Cost Institute, 2020 Health Care Cost and
Utilization Report, May 2022. https://healthcostinstitute.org/images//
pdfs/HCCI--2020--Health--Care--Cost--and--Utilization--Report.pdf; The
Impact of Hospital Consolidation on Medical Costs. NCCI Insights. 2018.
https://www.ncci.com/Articles/Pages/II--Insights--QEB--Impact-of-
Hospital-Consolidation-on-Medical-Costs.aspx
\3\ Sophia Tripoli, Frederick Isasi, and Eliot Fishman, Bleeding
Americans Dry: The Role of Big Hospital Corporations in Driving Our
Nation's Health Care Affordability and Quality Crisis (Washington, DC:
Families USA, September 2022), https://familiesusa.org/wp-content/
uploads/2022/09/People-First-Care--Role-of-Hospitals.pdf.
---------------------------------------------------------------------------
Health care is one of the only markets in the U.S. economy
in which consumers are blinded to the price of a service until
they receive a bill after the services are delivered. For the
majority of Americans (66%) who receive health care through
private insurance, health care prices are established in
closed-door negotiations between large hospital corporations
and health plans based on who has more market power.\4\ These
health care prices, often referred to as the negotiated rate,
are buried in proprietary contracts without insight into or
oversight over the price of health care services by the public
and policymakers.\5\
---------------------------------------------------------------------------
\4\ Katherine Keisler-Starkey and Lisa N. Bunch. "Health Insurance
Coverage in the United States: 2020." United States Census Bureau.
September 2021. https://www.census.gov/library/publications/2021/demo/
p60-274.html. See also, Sarah Kliff and Josh Katz. "Hospitals and
Insurers Didn't Want You to See These Prices. Here's Why." The Upshot:
The New York Times. August 21, 2021. https://www.nytimes.com/
interactive/2021/08/22/upshot/hospital-prices.html
\5\ Jaime S. King. "Examining State Efforts to Improve Transparency
in Healthcare Costs for Consumers: Testimony before the House Committee
on Energy and Commerce and Subcommittee on Oversight and
Investigations." U.S. House of Representatives. July 17, 2018. https://
docs.house.gov/meetings/IF/IF02/20180717/108550/HHRG-115-IF02-Wstate-
KingJ-20180717.pdf
---------------------------------------------------------------------------
It is critical that we achieve meaningful price
transparency to infuse healthy competition back into the health
care system and not allow large hospital corporations to
secretly set their prices to price gouging levels at the
expense of the health and financial security of our nation's
families. Price transparency pulls back the curtain on prices
so that policymakers, researchers, employers, and consumers can
see how irrational health care prices have become and take
action to rein in pricing abuses.\6\ Further, unveiling prices
can inform where the highest and most irrational prices are
occurring in the health care system, so policymakers can
implement targeted policy solutions to bring down the cost of
health care.\7\ All Americans, and particularly older Americans
who heavily rely on the health care system, should be able to
easily access the price of health care services at a hospital
or health care facility before they receive care.
---------------------------------------------------------------------------
\6\ Robert A. Berenson, Jaime S. King, and Katherine L. Gudiksen,
et al., "Addressing Health Care Market Consolidation and High Prices,"
The Urban Institute, January 2020, https://www.urban.org/sites/default/
files/publication/101508/addressing--health--care--market--
consolidation--and--h igh--prices--1.pdf.; See also, Jaime S. King,
"Examining State Efforts to Improve Transparency in Healthcare Costs
for Consumers: Testimony before the House Committee on Energy and
Commerce and Subcommittee on Oversight and Investigations," U.S. House
of Representatives, July 17, 2018, https://docs.house.gov/meetings/IF/
IF02/20180717/108550/HHRG-115-IF02-Wstate-KingJ-20180717.pdf
\7\ Phillip Longman and Harris Meyer, "Why Hospitals Keep Their
Prices Secret," Washington Monthly, July 6, 2020, https://
washingtonmonthly.com/2020/07/06/why-hospitals-keep-their-prices-
secret/
---------------------------------------------------------------------------
Consumer advocates have long sought transparency in health
care prices. Following years of consumer advocacy, the Center
for Medicare and Medicaid Services (CMS) finalized the Hospital
Price Transparency Rule and the Transparency in Coverage Rule,
which require hospitals and insurers respectively to disclose
health pricing information, including their negotiated rates,
and to provide consumer-friendly online tools to allow
consumers to compare prices and estimate out-of-pocket
costs.\8\ But many large hospital corporations have bucked the
federal requirements and are actively working to keep their
prices hidden.\9\ The Lower Costs, More Transparency Act and
the Health Care PRICE Transparency Act 2.0 make clear, without
any exception, that all hospitals and insurers are required to
post the underlying price of health care services, in a
standardized machine readable and consumer-friendly format.
---------------------------------------------------------------------------
\8\ "Transparency in Coverage Final Rule Fact Sheet (CMS-9915-F),"
Centers for Medicare & Medicaid Services, October 29, 2020, https://
www.cms.gov/newsroom/fact-sheets/transparency-coverage-final-rule-fact-
sheet-cms-9915-f.
\9\ PatientsRightsAdvocate.org, "The Fifth Semi-Annual Hospital
Price Transparency Compliance Report," PatientsRightsAdvocate.org, July
2023, https://www.patientrightsadvocate.org/july-semi-annual-
compliance-report-2023; See also, PatientsRightsAdvocate.org, "The
Fourth Semi-Annual Hospital Price Transparency Compliance Report,"
PatientsRightsAdvocate.org, February 2023, https://
www.patientrightsadvocate.org/february-semi-annualcompliance-report-
2023; See also, Justin Lo, Gary Claxton, Emma Wagner, et al., "Ongoing
Challenges With Hospital Price Transparency," Peterson-KFF Health
System Tracker, February 10, 2023, https://www.healthsystemtracker.org/
brief/ongoing-challenges-with-hospital-price-transparency/.
---------------------------------------------------------------------------
The American public is in broad agreement about the need
for action on price transparency, with polling showing that a
large majority (95%) of the public say it is important for
Congress to pass a law to make health care costs more
transparent to patients, including 60% who call this a top
priority.\10\
---------------------------------------------------------------------------
\10\ Shannon Schumacher, Kunna Lopes, and Grace Sparks, et al.,
"KFF Health Tracking Poll December 2022: The Public's Health Care
Priorities For The New Congress," KFF, December 20, 2022, https://
www.kff.org/mental-health/poll-finding/kff-health-tracking-poll-
december-2022/
---------------------------------------------------------------------------
Medicare for All Act
The current medical system is complicated and is not
patient friendly. The Medicare for All Act would simplify this
process and ensure every American has access to quality,
affordable health care regardless of income.
Question:
Ms. Tripoli, how would a system with one insurance plan
improve the issues that health care consumers currently face?
