Our nation’s patchwork system of insurance has resulted in pricing and reimbursement variations across programs and providers.  The patchwork approach enables costs to be shifted among the payers of care – public programs, private insurers, and those who pay directly for their care.  Some stakeholders implicate the reimbursement rates paid by public programs – Medicare and Medicaid – and describe them as low or inadequate.   In order to make up for this Medicare and Medicaid “shortfall,” providers shift some of the cost of care onto private insurers and others paying directly for their care.  Others voice concern that wide variations in plan design make it difficult for people with insurance to anticipate what they will have to pay for care and also for the providers serving them to accurately project what they will be reimbursed. 

What a healthcare provider charges for a services is far less relevant than what a provider expects to be reimbursed for the particular service.  Negotiated discounts, or contractual allowances, are proprietary and the end result is little or no transparency across the multiple private payers in the system.  For those with no insurance, the expectation is that they will pay full charges since they have no entity negotiating discounts on their behalf.  In many instances, providers would be willing to negotiate the fee that an uninsured patient pays for a service providing the patient proves that paying the full rate would be a hardship. 

Given the enormous gap between what is charged (price) for a healthcare service and the what is paid (reimbursement) by public programs, private insurance and individuals, health care pricing is rarely described a transparent.  The federal Medicare program and state Medicaid programs are required to provide public information on the fees that they pay for services.  While this information is not easily deciphered by the average consumer, it is available.  The same cannot be said for private insurers.   

Health provider charges are dramatically higher than costs or what a provider would expect to be paid for a service.  This fact has serious consequences for uninsured patients.  The uninsured have not program or insurer negotiating a discount on their behalf.   They are expected to pay full charges for services, unless they are informed of charity care or some form of discount.  Many uninsured patients are not informed of financial assistance and are surprised to learn that charges are negotiable.   

Increasingly, insured patients have deductible levels that exceed the cost of medical treatment and providers do not receive insurance reimbursement for care they provide to these patients.   These patients, while they may benefit from the discount negotiated by their insurers, may also be surprised to learn that their bill can be negotiated and discounted even further.  

Prompt pay discounts, most often provided to uninsured patients, but sometimes made available to insured patients for their self-pay portion of the bill, may range from 10- 50%.   Many patients who have been offered these discounts have expressed that the fees charged for services are quite arbitrary.   

Some states have passed laws to protect consumers against being overcharged by providers.  For example, New York, California, Minnesota, and Wisconsin limit the fees that may be charged to uninsured (and some underinsured) patients whom meet income eligibility standards.  Some of these states also require that the fees charged for services be posted on a state website. 

• Are there examples where Medicare formula is being (or considered being) used to drive prices paid by consumers?
• What are the practices of pricing and reimbursement where there is the most transparency?
• What can we learn from these examples?
• What are the most unpredictable revenue flows?
  Is it from a certain service type or demographic?

• Sliding scale- progressive pricing models
• Rate regulation
• Payment schedules
• Doc in a box
• Published rates