Given that most Americans cannot afford an unexpected $500 bill without going into debt, having financial assistance available and easily accessible is key for reducing the burden of medical debt in the U.S.

Check out our community benefit policy tracker to see the latest on how states are tackling hospital accountability on this issue!

Trends in financial assistance spending

Unfortunately, several recent reports show that spending on financial assistance (also known as “charity care”) appears to be declining among hospitals overall. A Modern Healthcare analysis found that hospitals’ median financial assistance spending as a percentage of operating expenses declined from 1.21% to 0.99% from 2020 to 2022. Although one might have expected financial assistance spending to increase due to the great need for emergency care during Covid-19, hospitals’ expenses also increased greatly from labor and other costs. 

Another 2023 study in Health Affairs found that on average, nonprofit hospital income grew from 2012-2019, but financial assistance declined slightly; in comparison, for-profit hospital spending on financial assistance more than doubled during that time.  

Hospitals also differ widely in the amount of free and discounted care they provide. For example, health systems like NYC Health+Hospitals devoted 6.85% of their expenses to financial assistance in 2022, while Baystate Health in Massachusetts spent only 0.16%, according to Modern Healthcare.

I’d like a refund, please

In Washington state, where there are additional state requirements for nonprofit hospitals, the Attorney General has been investigating certain health systems for inappropriately billing patients who should have qualified for free care. Recently, PeaceHealth System agreed to pay $13.4 million in refunds to thousands of patients who should have were eligible for free or discounted care but were billed anyway. This includes $4.2 million in direct refunds for more than 4,500 patients and up to $9.2 million in refunds for approximately 11,000 additional patients if they validate their income for eligibility. 

Requiring hospitals to refund patients who were billed erroneously is a growing trend. In Oregon, recent legislation requires hospitals to refund patients who paid for care when they were eligible for assistance. And Maryland is refunding patients who were billed for hospitals services from 2017-2021 when they could have qualified for free care.

Hospital sued patients who should have gotten free care

Some hospitals go beyond billing patients, bringing lawsuits to those unable to pay. Louisville Public Media recently reported that Norton Healthcare filed thousands of lawsuits for unpaid medical bills, despite many of those patients qualifying for free or discounted care. In many cases, patients are unaware they may be eligible for free care, or they face administrative barriers to assistance. 

Despite the established regulations around community investment and charity care, the lack of enforcement has resulted in crippling medical debt for thousands of Americans. Let’s hope the recent pressure policymakers and media are putting on hospitals will be encourage them to give more free care, in pursuit of their social mission. 

The post Policymakers and media put pressure on hospitals to give more free care appeared first on Lown Institute.

Fortunately, there have been some encouraging updates in the price transparency space. On the regulation front, CMS recently announced they are updating their price transparency rules to address concerns about data complexity and usability. And on the research front, a fascinating series of interviews with hospital leaders shows what factors drive price transparency compliance. Here’s what you need to know.

Price transparency rule updates

In a final rule Medicare regulation, CMS announced they are adding further requirements for hospital prices, that take effect in 2024:

1. Hospitals will have to use a standard template for their machine-readable file created by CMS. This ideally will make this information more uniform and easier for researchers to compare across hospitals.
2. A link to the machine-readable file must be in the footer of the hospital website, to avoid the maze of clicks that it often takes to reach the price transparency data  
3. Along with their charges and payer-negotiated prices, hospitals will also have to report the “estimated allowed amount” for services, which is the average amount hospitals have historically received from that payer for that service.
4. Hospitals will have to include a statement attesting that the price data they are reporting is “true, accurate, and complete.” This will be a step forward in accountability and give hospitals more incentive to ensure accuracy in the price data they publish.

CMS estimates that these additional requirements will cost hospitals under $3,000 on average to CMS will also publish data on how well hospitals have complied and whether they have been fined for noncompliance.  

What drives hospitals to be transparent? 