Response:
Every individual and family throughout the nation should
have access to the best health and health care, regardless of
who they are, where they are from, or how much money they make.
This includes putting in place a sustainable, competitive, and
affordable system of health care and coverage for all. There
are a number of pathways to achieve universal health coverage.
In all of them, it is critical to address the underlying
drivers of our nation's health care affordability and quality
crisis, including reining in the impact of unchecked health
care industry consolidation on health care prices. Policymakers
should enact a range of bipartisan, commonsense policy
solutions to address high and rising health care prices
including strengthening and codifying hospital price
transparency rules,\11\ so that hospitals provide real prices
(in dollars and cents) to consumers in advance of delivering
care; enacting comprehensive site neutral payments as
recommended by MedPAC that ensures consumers pay the same price
for the same service regardless of where that care is
delivered,\12\ as well as billing transparency reforms that
ensure large hospital systems do not overcharge for the care
they deliver in outpatient settings; banning anti-competitive
contracting terms in health care provider and insurer contracts
- such as "all-or-nothing," "anti-steering," and "anti-tiering"
clauses - and in clinician and health care worker employment
arrangements - such as "non-compete" clauses; and requiring
meaningful ownership transparency and strengthening FTC
authority to effectively oversee health care markets.
---------------------------------------------------------------------------
\11\ Gallup, Record High in U.S. Put Off Medical Care Due to Cost
in 2022, January 2023. https://news.gallup.com/poll/468053/record-high-
put-off-medical-care-due-cost-2022.aspx. See also, NORC at the
University of Chicago and West Health, Americans' Views on Healthcare
Costs, Coverage and Policy, March 2018 https://www.norc.org/
NewsEventsPublications/PressReleases/Pages/survey-finds-large-number-
of-people-skipping-necessarymedical-care-because-cost.aspx; Naomi N.
Levey, 100 Million People in America are Saddled with Health Care Debt,
Kaiser Health News, June 16, 2022, https://khn.org/news/article/
diagnosis-debt-investigation-100-million-americans-hidden-medical-debt/
; Robert A. Berenson et al., Addressing Health Care Market
Consolidation and High Prices, The Urban Institute https://
www.urban.org/sites/default/files/publication/101508/addressing--
health--care--market--consolidation--and--high--prices--1.pdf
\12\ Medicare Payment Advisory Commission, "Medicare and the Health
Care Delivery System, Report to the Congress," MedPAC, June 2023,
https://www.medpac.gov/wpcontent/uploads/2023/06/Jun23--MedPAC--
Report--To--Congress--SEC.pdf; H
=======================================================================
Statement for the Record
=======================================================================
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Statement for the Record
Statement of 75 Alliances, Unions, and Employers
We write asking you to support the bipartisan Senate Bill
3548, The Health Care PRICE Transparency Act 2.0, introduced by
Senate Health Education Labor and Pensions (HELP) Committee
Chairman Bernie Sanders and Committee member Senator Mike
Braun. The transparency provisions in this bill will empower
employers and unions like ours, which provide coverage to
nearly 160 million Americans, to greatly reduce our health plan
costs, improve our business competitiveness, and share savings
with employees through higher wages and lower premiums.
Currently, employers and unions nationwide are blocked from
accessing, auditing or leveraging their own health claims data.
The situation is so dire that many have had to sue their own
insurers and third-party administrators (TPAs) to gain access
to their own data and fulfill their fiduciary duty.
The Health Care PRICE Transparency Act will, among other
priorities, empower us as employers to access our claims data
through a daily data transaction set. This data feed acts as a
daily receipt for our plan payments to providers, allowing us
to confirm that the claim amounts match both the payments by
the TPA and the negotiated prices. It will enable the
identification and remedy of overcharges and erroneous billing,
allowing us to perform the fundamental oversight of our health
plan spending. The bill also removes anti-audit and similar
obstacles currently rampant in health plan administrator
contracts, making it easier for employers to audit and oversee
our plan spend effectively.
By building on the existing Transparency in Coverage (TiC)
regulation, this bill strengthens consumer access to health
plan pricing data with all billing and coding elements, helping
us protect our employees from overcharges and assess the value
and performance of our plan. Seeing systemwide prices across
all plans will empower us to negotiate higher quality, lower
cost care, as we do for every other aspect of our supply
chains.
This bill also requires disclosure of all hospital pricing
data including all negotiated rates and discounted cash prices
not estimates, averages, or percentages. This price disclosure
will enable us to identify wide price variation, steer
employees to lower priced facilities, and compare our plans
negotiated prices with others.
Finally, the bill expands price disclosure requirements to
laboratories, imaging centers, and ambulatory surgical centers,
informing consumers of alternatives to high-priced hospital
systems.
On behalf of the over 21 million employees we collectively
represent, we ask you to please support the Braun-Sanders
Health Care PRICE Transparency Act 2.0 in the reconciliation
process. By bringing systemwide transparency and accountability
to healthcare, this bill provides employers and unions with the
necessary tools to lower our healthcare costs, with no added
cost to the government. The significant savings can then be
used to increase earnings and wages, ultimately improving
competitiveness and stimulating the American economy.
