Paying a Premium for Misaligned Incentives
The Hospital Transparency Rule of the Centers for Medicare and Medicaid Services (CMS) took full effect at the start of 2021. As per the regulation, hospitals had to start publishing comprehensive data on the prices of provided items and services. The objective was to allow patients to compare prices between hospitals and preemptively choose more cost-effective treatment options. There are still large hospital systems that have not published data on consumer prices, and as per the rule, they will be fined for failure to comply with the CMS rule.
Recently, a Wall Street Journal article went in-depth with information currently available from Sutter Hospital, where the prices of treatments varied vastly. Depending on coverage, a C section could cost anywhere from $6,000 to $60,000 while some heart operations can see a range of $90,000 to a whopping $515,000.
Of course, these variations in pricing may be different from hospital-to-hospital, but the point still stands that the current means of conducting business in healthcare is directly correlated with greater cost burdens on the whole system. When insurers negotiate contracts for coverage of certain health systems, they have to essentially sell coverage of the hospital, which would pay off for insurers in the form of lower costs for procedures. Insurers capable of directing more patients towards a hospital will have an easier time achieving favorable rates. It is basic economic intuition that as a result of such a highly secretive process for sales, prices across the board increase because factors like price discrimination can come into play with a lack of transparency.
This phenomenon is not limited to coverage of hospital procedures. Pharmacy benefit managers set the prices of drugs by working with drug manufacturers to achieve insurer coverage. Most notoriously, the largest vendors of electronic health records make health practices and systems adopt secretive contracts, many of which restrict physicians’ abilities to publicly voice issues with the software. Combined with significant lobbying efforts, these agreements with hospital systems have essentially allowed many vendors to largely ignore calls for interoperability that would make data sharing between providers seamless. This of course, likely encourages providers to adopt already predominant EHR software for the sake of more consistent access to patient records across more providers.
All these reasons are why we are building Curamei to be network agnostic, so that the usability of our platform is not limited to specific provider networks or software systems. The exchange of health information should be with the patient, not with the health plan, and to force providers and patients to abide by secretive agreements is anti-consumer, plain and simple. Our role in this complicated mess of the American healthcare system is to be the one-size-fits-all software for patients to get everything health information-related and allow it to be directly shared with providers. No more constraints of faxing records from an out-of-network provider, no more restriction on feedback for software used in every patient encounter, and no third-parties at play.
