As Steven Brill laid out in his recent TIME cover story, “Bitter Pill,” the cost of various health care services is based on a mysterious and confusing set of formulas that leave consumers in the dark.
This is no more true that when it comes to the uninsured who, without an insurer or large employers to negotiate for them, are often stuck with massive bills for services they had no choice about and which are set at prices many times more than what individual procedures and treatments actually cost.
When the Affordable Care Act comes online fully in 2014, most currently uninsured Americans will gain new coverage, but hospital pricing, the foundation for insurance premiums, seems likely to remain shrouded in mystery.
Or will it?
There is at least one reason to be optimistic. In the wake of Brill’s story and in an unprecedented move, the Department of Health and Human Services released a trove of pricing data in early May, posting a spreadsheet online of what Medicare pays hospitals across America for the 100 most common inpatient stays. Following this, one hospital CEO in South Florida vowed to make public what private insurance companies pay his institution for individual services.
Speaking in May on a local public radio affiliate, WLRN, Steve Sonenreich, CEO of the Mount Sinai Medical Center in Miami Beach, FLA, said, “We’d be willing to put our prices to all the insurance companies out in public and we would welcome that kind of transparency of everyone in the marketplace.”
This pledge took others who work at Mount Sinai completely by surprise. “He kind of just said it in the context of a conversation on live radio,” says Joanna Palmer, public relations manager for Mount Sinai. “It wasn’t planned—he just went with it.”
Compiling the prices that insurers pay Mount Sinai for various treatments and procedures is no easy task. The formulas that go into these prices are complicated and based on many factors beyond treatment and procedure costs and quality—like the history of an insurer’s payments to a hospital and what overhead hospital costs are calculated into an individual charge for something like heart surgery. When Mount Sinai administrators heard about Sonenreich’s on-air promise, reported the next day in the Miami Herald, “We knew we would have our work cut out for us,” says Palmer.
Sonenreich’s move could alter the health care industry in South Florida. Publicizing Mount Sinai’s prices may give the hospital a competitive advantage. Said Sonenreich, “We consider ourselves to be the highest quality and also the most efficient in the marketplace…If we’re able to operate at prices that others in the marketplace are priced 30, 40 percent higher than we are, then we challenge everybody to get to that level where there could be affordable health care in this community.”
If hospitals elsewhere believe their prices are lower than competitors, publicly disclosing price contracts with insurers may make good business sense. Of course, if Sonenreich is the only hospital CEO in his region willing to release price information and other institutions that may have higher prices do not, his data dump could be just that. After Sonenreich made his pledge, WLRN host Tom Hudson asked his other guest that day, Baptist Health CEO Brian Keeley, if he would do the same. Keeley hedged, saying, “We’d welcome transparency we’ve always been strong advocates for transparency,” but stopping short of saying his institution would publicly released price data.
“The pledge is out there. The promise is made,” says Mount Sinai’s Palmer. As for when and how the price data will be published? “The goal is accuracy, rather than to just put something out quickly,” she says.
Click here to read Steven Brill’s full “Bitter Pill” cover story on hospital billing practices, available exclusively for TIME subscribers.
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