Sincerely,
75 Alliances, Unions and Employers Nationwide
CC: United States Senate
Alliances
Alabama Employer Health Consortium
Dallas-Fort Worth Business Group on Health
Employers' Advanced Cooperative on Healthcare
Employers' Forum of Indiana
Florida Alliance for Healthcare Value
Greater Philadelphia Business Coalition on Health
HealthCareTN
Houston Business Coalition on Health
Independent Colleges and Universities Benefits Association
(ICUBA)
Kansas Business Group on Health
Lehigh Valley Business Coalition on Health
MidAtlantic Business Group on Health
Midwest Business Group on Health
Nevada Business Group on Health
Oklahoma Business Collective on Health
Rhode Island Business Group on Health
Texas Business Group on Health
Texas Employers for Affordable Healthcare
The Alliance - Midwest
Washington Health Alliance
Unions
32BJ SEIU
International Union of Bricklayers and Allied Craftworkers
Local 1 CT
National Association of Police Organizations
New Jersey State Policemen s Benevolent Association
Teachers Health Trust
Employers
Agra Industries, Wisconsin
American Licorice, Indiana
Applied Laser Technologies, Wisconsin
Broadway Metal Works, Virginia
Conner Insurance, Indiana
Consolidated Scrap Resources, Inc., Pennsylvania
Curran Group, Illinois
Dick Myers, Inc., Virginia
Diversified Industrial Service Company, Texas
Dupre Logistics, Louisiana
Dynamic Aviation Inc., Virginia
Enerquip, Wisconsin
Faulks Bros Construction, Wisconsin
Frank Blum Construction, North Carolina
Glass and Metals Inc., Virginia
Harman Construction, Inc., Virginia
Health Rosetta, Washington
Hospice of Wichita Falls, Texas
Hyster-Yale, Ohio
InterChange Group; Inc., Virginia
Lantz Construction Company, Virginia
LD&B Insurance & Financial Services, Virginia
Lincoln National Bank, Kentucky
Lynch Companies, Wisconsin
Mayville Engineering Company, Inc., Wisconsin
Menasha Joint School District, Wisconsin
Meshoppen Stone, Pennsylvania
Midwest Carriers, Wisconsin
Mitchell Metal Products, Wisconsin
Moose Pharmacy, North Carolina
Myers Ford Co., Inc., Virginia
Nolato Contour, Wisconsin
Nordic Group of Companies, Wisconsin
Pacific Steel & Recycling, Montana
Partners Excavating Company, Virginia
Ponsse North America, Wisconsin
Railside Enterprises, Inc., Virginia
Rockingham Cooperative, Virginia
Rosen Hotels & Resorts, Florida
SavATree, New York
Second Harvest Food Bank of Central Florida, Florida
SFS Tools & Safety, LLC, Virginia
Shickel Corporation, Virginia
Synthomer, Ohio
Team Schierl Companies, Wisconsin
The Frazier Quarry, Inc., Virginia
The Weber Group, Wisconsin
Valley Engineering, PLC, Virginia
Vero Orthopaedics, Florida
Walker Forge, Inc., Wisconsin
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Statement for the Record
Statement of Patient Rights Advocate.Org Letter
Thank you for holding a hearing on health care price
transparency, lowering costs, and empowering patients. As a
nonprofit advocating for systemwide price transparency in
healthcare, we believe that empowering consumers and employers
with actual, upfront prices will create a functional,
competitive market, protect patients from overcharges, and
greatly reduce healthcare costs.
We strongly endorse the bipartisan Senate Bill 3548, The
Health Care PRICE Transparency Act 2.0, introduced by Senate
Health Education Labor and Pensions (HELP) Committee member
Senator Mike Braun and Committee Chairman Bernie Sanders.
Earlier this year, 75 alliances, unions and employers from
across the country, representing more than 21 million
employees, also endorsed this bill in the attached letter sent
to bipartisan Senate leadership.
The price transparency provisions in this bill will empower
employers and unions like them to greatly reduce their health
plan costs, improve their business competitiveness, and share
savings with employees through higher wages and lower premiums.
Currently, employers and unions nationwide are blocked from
accessing and analyzing their own health claims data to
identify overcharges and savings opportunities. Many have had
to sue their own insurers and third-party administrators (TPAs)
to gain access to their own data and fulfill their fiduciary
duty.
The Health Care PRICE Transparency Act 2.0 will, among
other priorities, empower self-insured employers and union
health plans to access their claims data through access to a
daily transaction data set. This data feed will act as a daily
receipt of plan payments to providers, allowing employers to
confirm that the claim amounts match both the payments by the
TPA and the negotiated prices. It will enable employers and
union health plans to identify and remedy overcharges and
erroneous billing, allowing them to perform the critical
oversight of their health plan spending. The bill also removes
anti-audit and similar obstacles rampant in health plan
administrator contracts, making it easier for employers to
audit and oversee their plan receipts for payment.
This bill also requires transparency of all hospital
pricing data including all negotiated rates and discounted cash
prices not estimates, averages, or percentages. This price
disclosure will enable consumers to identify wide price
variation, find lower priced care, and compare their plan s
negotiated prices to those of other plans. The bill requires
increased enforcement for noncompliant hospitals, at a time
when only 34.5% of hospitals reviewed are fully compliant and
the Centers for Medicare and Medicaid Services (CMS) has only
penalized fifteen hospitals for noncompliance.
By building on the existing Transparency in Coverage (TiC)
regulation, this bill strengthens consumer access to health
plan pricing data with all billing and coding elements, helping
employers protect their employees from overcharges and assess
the value and performance of their health plan. Seeing
systemwide prices across all plans will empower employers to
negotiate higher quality, lower cost care, as is the case for
every other aspect of supply chains.
Finally, the bill expands price disclosure requirements to
laboratories, imaging centers, and ambulatory surgical centers,
informing consumers of alternatives to high-priced hospital
systems.
By bringing systemwide transparency and accountability to
healthcare, this bill provides employers and unions with the
necessary tools to lower our healthcare costs, with no added
cost to the government. The significant savings can then be
used to increase earnings and wages, ultimately improving
competitiveness and stimulating the American economy.
Sincerely,
Cynthia Fisher
Founder & Chairman PatientRightsAdvocate.org
CC: United States Senate
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Statement for the Record
Statement of Leukemia and Lymphoma Society
On behalf of the more than 1.5 million Americans living
with a blood cancer diagnosis, The Leukemia & Lymphoma Society
(LLS) appreciates the opportunity to provide recommendations to
address the nation's rising healthcare costs and improve
transparency in our healthcare system. As an organization that
has invested in the fight to cure cancer, LLS knows that the
cost of care associated with a blood cancer diagnosis is too
high and continues to rise. We receive over 20,000 calls to our
Information Resource Center (IRC) annually, the vast majority
of which pertain to the cost burden of cancer.
In response to cost growth in recent years, payers and
policymakers have often passed the burden to patients in the
form of increased cost-sharing and changes that erode the
quality of care accessible to cancer patients. In 2019, the
national patient economic burden associated with cancer care
was over $21 billion, including direct patient out-of-pocket
costs of more than $16 billion.\1\
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\1\ K. Robin-Yabroff, PhD, Angela Mariotto, PhD, et al., Annual
Report to the Nation on the Status of Cancer, Part 2: Patient Economic
Burden Associated With Cancer Care, JNCI: Journal of the National
Cancer Institute, Volume 113, Issue 12, December 2021, Pages 1670-1682,
https://doi.org/10.1093/jnci/djab192
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LLS launched our Cost of Cancer Care initiative in 2017 to
address this growing issue, and we continue to advocate for
aggressive but feasible cost-cutting policy solutions that
would not sacrifice quality of care.\2\ We offer the following
policy recommendations for the Committee to consider to help
lower healthcare costs, incentivize high-quality care, and
increase healthcare transparency.
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\2\ The Leukemia & Lymphoma Society. Cost of Cancer Care
Initiative. Accessed at www.lls.org/CancerCost
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Expand Site-Neutral Payments
LLS encourages Congress to pursue expanding site-neutral
payments in Medicare. Expanding site-neutral payment-the
practice of paying equally for services whether they are
associated with a physician practice or an outpatient hospital
setting-has the potential to lower patient out-of-pocket costs,
reduce unnecessary Medicare spending, and reduce incentives for
hospitals to participate in anticompetitive practices (such as
buying up physician practices).