Hospitals’ compliance with price transparency has been variable, with some hospitals receiving accolades for their full compliance and many others avoiding the regulation. What made some hospitals decide to publish their prices and others resist? 

A recent Health Services Research article asked representatives from 12 non-profit healthcare organizations what influenced their decision to comply with price transparency regulations in the first year of the law. 

They found that of the 12 organizations, five complied to the regulations in what the researchers called “good faith” efforts without resisting. Three organizations chose a “compromise” strategy– complying with the regulation but at the same time putting pressure on CMS through state or local hospital organizations. Four chose an “avoid” strategy, not posting their prices or just posting enough to not get caught. Some hospitals had plans to fight back against CMS if they were fined, one participant saying, “If CMS got to the point that they actually levied fines, and fined [our organization], we will subjugate the legitimacy of the fine…[and] go to our state hospital association and see if they will help us fight.”

The strategies that health systems decided to take were based on both internal and external factors, including:

• Alignment with organizational mission — Some hospitals viewed the disclosure of price information as central to their core ethos and as something that sets them apart.
• Availability of time and money — Assembling prices for every medical service is a complex task, and almost all organizations hired consultants and external vendors to help. Some hospitals reported it costing millions to do so. And as Covid-19 hit, some hospitals put aside price transparency to focus on the emergency at hand.
• Reputation — Some hospitals wanted to avoid being seen as non-compliant or on CMS’ “naughty list,” because they were afraid of public shaming.
• Competition — Some hospitals wanted to keep their prices secret to maintain a competitive advantage with their insurer negotiations, while other hospitals with lower costs were happy to share the data.

Although financial penalties are CMS’ primary method of enforcing the rule, none of the hospital organizations reported fines as having a big impact on their strategic response and compliance. The amount of fines for noncompliance has increased over time, so they likely have a larger impact now than in the first year of the rule.

As hospitals gain clarity around regulations and their impacts, we should expect to see an increase in compliance rates. Hopefully, this coincides with lower costs to patients and a more cost efficient healthcare system.

The post What makes hospitals comply with price transparency rules (or not)? appeared first on Lown Institute.

Fee-for-service vs value-based care

In most states, the dominant payment model for healthcare is fee-for-service, in which providers get paid for each service they do. Hospitals and doctors therefore have an incentive to do more tests and procedures, even when they don’t make patients healthier. At the same time, there is little incentive to take on health-related social needs and preventive care that can keep patients out of the hospital in the first place.

The goal of the AHEAD model is to turn these incentives on their head (sorry!). Hospitals in participating states will receive a “global budget” — essentially an annual salary — that takes into account their previous Medicare and Medicaid payments, the populations they serve, and other factors. So when hospitals avoid unnecessary care and reduce preventable hospitalizations by addressing social needs, they get to keep those savings.

AHEAD builds on the success of previous global budget models. In Maryland, they have had global budgeting for hospital inpatient care since 2014, which has led to significant Medicare cost savings and reductions in avoidable readmissions. In Vermont, most hospitals participate in a voluntary accountable care organization model to reduce overuse and better coordinate care. And many rural hospitals in Pennsylvania received fixed global budgets through a CMS pilot program, which gave them financial stability during COVID-19.

The AHEAD model takes these existing models much further, which could result in transformative change for participating states. For one, AHEAD is a ten-year program, so states and hospitals will have the time to invest in primary care and social needs and actually see savings during the program. AHEAD is also comprehensive, including Medicare, Medicaid, and private payers (states are responsible for incentivizing or requiring participation from private insurers); including a voluntary fixed payment model for primary care providers as well as hospitals; and including outpatient as well as inpatient payments in the global budgets. Lastly, AHEAD holds providers accountable for achieving not only quality goals but equity goals as well. Participating states must develop a “health equity plan” for improving population health and reducing disparities.

