Dive Brief:
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Some New York hospitals are up to 2.7 times more expensive than the lowest-priced hospitals in the same region, according to a report recently released by the New York State (NYS) Health Foundation.
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Some contracts between hospitals and payers include provisions that could decrease competition, such as prohibitions on participation in cost-estimator tools and anti-steering language.
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The situation in New York reflects a nationwide pattern in which hospitals and health systems with significant market power command higher rates from private payers.
Dive Insight:
Some hospitals in New York state use their market power to set higher rates with private payers and quality scores don’t necessarily correlate with these prices, according to the report. Additionally, despite nationwide attention on transparency in healthcare pricing, some New York hospitals insert language into contracts with payers to hide the cost of care.
Confidentiality language in contracts between hospitals and payers can prevent payers from publicizing provider prices, limiting their ability to encourage patients to seek cost-effective care and patients’ ability to compare costs. Anti-steering language can even limit payers’ ability to provide patients with information on high-quality, low-priced providers.
The correlation between market power and price is not unique to New York. Effects of hospital consolidation, which leads to greater market power, was the focus of a recent MedPAC public meeting. MedPAC determined that rates paid to private payers are being driven higher as some provider organizations increase market power through consolidation.
To improve transparency in pricing, NYS Health Foundation made several recommendations. For instance, policymakers could implement regulations that simplify the methods used by payers and hospitals to set rates. Prohibitions on language the prevents payers from publicizing provider prices could also be used to improve transparency and potentially reduce healthcare costs.