Vertical consolidation between hospital and physician
office settings continues to rise, driven in part by the
ability of hospital entities to receive higher hospital
outpatient reimbursements for services performed at the
facility that had previously been considered a physician
office. According to the Government Accountability Office
(GAO), between 2007 and 2013, the number of vertically
consolidated physicians nearly doubled from 96,000 to
182,000.\3\ Further, a 2016 study found that the proportion of
chemotherapy infusions delivered in a hospital increased from
15.8 percent in 2004 to 45.9 percent in 2014 in the Medicare
population.\4\
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\3\ GAO (2015) Increasing Hospital-Physician Consolidation
highlights Need for Payment Reform. Accessed at https://www.gao.gov/
assets/680/674347.pdf
\4\ Milliman (2016) Cost Drivers of Cancer Care: A Retrospective
Analysis of Medicare and Commercially Insured Population Claim Data
2004-2014. Accessed at https://www.communityoncology.org/wpcontent/
uploads/sites/20/2018/07/Trends-in-Cancer-Costs-White-Paper-FINAL-
20160403.pdf
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We urge the Committee to consider implementing site-neutral
payment policies as outlined in H.R. 5378, the Lower Costs,
More Transparency Act, which passed the House of
Representatives on an overwhelmingly bipartisan basis last
year. The site-neutral policies included in this bill take
steps to adjust incentives by expanding existing site-neutral
payments for drug administration services. LLS strongly
supports advancing this policy and looks forward to working
with Congress to advance and expand site-neutral payments or
other payment changes intended to address the ways in which
consolidation negatively impacts patients.
Experts have repeatedly identified site-neutral payments as
an opportunity to save money for Medicare. The Congressional
Budget Office (CBO) estimated that the site-neutral policies in
the Lower Costs, More Transparency Act would result in over
$3.7 billion in Medicare savings.\5\ More importantly, these
policies also reduce cost-sharing for beneficiaries and limit
non-clinical incentives to provide services in more expensive
settings - without compromising beneficiary access to care or
health outcomes. Research commissioned by LLS has demonstrated
that requiring site-neutral payment for drug administration
services can result in significant out-of-pocket savings for
patients. A patient with multiple myeloma, for example, could
save $1,200/year under this policy.\6\ In addition to saving
taxpayer dollars and reducing patient out-of-pocket costs,
equalizing payments between these sites of service would weaken
the incentive for provider consolidation, which would also
produce long-term cost savings and provide patients with
additional options for their care.
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\5\ Congressional Budget Office. (2023) "Estimated Direct Spending
and Revenue Effects of H.R. 5378, the Lower Costs, More Transparency
Act." Accessed at: hr5378-DS-and-Revs--12-2023.pdf (cbo.gov)
\6\ Stewart, R. (2023) "Site Neutral Payment Reform Has the
Potential to Significantly Reduce Out-Of-Pocket Patient Spend" Wakely.
Accessed at: Site Neutral Payment Reform has the Potential to
Significantly Reduce Out-of-Pocket Patient Spend (lls.org)
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Unique Identifiers
Medicare payments to providers currently include limited
information about where the service is provided. For example,
codes do not distinguish if services are delivered on a
hospital campus or at an affiliated provider, such as a primary
care doctor or infusion center that may be geographically
separate from the primary hospital's physical campus. Because
Medicare payments for hospital outpatient departments (HOPDs)
are reimbursed at a higher rate than physician's offices,
hospitals are incentivized to purchase smaller providers and
reclassify them as HOPDs.
In addition to site-neutral reforms, several proposals
under consideration in Congress would, if passed, require
hospitals and providers to report more granular data regarding
where services are being provided-at a hospital's primary
facility or at a provider beyond the boundaries of the
hospital's physical campus. These simple transparency
requirements would provide data that would help policymakers
and researchers better understand hospital revenue cycles and
consolidation trends, as well as their implications on patients
and national budget outlays. LLS strongly supports legislation
that would improve site-of-service transparency to better
understand if healthcare systems are using consolidation and
other anti-competitive behaviors to game federal payments.
Enforce Provider Price Transparency Rules
One crucial way this Congress can address provider
consolidation and encourage competition in the healthcare
system is through price transparency. While multiple federal
rules are in effect requiring disclosure of negotiated prices
between health plans, physicians, and hospitals, compliance is
lacking. Price transparency is a means to an end, and
stakeholders must be able to access and analyze data to
identify cost drivers and make informed healthcare policy
decisions. Congress should direct the Centers for Medicare and
Medicaid Services (CMS) to provide hospitals and health plans
with better datareporting standards and usability guidelines to
ensure that transparency leads to the goal of a more cost-
efficient healthcare system.
Bring Transparency to Pharmacy Benefit Managers (PBMs)
Given the nature of blood cancers, many patients rely on
prescription drugs as their primary therapy. As a result, blood
cancer patients often access their cancer therapy via their
insurance plan's pharmacy benefit-typically managed by their
plan's contracted pharmacy benefit manager (PBM). LLS believes
that the healthcare system needs greater transparency,
oversight, and guardrails in order to ensure that PBM financial
incentives are aligned with the goals of both plans and
patients.
Congress should require that PBMs provide comprehensive
quarterly reporting to plan sponsors, including details about
the list and net prices for drugs accessed through the pharmacy
benefit as well as comprehensive rebate information for each
drug. Additionally, PBMs should be required to provide
important information related to the inflated out-of-pocket
costs paid by plan enrollees utilizing a drug whose enrollee
cost-sharing is based on its list price rather than net price.
Plan sponsors should be aware of the impact on enrollees of
choosing to base cost-sharing on an inflated list price, which
dramatically increases the cost burden for patients who rely on
drugs with high list prices in order to provide a small amount
of savings either to plan cost or enrollee premiums. This
trade-off has significant consequences for plan enrollees with
blood cancer and other chronic and/or life-threatening
conditions, and plan sponsors should be aware of the impact on
these enrollees.
Congress should also prohibit spread pricing-a practice
that positions a PBM's financial incentives in opposition to
the incentives of the plan sponsor for whom they are managing
the prescription benefit. Spread pricing describes the practice
of PBMs administering a plan's drug benefits charging a plan
sponsor far more for a drug than the drug's pharmacy
acquisition cost, with the potentially vast difference between
the two costs going to the PBM's bottom line. This practice
prevents plan sponsors, enrollees, and patients filling their
prescriptions from experiencing the financial benefits of
generic competition, and it serves no purpose other than to
reward PBMs for behavior contrary to the interests of the
entities on whose behalf they are contracted to work.
Facilitate Competition through Consumer-Friendly Plan
Transparency
When shopping for coverage during enrollment periods,
consumers do not have access to clear and transparent
information about the amount they would be required to pay as
their share of the cost of a medication. This is due largely to
the prevalence of coinsurance, a cost-sharing technique that
requires consumers to pay a percentage of a drug's total cost.