Challenges ahead

The AHEAD program is promising, but this ambitious plan is going to face many challenges throughout planning and implementation. In a recent piece in Health Affairs, Troyen Brennan, adjunct professor of public health at the Harvard T.H. Chan School of Public Health, identifies potential roadblocks and unanswered questions for CMS.

For example, AHEAD goes further than Maryland’s global budget model by including outpatient care as well as inpatient care. Will hospitals join in the model without this “lifeline of fee-for-service support”? In Maryland’s model, Medicare pays hospitals much higher rates to make up for lower rates from private insurers. Is CMS prepared to offer these much higher rates to hospitals in more states?

Brennan also questions whether hospitals that are financially successful in the current fee-for-service system will take a gamble on global budgets when they might lose money. He writes:

“As a hospital executive, your key strategy, perhaps your only strategy, has been to increase in size, gain leverage with insurers, bargain for better fee-for-service rates, and do more procedures.  Working under a prospective budget blocks that strategy.  So one might ask about Pennsylvania, would centers like UPMC in the west, and Jefferson or University of Pennsylvania in the East, be ready to abandon the fee-for-service revenue generation program for one based solely on value-based care that improves population management. I wish that were true, but it seems doubtful.”

Ever since Maryland launched their global budgeting model, health policy experts have been hoping that other states will follow their lead. The AHEAD program presents an opportunity for more states to dive into the deep end of value-based care, with CMS holding their hand for support. Let’s hope states will take the plunge.

The post Looking AHEAD: CMS’ new global budget model for states appeared first on Lown Institute.

The event kicked off with a discussion about incentives and accountability in healthcare. Earlier this year, panelist and healthcare expert Dr. Don Berwick published “Salve Lucrum: The Existential Threat of Greed in US Health Care” in JAMA, making waves in his unabashed critique of health sector greed. This unchecked greed, he argues, has an immense impact on entire communities.”We have worked very hard to…have a single effort to try and improve the upstream determinants of health, and to be honest with you, we’ve failed miserably at that,” Dr. Berwick told the audience. “We’ve been working at it for a very long time and we have some good examples [of effective changes], but it should be much bigger.” Panelists at this NY Fed Event agreed, emphasizing the dissonance between workers’ dedication and profit-driven policies.

“Our healthcare workforce does noble and often heroic work, but the system has given in to greed and the pursuit of excess profits. I think we can start to change this if we aggressively assert that hospitals have a responsibility to their communities that goes beyond the provision of healthcare.”

– Dr. Patty Gabow, Chair of the Lown Institute

Transparency is a key part of accountability. Dr. Patty Gabow, a panelist and Chair of the Lown Institute, pointed out that large nonprofit hospitals have tremendous taxpayer support. This support comes with the condition that these hospitals give back an equivalent value in community investment and support. Our “Fair Share” spending research at the Lown Institute suggests that this condition is not being met.

The 2023 Fair Share Spending Report revealed a $14.2 billion dollar national fair share deficit, meaning that the value of nonprofit hospital tax exemptions is far more than the value of investments communities receive in return. This gap in value, juxtaposed with the fact that many hospital workers earn below the federal poverty line while some hospital CEOs make millions each year, demonstrates just how off balance the current system is. We need social responsibility, but we have a profit-driven system.

As the panelists note, if hospitals did just two basic things; take care of their own and gave community investments equal in value to their tax breaks, they could pivot from excess profitability to become anchors for communities. “This should be the baseline,” said Tyler Norris, Visiting Scholar at the Federal Reserve Bank of New York.

“We treat vulnerability as some sort of exotic thing we don’t know how to solve for. But we’re not at a loss on how to build healthy, productive communities with children who thrive—many of us live in them. We don’t have an innovation problem, we have a distribution problem.”

Jason Purnell, President of the James S. McDonnell Foundation

For hospitals to become anchors for their communities, they need to collaborate with community members themselves. “We need radical inclusion of people’s voices,” said Dr. Leslie Walker-Harding, Senior Vice President and Chief Academic Officer at Seattle Children’s Hospital, “If you live in a particular community, you are an expert on that community, you know what you need and you know how it can be done.”

