Buttigieg goes first! -- Decries predatory hospital pricing and proposes to do something about it

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I have been part of a chorus of healthcare writers complaining that when Democratic presidential candidates excoriate profiteering by health insurers and pharma, they always give providers a pass. Relatedly, my last post salutes three hard-hitting stories published this year -- two of them in the last week -- that spotlight predatory billing or collections by hospitals and private equity-owned physician staffing companies.

While no candidate participating in the September 12 CNN debate took Kaiser Health News editor-in-chief Elizabeth Rosenthal's pre-debate invitation...

Will any of the candidates take on HOSPITALS' PRICING AND BILLING policies at tonight's #democraticdebate? They should and why they might not...in my latest for the @NYTimesOpEd. https://t.co/e808tYGdLe

— Elisabeth Rosenthal (@RosenthalHealth) September 12, 2019

one candidate caught the cue this week. Today, Pete Buttigieg is out with a "Medicare for all who want it" plan (rather like Biden's, FWIW). In a statement, as reported by HuffPost's Jonathan Cohn, Buttigieg rounded up the usual healthcare suspects -- plus one (my emphasis):

“For years, Washington politicians have allowed the pharmaceutical industry, giant insurance companies, and powerful hospital systems to profit off of people when they are at their sickest and most vulnerable,” Buttigieg said in a prepared statement. “My ‘Medicare for All Who Want It’ plan will create a health care system that puts power in the hands of each American.”

The plan outline* promises to curb balance billing and explicitly calls out predatory pricing:

LIMIT WHAT HEALTH CARE PROVIDERS, INCLUDING HOSPITALS, CAN CHARGE FOR OUT-OF-NETWORK CARE AT TWICE WHAT MEDICARE PAYS FOR THE SAME SERVICE.

Health providers often charge private insurers exorbitant fees. As hospital prices for outpatient care increase at a rate four times faster than physician prices,10 hospital profits have risen to their highest levels in decades.11 As President, Pete will prohibit health care providers from pricing irresponsibly. This will also provide insurers with leverage to demand lower rates for in-network care. 

The plan outline further promises active antitrust enforcement "to better monitor and challenge more health care mergers, which often raise the cost of care without improving outcomes." It also promises to strengthen the "community benefit requirements" that are a condition of hospitals' nonprofit status, noting that "some non-profit hospitals are doing little to benefit their community—sometimes even harming their own patients through aggressive billing and predatory collection practices."

Buttigieg has been listening. The plan footnotes reference three news stories published since September 1 spotlighting predatory hospital pricing and collection:

1. Beil, Laura. “As patients struggle with bills, hospital sues thousands.” The New York Times. September 3, 2019. Hancock, Jay and Elizabeth Lucas. “‘UVA has ruined us’: Health system sues thousands of patients, seizing patients and putting liens on home.” The Washington Post. September 9, 2019.Back to content
2. Rosenthal, Elizabeth. “That beloved hospital? It’s driving up health costs.” The New York Times. September 1, 2019

While the outlines of Buttigieg's Medicare-for-all-who-want-it offering are familiar -- better ACA subsidies, a strong public option, a buy-in for those discontent with their employers' offering, auto-enrollment of the uninsured -- its focus on cost control is unusual. The linchpins are a hard rate cap on out-of-network billing, antitrust enforcement, an all-claims database and central clearing house for claims, and "harmonizing standards [among private insurers] for transactions, including for eligibility and benefit verification, prior authorization, claims attachment, and claim status inquiry." Those cost control measures are meant to enable measures to reduce individuals' exposure: reduced premiums and out-of-pocket costs in the marketplace, an annual cap on out-of-pocket costs in traditional Medicare, an end to surprise billing, and a forthcoming prescription drug proposal.

Perhaps the most radical provision is a cap on out-of-network billing rates at 200% of Medicare. That would radically reduce providers' leverage to bill at larger multiples of Medicare, and perhaps effectively cap commercial rates at that level. While average commercial rates are below that threshold, they exceed it in many specialties and regional markets.

Tossing "powerful hospital systems" onto the villain list behind "the pharmaceutical industry and giant insurance companies" may seem like a small variation on a theme. It's not. It's a real departure, informed by kick-ass reporting and research, and shaping key elements in Buttigieg's plan.

Footnote, 9/20: Biden's claim that his public-option-for-all-who-want-it plan would cost $750 billion over ten years was an obvious gross underestimate. Buttigieg is claiming $1.5 trillion/10 years.

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* A more detailed document is available here.