Plan formularies typically represent coinsurance as a
percentage only - e.g. "30%" or "45%" - with no accompanying
information that consumers can use to translate that percentage
to an actual dollar amount. Thus consumers must select and
enroll in a plan without a full understanding of the
affordability of one plan's drug benefit versus another.
This lack of transparency poses a real threat to patient
well-being: patients are more likely to abandon treatment when
the cost of their care is high, a dynamic that is exacerbated
when patients are unable to anticipate and plan for the precise
out-of-pocket cost of their care. This lack of transparency is
harmful to the marketplace as well, as it diminishes
competition among plans.
In order to facilitate greater transparency regarding cost-
sharing for medications:
-Congress should require CMS to improve Medicare Plan
Finder to convey important information on out-of-pocket drug
costs so that consumers can judge their health care options
based on complete information about the impact of their
decision on their financial and physical health, and
-Congress should require qualified health plans (QHPs) to
provide transparency regarding the plan's prescription drug
formulary, including meaningful cost-sharing information, to
consumers during the open enrollment process. At a minimum,
QHPs should be required to include for every covered drug a
range of out-of-pocket spending for the prescription (e.g. $-
$$$$ OR $010, $11-25.$500+, etc.)
Conclusion
LLS stands ready to work with you and your colleagues in
Congress to advance the solutions we have outlined above and
other proposals that would achieve savings without sacrificing
patient access to appropriate cancer care. We share your belief
that we are at a crucial juncture in our healthcare system, and
we urge you and your colleagues to capitalize on this real
opportunity to make the reforms necessary to promote patient
access to appropriate care while eliminating incentives that
drive unnecessary spending. We are grateful for your
leadership.
Sincerely,
Brian Connell
Executive Director of Federal Affairs
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Statement for the Record
Statement of American Hospital Association
On behalf of our nearly 5,000 member hospitals, health
systems and other health care organizations, our clinician
partners - including more than 270,000 affiliated physicians,
two million nurses and other caregivers - and the 43,000 health
care leaders who belong to our professional membership groups,
the American Hospital Association (AHA) writes to share the
hospital field's comments on health care costs and
transparency.
OVERVIEW OF NATIONAL HEALTH SPENDING
America's hospitals and health systems - physicians, nurses
and other caregivers - understand and share concerns regarding
the high cost of health care and are working hard to make care
more affordable by transforming the way health care is
delivered in our communities. Real change will require an
effort by everyone involved, including providers, the
government, employers and individuals, device makers, drug
manufacturers, insurers and other stakeholders.
The AHA's most recent "Cost of Caring" report provides
greater details on the challenges hospitals face with respect
to treating patients with higher acuities while dealing with
financial instability. The issues include workforce shortages
and increasing supply chain costs, coupled with inadequate
reimbursement from government payers and increased
administrative burden related to commercial insurance efforts
to reduce compensation. Taken together, these factors create an
environment of financial uncertainty in which many hospitals
and health systems are operating with little to no margin.
For this statement, we highlight two of the cost drivers
incurred by hospitals and health systems: commercial insurer
operating methods and prescription drug costs.
Commercial Insurer Practices
To truly reduce health care costs, we urge Congress to
address practices by certain commercial health insurers. For
example, additional oversight is needed to ensure that Medicare
Advantage (MA) plans can no longer engage in tactics that
restrict and delay access to care while adding burden and cost
to the health care system.
While MA plans were designed to help increase efficiency in
the Medicare program, data from the Medicare Payment Advisory
Commission (MedPAC) found that MA plans will be responsible for
$88 billion in excess federal spending this year, due in part
to inappropriate upcoding practices, whereby plans report
enrollees as having more health conditions and being sicker
than they are to receive higher reimbursements. At the same
time, health insurance premiums continue to grow - in fact,
annual insurance premiums increased nearly twice as much as
hospital prices over a 10-year period.\1\
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\1\ https://www.medpac.gov/wp-content/uploads/2023/10/MedPAC-MA-
status-report-Jan-2024.pdf
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Additionally, inappropriate denials for prior authorization
and coverage of medically necessary services remain a pervasive
problem among certain MA plans. A 2022 report from the
Department of Health and Human Services (HHS) Office of
Inspector General found that MA plans are denying at a high
rate medically necessary care that met Medicare criteria.\2\
The report highlights that 13% of prior authorization denials
and 18% of payment denials met Medicare coverage rules and
therefore should have been approved. In a program this size -
covering more than half of all Medicare beneficiaries -
improper denials at this rate are unacceptable. However,
because the government pays MA plans a risk-adjusted per-
beneficiary capitation rate, there is a perverse incentive to
deny services to patients or payments to providers to boost
profits.
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\2\ https://oig.hhs.gov/oei/reports/OEI-09-18-00260.pdf
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These practices delay access to care for seniors and add
financial burden and strain on the health care system through
inappropriate payment denials and increased staffing and
technology costs to comply with plan requirements. They also
are a major burden to the health care workforce and contribute
to provider burnout. To address these issues, the AHA supports
regulatory and legislative solutions that streamline and
improve prior authorization processes, including the Improving
Seniors' Timely Access to Care Act (S. 4532), which would
codify many of the reforms in the Interoperability and Prior
Authorization Final Rule.
Though issues with denials are often felt most acutely with
MA and Medicaid managed care plans, these practices also are
followed by other commercial payers, where claims denials
increased by 20.2% in 2023. Moreover, the time taken by
commercial payers to process and pay hospital claims from the
date of submission increased by 19.7% in 2023, according to
data from the Vitality Index. For hospitals and health systems,
these practices, which require hospitals to divert dollars away
from patient care to instead focus on seeking payment from
commercial insurers, result in billions of dollars in lost
revenue each year.\3\ Without further intervention, these
trends are expected to continue and worsen. National
expenditures on the administrative costs of private health
insurance spending alone are projected to account for 7% of
total health care spending between 2022 and 2031 and are
projected to grow faster than expenditures for hospital
care.\4\
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\3\ https://www.ama-assn.org/practice-management/prior-
authorization/health-systems-played-payer-takeback-schemes
\4\ AHA analysis of NHE projections of 2022-2031 expenditures.