Watch the video recording to view the full event and panelist discussion.

The post WATCH: Investing in Health and Well-Being appeared first on Lown Institute.

Now a new report from the Los Angeles County Department of Public Health (DPH) shows how bad the problem has become in one major city, and offers solutions for hospitals and policymakers to consider.

The burden of medical debt in LA

The LA DPH used county-specific data from the California Health Interview Survey (CHIS) of 4,000+ people from 2017-2021 to better understand the burden of medical debt. They found that about one in ten LA County adults reported having trouble paying medical bills in the past year. That’s higher than the rate of asthma or smoking in the county and close to the rate of type 2 diabetes in the area.

Even as the proportion of insured adults increased from 2017 to 2021, the level of burdensome medical debt in the county did not significantly change, according to the report. The impact of medical debt on LA residents’ financial security was profound. Half of adults with medical debt burden reported taking on credit card debt to pay for their medical bills, and 46% reported being unable to pay for basic necessities due to their medical bills.

While medical debt is widespread, certain LA county residents are disproportionately impacted by medical debt. Here were some of the factors associated with greater rates of medical debt burden in LA County:

• Insurance status: Uninsured patients had high rates of burdensome medical debt (26.3%). But even those insured under MediCAL (California’s Medicaid program) and private insurance were twice as likely to have medical debt burden compared to those covered under Medicare.
• Race/ethnicity: Latino (12.4%), Black (11.0%), and American Indian/Alaskan Native, Native Hawaiian/ Pacific Islander, or multiracial adults (12.7%) were more likely to have medical debt burden compared to white (7.9%) and Asian (5.8%) adults.
• Income: Those with household income under 300% of the Federal Poverty Level ($79,500 for a family of four) were more likely to be burdened by medical debt compared to those making above 300% FPL.
• Health status: Respondents in “poor” health were more than three times as likely to have medical debt burden compared to those in “excellent” health.

Hospitals and medical debt

The high cost of hospital care — especially for uninsured patients or those with high-deductible plans — is one of the big drivers of medical debt. According to a 2023 Urban Institute report, nearly 75% of adults with medical debt owe some or all of it to hospitals. In LA County, adults with one or more hospital stays in the past 12 months were more than twice as likely to have medical debt as those with no hospital stays (21.5% vs 9.2%).

At the same time, hospitals are well-positioned to help solve this problem, as growing profits have given some hospitals a financial buffer to invest more in free and discounted care for patients that need it. However, increased profits do not always result in increased financial assistance. A recent study in Health Affairs found that from 2012-2019, the average operating income for nonprofit hospitals increased from $43 million to about $59 million, a 37% increase. Yet over that time period, spending on financial assistance for nonprofit hospitals actually decreased slightly.

The decrease in financial assistance spending during that time could partly be attributed to Medicaid expansion, which reduced the number of uninsured patients who are usually the target of assistance. Yet it doesn’t explain why average financial assistance spending at for-profit hospitals nearly doubled over the same time period, as the Health Affairs piece found.

The Lown Institute’s Fair Share Spending report earlier this year found a similar disconnect between nonprofit hospitals’ enormous tax benefits and the amount spent on their communities.

What can hospitals do?

So what should hospitals do about this? The LA DPH convened a coalition of community organizations, hospital representatives, and local government to discuss solutions to help reduce the burden of medical debt. Here are a few policies for hospitals that were discussed:

1. Expand financial assistance to more patients. In the LA study, adults in households with incomes below 300% or more of the FPL had a greater likelihood of medical debt burden than those with higher incomes. Currently, California law requires that hospitals have to provide free or discounted care for uninsured patients who earn up to 400% of the federal poverty level, but the same rule does not apply to all insured patients — nor do care discounts always cover the full cost of care.
2. Use presumptive eligibility. This means that hospitals automatically qualify patients for financial assistance if they are eligible for Medicaid, SNAP or other means-tested benefits. This takes away a lot of the administrative burden on patients to apply for assistance.
3. Make financial assistance applications simpler and less invasive. For example, don’t require details on patients’ assets, pay stubs, tax returns, or other personal information that people are reluctant to share.
4. Have financial counselors or patient advocates available to help patients navigate the billing process and identify when people are eligible for assistance.

