WASHINGTON — Equifax, the credit rating agency, once spent a year auditing hospital bills for insurance companies. More than 90 percent of the 40,000-plus bills included overcharges.
That was back in 1998. Today, hospitals claim their bills are much more accurate — if no less complex and expensive.
Several companies are trying to shed light on these costs for the people paying the bills. Medicare audits, for example, have recovered more than $4.8 billion in hospital charges since 2009.
Audit and transparency companies are now offering their services to the nation’s bigger companies, which typically pay the majority of the hospital costs of their employees.
“Employers are starting to see the real costs of what they’re buying and paying for,” said Marianne Fazen, executive director of the Dallas-Fort Worth Business Group on Health.
“Transparency is going to be a top factor in their negotiations” — with insurers, with audit firms and with hospitals themselves, she said.
Audit and transparency firms like Group & Pension Administrators and Compass in Dallas, San Francisco-based Castlight Health and Atlanta’s Advanced Medical Pricing Solutions are trying to get hospitals to accept a different type of payment.
The current payment model, fee-for-service, charges for every separate step of care, whether it’s 30-minute increments in the operating room or the cost of a vitamin.
Some take Medicare’s price controls as their starting point and add a little for the hospital’s profit — a “cost-plus” approach.
Some do reference pricing — a ceiling on what they’ll pay for certain procedures, with the patient at risk to pay the difference if they go somewhere charging a higher price.
Others negotiate directly with hospitals, where a discount fixed price is offered in exchange for directing employees needing that type of care to the preferred hospital.
Wal-Mart, Texas811 and Energy Future Holdings are a few of the companies that have gone in one of these directions.
It’s incumbent on employers to do this if they hope to get their insurance bills under control, Fazen said.
A third of America’s medical spending — $882.3 billion in 2012 — was spent at hospitals, according to federal assessments of national health expenditures. And while overall health care spending slowed markedly that year, hospital charges were up 4.9 percent.
Medicare pays most of the nation’s hospital bills, but private insurance picks up about a third of that cost. Usually, the insurance companies are third parties in these transactions — they administer the plans, but the money comes out of the wallets of companies and their employees.
It’s an arrangement coming under challenge from the new transparency firms, who say the insurance companies aren’t paying enough attention to hospital charges.
Companies have tried to keep control of their medical benefits by passing on more of the cost to employees through higher annual deductibles and out-of-pocket ceilings.
That won’t curb hospital charges, however, which easily exceed those higher worker contributions.
“It’s ridiculous to expect them [consumers] to drive change in the market. The change is going to come when employers do it en masse,” Fazen said. “It’s high time for employers to step up to the plate on this.”
Follow Jim Landers on Twitter at @landersjim.
firstname.lastname@example.org Publishedd: 24 March 2014 09:30 PM Updated: 24 March 2014 09:31 PM
Editor’s Note: Advanced Medical Pricing Solutions (AMPS) is a healthcare cost management company serving the self-funded payer community. AMPS specializes in physician led, technology driven, facility claim review. AMPS primary goal is to ensure medical facility claims are accurate and reasonably paid. www.advancedpricing.com