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Prescription Drug Prices
Congress also should address the high costs of prescription
medications, given the regular increases in costs, as this
impacts expenses for all providers, including hospitals. For
instance, a report from earlier this year noted pharmaceutical
companies raised list prices on 775 brand name drugs during the
first half of January 2024, with a median increase of 4.5%,
though the prices of some drugs rose by 10% or higher.\5\ These
increases were higher than the rate of inflation, which was
3.4% in December. A report by the HHS Assistant Secretary for
Planning & Evaluation (ASPE) found that between 2022 and 2023
drug companies increased drug prices for nearly 2,000 drugs
faster than the rate of general inflation, with an average
price hike of 15.2%.\6\
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\5\ https://www.wsj.com/health/pharma/drugmakers-raise-prices-of-
ozempic-mounjaro-and-hundreds-ofother-drugs-bdac7051
\6\ https://aspe.hhs.gov/reports/changes-list-prices-prescription-
drugs
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Moreover, recent drug shortages also have fueled further
expense growth. An ASPE report found up to a 16.6% increase in
the prices of drugs in shortage; in many cases, the increase in
the price of substitute drugs were at least three times higher
than the price increase of the drug in shortage.\7\ The costs
incurred as a result of drug shortages are compounded by staff
overtime needed to find, procure and administer alternative
drugs, to manage the added challenges of multiple medication
dispensing automation systems and changing electronic health
records and to undergo training to ensure medication safety
using alternative therapies.\8\
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\7\ https://aspe.hhs.gov/reports/drug-shortages-impacts-consumer-
costs
\8\ https://link.springer.com/article/10.1007/s13181-023-00950-
6:text=shortages%20compromise%20or%20delay%20medical,morbidity%20%5B1%2C
%202%5D.
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MEDICAL DEBT
Hospitals and health systems are very concerned about
patients' medical debt, which is a consequence of patients not
paying some or all their health care bills. While health
insurance is intended to be the primary mechanism to protect
patients from unexpected and unaffordable health care costs,
for too many that coverage is either unavailable or falling
short.
Trends in health insurance coverage that are driving an
increase in medical debt include inadequate enrollment in
comprehensive health care coverage, growth in highdeductible
and skinny health plans that intentionally push more costs onto
patients and misleading health plan practices that confuse
patients' understanding of their coverage. These gaps in
coverage leave individuals financially vulnerable when seeking
medical care. The primary causes of medical debt are:
-There are still too many uninsured Americans.
Affordable, comprehensive health care coverage is the most
important protection against medical debt. While the U.S.
health care system has achieved higher rates of coverage over
the past decade, gaps remain.
-High-deductibles subject many Americans to cost-sharing
they cannot afford. High-deductible plans are designed to
increase patients' financial exposure through high cost-sharing
in exchange for lower monthly premiums. Yet many individuals
enrolled in high-deductible plans find they cannot manage their
portion of health plan expenses. A Federal Reserve report found
that 37% of adults would not be able to afford a $400
emergency,\9\ an amount $1,000 less than the average general
annual deductible for single, employer-sponsored coverage.
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\9\ https://www.federalreserve.gov/publications/2023-economic-well-
being-of-us-households-in-2022expenses.htm
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-Certain health plans provide inadequate benefits and
frequently lead to surprise gaps in coverage. Short-term,
limited-duration health plans and health sharing ministries
cover fewer benefits and include few to no consumer
protections, such as required coverage of pre-existing
conditions and limits on out-of-pocket costs. Patients with
these types of plans often find themselves responsible for
their entire medical bill without any help from their health
plan, including for critical services such as emergency medical
and oncology care. These denials can lead to an accumulation of
significant medical debt.\10\
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\10\ https://kffhealthnews.org/news/sham-sharing-ministries-test-
faith-of-patients-and-insurance-regulators/
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-Complex health plan benefit design and misleading
marketing can expose patients to unexpected costs. Many health
plans have complex benefit designs that are not transparent to
patients, such as what is covered predeductible, the
interaction between point-of-service copays, coinsurance and
deductibles and poor communication and education about what the
plan covers. For example, a recent National Association of
Insurance Commissioners report found significant gaps and
inconsistencies with the way that insurers share information
about pre-deductible, no cost-sharing preventive services with
their members, resulting in a "meaningful barrier to effective
understanding and use of preventive service benefits."\11\
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\11\ https://healthyfuturega.org/ghf--resource/preventive-services-
coverage-and-cost-sharing-protectionsare-inconsistently-and-
inequitably-implemented/
Hospitals are the only part of the health care sector that
provide services to patients regardless of their ability to
pay. They underscore that commitment by offering financial and
other assistance, including helping patients qualify for
federal and state health care programs, such as Medicaid. In
doing so, patients can receive regular preventive care, not
just episodic care for serious injuries or illness. In
addition, hospitals absorb billions of dollars of losses for
patients who are unable to pay their bills, mainly due to
inadequate commercial insurance coverage; in 2020, the latest
figure available, hospitals provided more than $42 billion in
uncompensated care.\12\
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\12\ https://www.aha.org/system/files/media/file/2020/01/2020-
Uncompensated-Care-Fact-Sheet.pdf
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This is why hospitals are staunch supporters of ensuring
everyone is enrolled in some form of comprehensive coverage.
However, we appreciate that closing the remaining coverage gaps
may be a longer-term solution and that more immediate steps can
be taken. To that end, the AHA has routinely developed patient
billing guidelines to help prevent patients from incurring
medical debt. The AHA's Board of Trustees adopted the most
recent set of guidelines in 2020, which reaffirm the hospital
field's commitment to:
-Treating all people equitably, with dignity, respect and
compassion.
-Serving the emergency health care needs of all,
regardless of a patient's ability to pay.
-Assisting patients who cannot pay for part or all the
care they receive.
Notably, several of the guidelines directly address medical
debt, including encouraging hospitals to forego adverse credit
reporting of medical debt, so far, nearly 2,800 hospitals and
health systems have affirmed their commitment to the
guidelines, and the AHA revisits them regularly for updating.
PRICE TRANSPARENCY REQUIREMENTS
We appreciate Congress' ongoing interest in hospital price
transparency to provide consumers with the price information
they need specific to their course of treatment.
Hospitals and health systems have invested considerable
time and resources to comply with the Hospital Price
Transparency Rule, which requires online access to both a
machine-readable file and a list of shoppable services. Recent
data from Turquoise Health shows that 93.4% of hospitals have
met the requirement to post a machinereadable file.
We are concerned, however, with recent legislative efforts
to no longer recognize price estimator tools as a method to
meet the shoppable services requirement. This change would both
reduce access to a consumer-friendly research tool and unfairly
penalize hospitals that have spent significant capital to
comply with the regulation. These facilities would instead need
to develop and maintain a shoppable services spreadsheet, which
may be difficult for consumers to navigate and will not reflect
the different policies that their insurer may apply to
determine the final price for a service. Price estimator tools
offer consumers an estimate of their out-of-pocket costs based
on their insurance benefit design, such as cost-sharing
requirements and prior utilization, as well as the patient's
annual deductible. This is an important feature of these tools
that is not available from a shoppable services spreadsheet.
Eliminating the use of price estimator tools as a method to
meet the shoppable services requirement of the Hospital Price
Transparency Rule would therefore reduce price transparency for
patients. We urge Congress to reject this potential change.