The coalition also identified several important actions for local government, such as:

1. Pass legislation requiring hospitals to broaden eligibility for financial assistance and stop aggressive billing practices like selling medical debt to collection agencies. Los Angeles could also follow in the footsteps of New York City and create an Office of Healthcare Accountability to be able to gather more data on hospital pricing, community benefit spending, and billing practices.
2. Increase transparency for financial assistance and billing practices. While we don’t always get to choose our hospital, it can help to know which hospitals have the most generous and simple financial assistance policies before seeking care. Perhaps more importantly, we need to know which hospitals allow them to sue patients with past-due bills, garnish wages, refuse care, or have other aggressive billing practices.
3. Buy and forgive medical debt. Dozens of communities including Boston, Chicago, and New Orleans have used COVID relief funds to forgive medical debt for thousands of people.

Whether it’s policymakers or hospitals making the first move, action is urgently needed, because the medical debt crisis is only growing.

The post How hospitals can help solve our medical debt crisis appeared first on Lown Institute.

Is lecanemab cost effective?

We previously wrote about the new drug for Alzheimer’s Disease lecanemab (brand name Lequembi). While the drug shows some promise to slow the progression of cognitive decline, it’s still unclear whether the safety issues outweigh the clinical benefits, and whether Biogen’s list price of $26,500 per year is reasonable.

A recent report by The Institute for Clinical and Economic Review (ICER) evaluated the cost-effectiveness of the current list price of lecanemab and concluded that the current price doesn’t accurately reflect the clinical value of the drug. ICER’s estimated cost-effective pricing of it falls between $8,900 and $21,500, which means that manufacturers would need to discount the drug by at least 19% to fall within that range. 

Evaluating the cost-effectiveness of lecanemab is difficult because the effectiveness of the drug itself is unclear. On the one hand, clinical trials have showed a slowing in cognitive decline; on the other hand, those same trials showed serious and concerning side effects. The theory behind the drug is shaky as well. Lecanemab is designed to remove amyloid plaques, but the study identifying amyloid plaques as the primary source of Alzheimer’s has been called into question as fraudulent. Thus, ICER classifies the evidence for benefit of lecanemab as “promising but inconclusive.”

The price of lecanemab is a serious one, because if all eligible patients receive it, that could put an enormous strain on Medicare’s finances. ICER calculated that if more than 5% of eligible patients received the drug over five years, Medicare spending would surpass $777 million, ICER’sl budgetary impact threshold of sustainable government spending.. 

Medicare spends too much for ineffective drugs

Aside from lecanemab, there is evidence showing that Medicare already spends too much on drugs that offer little clinical benefit compared to what’s already on the market. A day after ICER released their report, JAMA published an investigation of the added therapeutic benefit of top-selling brand-name drugs in Medicare. Researchers looked at the drugs Medicare spent the most on in 2020 and assessed their added therapeutic benefit using ratings from national assessment organizations in Canada, France, and Germany. 

Of the 49 drugs examined, 27 (55%) had received at least one rating of “low added therapeutic benefit” from another country. This means that compared to existing treatment options, the drugs added little or no benefit for patients. These 27 drugs together made up $19.3 billion in Medicare spending–more than 10% of all Medicare’s prescription drug spending. 

The Inflation Reduction Act of 2022 allows Medicare to negotiate the pricing of top-selling drugs, so reform is likely coming. While pharmaceutical manufacturers will push back with claims that lowering drug prices will “stifle innovation,” it’s important to point out that some of these “innovations” aren’t really helping patients. It’s time to negotiate these prices in accordance with their proven therapeutic benefit. 

