This piece was co-written with Cynthia Fisher.
Jason Dean from Tennessee needed stitches on his knee after a minor accident last year. He went to a local hospital that told him insurance would cover the procedure. Weeks later, he received a $6,500 bill, of which his insurer only covered about half.
Jason thought the bill was a joke, but in the opaque American healthcare system where prices are hidden until after consumers receive care, the joke’s on him. Adding insult to his injury: urgent care clinics provide the same care for approximately $275 without insurance.
New federal healthcare price transparency rules empower patients like Jason to avoid this common overbilling nightmare. A hospital price transparency order that took effect on January 1, 2021, requires hospitals to publish their actual prices, including their discounted cash and negotiated rates by insurance plan. And on July 1 a health insurance price transparency rule takes effect, requiring insurers to reveal their historical claims data and negotiated rates so patients can access upfront prices wherever they get care. Armed with these actual, upfront prices, consumers like Jason can prevent hospital overcharging through their choices and seek easy remedy and recourse when overbilled.
Unfortunately, North Carolina law has a gag clause for public employee healthcare plans that keeps negotiated rates and historical claims data confidential. To align with federal law and empower state employees and unleash price transparency for all North Carolina consumers, this law should be immediately repealed or revised.
Hospitals and health insurers in the state have long taken advantage of this gag clause to profit off keeping patients in the dark about prices. In 2018, the non-profit UNC Health system responded to a public records request about the actual rates it charges the North Carolina State Health Plan with a heavily redacted document and prices blotted out. Even more interesting is that employees of UNC Health are members of the North Carolina State Health Plan.
Federal law is “supreme” under the US Constitution and preempts state law. In a legal challenge over North Carolina’s opaque price rules, federal law would supersede it. Consumers fought hard for these rules, including winning industry-backed challenges to the hospital rule in federal district and appeals courts in 2020.
Yet competing state and federal laws threaten to delay the publication of these actual prices for consumers who need them now to protect their financial and personal health. North Carolina insurers will use state law as justification to continue hiding their real prices from state employees and the taxpayers who fund their care.
Consumers can’t wait and need access to real prices now. Last week, the Kaiser Family Foundation released a new analysis indicating that a shocking 100 million Americans hold medical debt. According to the Urban Institute, almost one in five North Carolinians have medical debt in collections. Another report released last week by the Consumer Financial Protection Bureau finds that members of the military regularly have their credit ruined over hospital upcoding and fraudulent billing. Employers, who provide most Americans with healthcare, have had to reduce employee wages due to runaway coverage costs at the worst possible time as inflation soars.
On Wednesday, North Carolina legislators will be voting on a bill to bring its state law into line with federal law. However, large hospital systems are secretly trying to kill this pro-consumer bill.
Legislators can ensure North Carolina consumers enjoy all the transparency benefits of federal price transparency rules by simply repealing the state law that mandates secret prices. A recent study by PatientRightsAdvocate.org finds that only 14.3% of hospitals nationwide – and only 19% in North Carolina – are complying with the hospital price transparency rule.
When all actual prices for care and coverage are known upfront, a functional, pro-consumer healthcare marketplace will emerge. Patients and employers will be able to shop for the best care and coverage at the best prices, unleashing competition that reverses runaway costs and fights inflation in health care.
Josh Archambault is the founder of Presidents Lane Consulting and a senior fellow at Cicero and Pioneer Institutes. Cynthia Fisher is the founder and chairman of PatientRightsAdvocate.org and the founder and former CEO of ViaCord.