As Congress seeks to make statutory changes to price
transparency standards, it is important for legislators to take
into consideration the adjustments to the Hospital Price
Transparency Rule made by the Centers for Medicare & Medicaid
(CMS) on a regular basis. These include changes related to
standardization, new data elements, file accessibility, an
accuracy and completeness affirmation, as well as changes to
CMS' monitoring and enforcement processes. Most notably, CMS
now requires hospitals to use a standard format to comply with
the machine-readable file requirement, which includes new data
elements such as negotiated rate contracting type or
methodology, an accuracy and completeness affirmation and (as
of January 1, 2025) an "estimated allowed amount." CMS also now
requires that hospitals' price transparency information be more
easily found on their websites.
Regarding compliance and enforcement, hospitals may be
required to have an authorized hospital official certify the
accuracy and completeness of the hospital's machine-readable
file during the monitoring and enforcement process. CMS also
can require hospitals to provide additional documentation at
the agency's request, including contracting documentation
needed to validate the hospital's negotiated rates and
verification of the hospital's licensing status.
In addition, CMS increased its efforts to publicize
hospital-specific information on all compliance assessment and
enforcement activity, which it now updates regularly on a
public website. This includes details related to CMS'
assessment of hospital compliance, any compliance actions taken
against a specific hospital, the status of the compliance
action(s) and the outcome of the action(s). A list of the civil
monetary compliance notices and fines issued to date is
available on the CMS website. The fines vary in scope, from
$55,000 to nearly $1 million, for those hospitals that have
been deemed out of compliance with the Hospital Price
Transparency Rule. CMS clearly has the authority and
willingness to enforce compliance with the rule and assess
significant fines, regardless of statutory activity.
CONCLUSION
Thank you for your consideration of the AHA's comments on
issues related to health care expenditures. We look forward to
continuing to work with you to address these important topics
on behalf of our patients and communities.
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Statement for the Record
Statement of AHIP
AHIP is the national association that represents health
insurance plans that provide coverage, services, and solutions
for over 205 million Americans through public programs such as
Medicare and Medicaid, employer-sponsored insurance, and the
individual insurance market.
We appreciate the Committee's attention to the issue of
health care transparency and encourage efforts to increase
transparency and accessibility of health care for older
Americans. We share the Committee's goal of achieving better
health outcomes and more affordable health care, and increased
price transparency is a step in the right direction.
Our statement for the Committee's July 11 hearing outlines
several policy considerations and highlights the ways health
insurance plans are implementing innovative solutions to
increase access and transparency for older Americans, such as
providing clear information on coverage options, strengthening
Medicare, and addressing the cost of high-priced prescription
drugs.
Commitment to Price Transparency
AHIP and our member health insurance plans fully support
the goals of providing actionable information about the cost
and quality of health care services to enable older Americans
to make better-informed decisions.
Health insurance plans are often the best resource for
providing consumers with personalized and accurate cost
information, offering tools that enable consumers to obtain
specific data about their coverage while protecting the privacy
and security of their personal health information. For example,
consumers use these tools to understand their benefits and
provider networks, and cost sharing.
Health insurance plans continue to work to increase
consumer awareness and use of these tools through, among other
methods, member portal messages, outreach efforts, and text
messaging campaigns. Older Americans deserve to know how much
their care and prescriptions will cost before they receive
them, as well as how to access the highest value services.
Health insurance plans are committed to empowering seniors with
the information they need, when they need it, so they can make
health care decisions that are right for them.
Medicare Advantage Provides Choice, Value and Transparency for
Older Americans
More than 33 million seniors and people with disabilities
actively choose Medicare Advantage (MA) for their Medicare
coverage. MA offers high-quality care and support, financial
protections, and affordable coverage options so enrollees can
pay less and receive better care.
MA Empowers Choice
MA offers a market-based framework that encourages
competition and provides seniors and people with disabilities
with options for finding a package of benefits that best meets
their needs. An average Medicare beneficiary in 2024 has access
to 43 MA plans, with specialized plans also available to
certain populations such as retirees or individuals who also
have Medicaid coverage.1
These different options provide enrollees with the same
basic covered benefits available in feefor-service (FFS)
Medicare. However, unlike FFS, all MA plans are required to
limit annual outof-pocket spending, with most offering a wide
range of extra benefits, called supplemental benefits. These
benefits can include reduced cost sharing for basic Medicare
benefits and offer important benefits unavailable in FFS such
as dental, vision, and hearing services; innovative telehealth
options; wellness programs; and nutrition, transportation, and
in-home caregiver services. The Medicare Payment Advisory
Commission (MedPAC) reports that in 2024, MA enrollees on
average have access to more than $2,100 in added
benefits.2 In addition, most MA enrollees can obtain
Part D drug coverage through an MA plan for no additional
premium.
To obtain similar financial protection or supplemental
benefits, individuals in FFS Medicare must purchase coverage at
an additional monthly premium. One analysis found that "MA
enrollees spent, on average, $2,541 less on healthcare costs
(spending on premiums and out-ofpocket expenses) than FFS
Medicare enrollees in 2021."3 Another analysis found
that a 65-yearold retiree who chooses to enroll in MA needs
more than 40% less in savings to cover health care costs over
their remaining lifetime as a person who chooses FFS
Medicare.4
Transparency Aids Consumer Decision-Making and Program Analysis
Medicare beneficiaries have access to information about the
plans available to them through a variety of sources, including
the Medicare program's Medicare Plan Finder. This tool provides
data to beneficiaries, researchers, and others so they can
understand Medicare coverage options and benefits available
under each available plan in a particular service area.
In addition, significant data on MA supplemental benefits
is currently available and additional data will soon be
available. The Centers for Medicare & Medicaid Services (CMS)
requires supplemental benefits data reporting through plan
Medical Loss Ratio (MLR) reporting. Effective for plan year
2024, CMS is collecting additional data through annual
reporting requirements and "encounter data", including use and
cost data. CMS typically posts public use files of plan-
reported data, which can be used by researchers and other data
analysts.5 Beginning in 2026, MA plans will be
required to send mid-year notices to enrollees regarding unused
supplemental benefits.
MA plans also submit details to CMS on every claim they
receive from providers, including demographic information,
diagnoses, and descriptions of services provided. This
"encounter data" is made publicly available for analysis by
researchers and analysts, and detailed "landscape" files are
released in advance of the annual Medicare open enrollment
period to allow analysts to identify key trends in the program.
In summary, whether it's more choices for the health plan
that fits a person's needs, more widespread availability of
high-quality, integrated health coverage, and greater access to
health plans with $0 premium and drug coverage, MA is helping
drive immense value for the millions of older Americans the
program serves.
