The Jig Is Up

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For many years, hospitals and physician practices have engaged with payors in a little game we play in a free market society called "negotiation." This game enables the players to use whatever tools and stratagems they possess to leverage as good a price possible for their services/business in an increasingly price-conscious marketplace. On the provider side, good means high, and on the payor side, good means low. Providers might negotiate from a position of excellence, access, or affordability, leveraging various discounts off an established price based on presumed volume.

Ever since President Lyndon Johnson's Great Society established the Medicare program in the 1960s, government has played a role in this game by setting prices for a segment of the market that has grown over time to exceed 50% of all health care services. When HHS published hospital prices for 100 of the most common services on May 8, the government brought its influence to bear on the free-market side of health care.

This move is not likely to end the game, but it certainly puts providers on notice that there is now another player involved: The patient. Patients have been getting EOBs with outrageous prices for many years, but in those days of low deductibles and wider employment, it was little more than an anecdote at a dinner party. In lifting the veil on provider pricing strategy, the government has thrown its weight behind traditional media, social media, and health-care pricing web sites to encourage patients to pay attention.

Providers can wail as much as they’d like about how this may confuse patients (ie, how insured patients are not paying the published prices), but the objections will fall on deaf ears. (Plus, the issue of uninsured patients being accountable for the list price or whatever discounted price they manage to negotiate with the provider is not easy to defend.).

Clearly, price has become the defining issue for health care in 2013. It’s time for providers to acknowledge this and change the game.

How do you plan to respond?