(The Center Square) – Over the years, inflated prices for hospital services have added billions to the North Carolina health plan’s now $27 billion in unfunded liability, according to state Treasurer Dale Folwell.
Folwell told The Center Square on Wednesday the plan is on track to become insolvent within the next two years without significant price relief and reforms.
It’s linked to the same issue that has impacted more than 7,500 residents and their families who have faced lawsuits from hospitals over medical debt.
“Every citizen is impacted,” Folwell said, particularly those who participate in the state health plan. “We’re talking about those who teach, protect or otherwise serve” taxpayers.
The situation has served as the motivation for several reports from Folwell’s office highlighting how the “health care cartel” has overcharged patients, pushed many into high-interest credit cards, concealed costs, and collected tax breaks and pandemic relief that outpace charity care from the nonprofit systems.
The latest came Tuesday with new data on how the state’s hospitals’ extreme price markups and lack of transparency for costs are crippling the ability of residents and the state health plan to protect their financial health.
Researchers with the state health plan investigated hospital prices and compliance with federal price transparency rules across 16 common services at 140 hospitals, with data analysis provided by the Johns Hopkins Bloomberg School of Public Health.
The key findings in the report show North Carolina hospitals charge commercially insured patients more than 700% of Medicare rates for some services at a time when the majority have self-reported profits from Medicare rates over six years. The most expensive subset of hospitals inflated prices for commercially-insured patients as much as 24 times what Medicare pays, according to the report.
The research points to urinalysis tests with a 1,120% median markup from Medicare rates that forces patients to pay a median of $28.80 when Medicare pays a median of $2.36. Other large price disparities were found in radiological services such as CT and MRI scans. The report shows hospitals inflated the median $1,167 commercial price for a computerized tomography scan of the brain by 976% from Medicare’s $108 median rate.
Those disparities, according to Folwell, are driven in part by the state’s certificate of need laws, which require government approval for and restrict the supply of health care equipment and services.
Researchers found uninsured patients are exposed to high price markups, as well, some more than on commercial rates. Across the majority of the 16 services analyzed, hospitals charged uninsured patients more than 150% above Medicare rates.
Still other findings showed prices for commercially insured patients varied as much as 1,670% between hospitals. On average, only 51% of hospitals disclosed commercial insurance prices, a figure that drops to 42% for cash prices for the uninsured across the 16 services.
The problem with a lack of price transparency is a major reason residents sued by hospitals struggle to defend themselves against the charges, according to the treasurer.
Changing the dynamic rests with the General Assembly, with Folwell pointing to a Medical Debt De-Weaponization Act that would force hospital systems to post price information and strengthen consumer protections against medical debt.
Senate Bill 321, which cleared the Senate by unanimous vote in May and is now pending in the House rules committee, would empower the state’s attorney general to enforce the changes with the potential revocation of nonprofit status for hospitals that refuse to comply.
“I think it would send a signal to the hospital cartel in North Carolina that the people of this state can no longer have 20% of their income go to something they would rather not consume nor do they understand,” Folwell said.
The treasurer also believes the state’s certificate of needs laws “need to be repealed immediately.”
“We can’t continue to be No. 1 in the country for business activity while our health care costs are out of control,” he said.
The North Carolina Healthcare Association and its members “support price transparency” but it’s “a work in progress for all U.S. hospitals,” spokeswoman Cynthia Charles said in a statement to The Center Square.
She noted that hospitals “are not price setters, they are rate takers” that do not negotiate with Medicare or Medicaid and reimbursements are “typically not sufficient to reimburse providers for the care they deliver to patients.”
Charles wrote “the suggestion that hospitals ‘hide’ prices from patients is absolutely false.”
The report says research shows “hospital prices are directly linked to hospital consolidation” because it removes options for patients and dictates pricing. And realities could be even worse because “the federal government does not even weigh ‘virtual mergers,’ such as the Joint Operating Agreement between Vidant Health and the Brody School of Medicine to create ECU Health.”
Executive compensation is another arrangement tough to capture.