-Recommendation: AHIP urges lawmakers and regulators to
invest resources to make further improvements to the comparison
functionality on certain benefits (including supplemental
benefits) and to make other changes based on public input. Q05
The Importance of Transparency in Reducing Drug Prices
Rising drug prices impose a heavy burden on all Americans,
especially older adults living on fixed incomes. This situation
is a direct result of high list prices determined solely by
drug companies. Due to the high prices manufacturers set in the
U.S., twenty-two cents of every health care dollar go toward
prescription drugs - with drugs contributing more to health
care costs and growing at a rate faster than any other type of
health care service.6
AHIP looks forward to working with the Committee to advance
market-based solutions that hold drug makers accountable for
setting high list prices and provide relief to American
families.
Manufacturers Set High Drug Prices
Any assessment of prescription drug affordability must
start with the root causes of high drug prices: drug
manufacturers often hold monopoly power over medicines and
continue to prevent and undermine competition to keep drug
prices as high as possible in the U.S. This anticompetitive
dynamic has a profound impact on older Americans. For instance,
over the 2009-2018 period, the average price of a brand-name
drug prescription more than doubled in the Medicare Part D
program and increased by 50% in Medicaid.7
To make prescription drugs available and affordable for
patients, health insurance plans and their pharmacy benefit
manager (PBM) partners negotiate with drugmakers. These savings
are passed along to patients and consumers through lower
premiums and out-of-pocket costs. However, the lack of
transparency on how drugmakers' set prices or why they
routinely increase prices on Americans multiple times a year
creates a barrier to developing new solutions to lower drug
prices.
Solutions to Enhance Drug Pricing Transparency and Reporting
Consumers and taxpayers should have access to information
on manufacturing and research and development costs, net
profits, and marketing and advertising costs for expensive
medications and manufactures should publicly justify price
increases.
-Recommendation: AHIP urges Congress to consider policies
that would require drugmakers to publicly justify high prices
and report pricing information. Congress should advance S.1218,
the Fair Accountability and Innovative Research (FAIR) Drug
Pricing Act, to apply basic transparency to drug pricing and
require drug manufacturers to justify price increases.
Disclosure of Drug Prices in Direct-to-Consumer (DTC)
Advertising
Greater transparency is a crucial component of the broad-
based strategy by lawmakers that is needed to provide consumers
with relief from prescription drug prices.
-Recommendation: Congress should pass S. 1250, the Drug-
Price Transparency for Consumers Act, which would require
drugmakers to disclose list prices in DTC advertisements and
provide disincentives for them to continue price gouging
patients.
Accessing Affordable Alternatives
Older Americans should be able to get the medications they
need at costs they can afford, including more affordable
generics and biosimilars. However, drug companies are regularly
abusing the patent system to keep lower-cost generic drugs from
reaching the market. AHIP supports supports a number of
bipartisan Senate legislative proposals to promote more
competition and reduce drug costs, including:
-S.79, the Interagency Patent Coordination and
Improvement Act, which would establish an inter-agency
cooperative task force to spur more collaboration in patent-
related functions.
-S.142, the Preserve Access to Affordable Generics and
Biosimilars Act, which would prevent anticompetitive "pay-for-
delay" deals that delay and prevent the introduction of more
affordable alternatives.
-S.148, the Stop STALLING Act, which would authorize the
Federal Trade Commission (FTC) to take action against drug
companies when they game the patent system by filing frivolous
petitions with the Food and Drug Administration (FDA).
-S.150, the Affordable Prescriptions for Patients Act,
which would begin to limit drug manufacturers' anti-competitive
tactics such as product hopping and manipulating the patent
litigation process.
-Recommendation: AHIP recommends the Committee work with
the House of Representatives to advance these pieces of
legislation expeditiously and create a more competitive drug
market and lower costs for older Americans and all consumers.
Our members are fully committed to advancing solutions that
provide relief to the American people from out-of-control
prescription drug prices. Common-sense steps are needed to
ensure that people have access to affordable medications. With
solutions that deliver real competition, create more consumer
choice, and reduce drug prices, we can deliver more savings.
Additional Considerations
Impact of Concentrated Health Systems and Private Equity
A growing body of research consistently finds that the
consolidation of health care providers into health systems with
market power is a primary driver of the high costs of health
care in the United States.8 Concentrated health
systems often stifle competition and limit the ability for
health insurance plans to negotiate lower prices for patients.
Private equity's growing influence over portions of the
provider market - from nursing homes to ambulance providers to
important specialties - has also resulted in higher costs for
the same, or worse, care resulting in higher out-of-pocket
costs and higher premiums.9 Additional growth of
private equity ownership focused on extracting short-term
profits, could further inflate health care costs.
-Recommendation: AHIP urges the Committee to prioritize
policies that remove the incentives and opportunities for
private equity firms focused on extracting short term patients
to exploit patients by acquiring specialty practices, ambulance
providers, and other portions of the system vulnerable to such
abuses.
Improving Hospital Transparency by Advancing Site-Neutral
Payments
Advancing site-neutral payments is a competition-enhancing
approach that would improve affordability and access for older
patients and all Americans. Medicare's outdated payment
structure has created an incentive for hospitals to acquire
physician practices and superficially convert them to off-
campus, provider-based hospital outpatient departments. This
loophole allows providers to charge patients substantially more
for the same services and outcomes.
Expanding site-neutral payment reforms would require
transparency of these locations and improve payment accuracy in
the Medicare program. Solutions that permit comparable payment
for comparable services would protect consumers from hidden
fees and encourage a more efficient and competitive market. An
industry analysis found that if enacted site-neutral payments
would save patients and taxpayers close to $500 billion over
ten years.10
-Recommendation: We urge the Senate to advance the
bipartisan S. 1869, SITE Act, which would reduce costs for
consumers and the system by expanding site-neutral payments and
billing transparency.
Conclusion
Consumers need access to reliable estimates and
explanations of their health care costs. Health insurance plans
will continue to help older Americans can get the information
they need to make important decisions about their coverage and
care. Through meaningful collaboration with the Committee, we
believe we can achieve such a framework and help older
Americans make wellinformed health care decisions aided by
transparent information.
[GRAPHIC] [TIFF OMITTED] T7076.010
U.S. Senate Special Committee on Aging
"Health Care Transparency: Lowering Cost and Empowering Patients"
July 11, 2024
Statement for the Record
Statement of Healthsystem Association of Pennsylvania
We are concerned that individual examples cited do not
provide full information and do not accurately reflect hospital
pricing. The Committee should undertake a holistic discussion
about health care costs for patients, providers, and others in
the health care system. A recent report from the Pennsylvania
Health Care Cost Containment Council (PHC4) found that more
than half of Pennsylvania general acute care hospitals are
operating in the red. As you continue to evaluate opportunities
for health care reform, HAP strongly encourages you to address
the underlying challenges facing hospitals in Pennsylvania and
across the nation, including inadequate reimbursement for the
cost of care, outdated regulations that drive administrative
burden and cost, and continuum-wide workforce shortages. HAP
and Pennsylvania's hospital community are committed to working
with you to address these core challenges.
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