High medical costs are a well-known problem facing the United States. The personal well-being and economic prosperity of Pennsylvania citizens depend on everyone taking aggressive steps to keep prices down.
Thankfully, tools are available to empower elected officials and the public to demand accountability, transparency, and control of out-of-control industry-driven costs.
Here in Lehigh County, we’ve found nearly $4 million in potential savings just by opening the books and scrutinizing every aspect of the contract, reimbursement, and spending process.
As administrator of Lehigh County, I am presenting the findings of the 2021 audit of the county’s prescription drug providers. Poor cost control was discovered there in the form of inaccurate billing and other errors. We also found that the terms of the contract increased the cost of rebate incentives and the need to select a prescription drug provider. Our audit also found that more transparency and enforcement are needed to increase oversight by county officials.
Self-insured employers have a fiduciary responsibility to leverage all available tools to avoid paying exorbitant costs. Now, some laws and regulations are allowing officials to dig deeper into what they are paying.
The final Coverage Transparency rule requires health insurers to disclose the prices of covered services and items, and the Hospital Price Transparency final rule requires that U.S. hospitals provide It is mandatory to provide online pricing information. Bill for emergency services.
Price transparency could be the ultimate key to ensuring that the healthcare market works well. For example, according to the AMA Journal of Ethics, price transparency is beneficial because it gives patients more control over their healthcare decisions and increases their trust in the system as a whole.
The recently passed Consolidated Appropriations Act of 2023 includes provisions for public health data transparency. Insurance companies will now be required to disclose the prices they negotiate with hospitals and other health care providers, so people can see and compare prices and make more informed decisions about health insurance coverage. can be lowered. This can potentially help employers and individuals maximize cost-effectiveness and reduce healthcare costs.
On a broader level, perhaps it’s time to look at the whole concept of health insurance in a different light. It can be argued that medical insurance is not true “insurance” in the traditional sense because health insurance must be used at some point. Rather, it’s like an upfront payment for a service that you will inevitably need. This means that the health insurance company is essentially acting as a group purchaser, negotiating prices for services on behalf of its members.
Insurers can increase revenue by negotiating higher reimbursement rates with health care providers, with little benefit to members. Individual out-of-pocket costs may increase. According to CMS.gov, his out-of-pocket spending in 2021 will increase by 10.4% to $433.2 billion, which is his 10% of the nation’s medical bills. How can people trust that they are negotiating the best prices and offering the most comprehensive insurance when they know insurance companies are profit driven companies? ?
Pharmacy benefits managers, wholesalers, and distributors often increase healthcare costs by acting as intermediaries between providers and patients. Beyond the obvious administrative bloat caused by these intermediaries, wholesalers and distributors can unnecessarily raise the prices of medical supplies and devices to supplement their revenues.
The problem is getting bigger. According to the Centers for Medicare and Medicaid Services, U.S. healthcare spending has increased consistently over the past decade, reaching an estimated $3.9 trillion in 2020. This places a heavy burden on many individuals and families, especially those who are uninsured or underinsured. Sadly, many even choose to forgo treatment due to concerns about the cost, which can lead to more serious health problems.
Rising health care costs can and must be addressed, but getting the job done will require the engagement of an informed public and elected leaders. By taking the necessary steps, we can reduce costs and improve access to basic health care for all individuals.
Mark Pinsley is the Lehigh County Administrator.