The post When it comes to prescription drugs, are we getting what we pay for? appeared first on Lown Institute.

All states are required under federal law to have these programs designed to recoup money spent under Medicaid for people over 55. However, states have control over enforcement. That means that while some states elect not to target their residents, other states are much more aggressive in reclaiming Medicaid costs, targeting assets like their homes or retirement accounts.

On paper, the program is designed to bring down Medicaid costs and ensure wealthier individuals aren’t gaming the system at low-income people’s expense. In reality, it’s taking away what’s oftentimes the only source of wealth people have and crushing generational progress. 

A family home lost

Take the Ruhl family, featured in a recent NPR article. After losing their wife and mom Fran to Lewy body dementia, the family received a letter from the Iowa Medicaid estate recovery program informing them that the government would recoup all of Fran’s assets. Fran’s husband still lives in the house and intended to leave it to their daughter, but Fran was a joint owner of the home and therefore the government was entitled to half the value of the home. 

Fran’s disease was hard to treat and expensive. Options were limited, and now the family is paying the price. On the bright side, her husband will not be evicted from the home they shared. Their daughter, though, will still have to deal with the $266,000 bill on her own once he passes. The pain has been deferred to the future.

The ripple effects

As stories like this gain attention, there’s one often-missed side effect: avoidance of care. Patients, particularly those who are elderly and dually eligible, may hear about Medicaid estate recovery and become fearful of using the benefits that they are eligible to receive. The thought of eviction is terrifying, and education about the program is lacking, so seniors might not understand that this process begins after death. Thus, the fear of potential repercussions discourages people from seeking the care they need, which can exacerbate their conditions and create a cycle of needing and avoiding care. 

“For the elderly poor, the prospect forces an impossible choice, between their health and their sole marker of wealth.”

– Libby Watson, The Defector

All of this is justified under the reasoning that these funds need to be recouped in order to keep Medicaid solvent, but the math just doesn’t line up. To qualify for Medicaid, one has to be considered low-income; it follows that low-income patients likely don’t have hugely valuable estates. A 2021 study found that three-quarters of those on Medicaid have a net wealth of less than $48,500. Similar to how nonprofit hospitals continue to sue patients eligible for charity care, these programs tend to recoup very little monetarily while being devastating to families. Many states also hire third-party contractors to manage their estate recovery programs, tacking on even more costs. All in all, estate recovery only recovers 0.55% of total spending on long-term care. The fiscal responsibility argument doesn’t have the numbers to justify the suffering caused. 

States have control over the enforcement of Medicaid estate recovery efforts. Some experts are even advocating allowing states to opt out completely. In a socially responsible healthcare system, there is never a choice between your health and home. 

The post <strong>Trading your home for your health: Medicaid estate recovery</strong> appeared first on Lown Institute.

The people who have the least owe the most

Chances are, you or someone you know holds medical debt. Coast to coast, Americans have been drowning in medical debt, and new research from the Urban Institute identifies hospitals as the primary driver of this debt.

According to the report, nearly 75% of adults with medical debt owe some or all of it to hospitals. Individuals with incomes below the federal poverty line are particularly hard-hit, with up to eighty percent in debt to hospitals. The findings also reveal that hospital debts tend to be higher than non-hospital medical debts, with over a quarter of hospital debts above than $5,000. This is especially concerning given that the majority of Americans cannot afford a $500 emergency, nevermind a $5,000 one. 

“The prevalence of past-due medical debt declines as family income rises.”

-Michael Karpman, Urban Institute

There are other ways

When it comes to addressing medical debt, patient advocates have plenty of ideas. An easy target is health insurance. Patients without insurance struggle significantly with medical debt and expanding health insurance to this population could drastically improve the situation. It’s not a magic bullet, however. This latest research found that over 63.5% of adults with medical debt incurred that debt while they had insurance, indicating that the under-insurance is also a significant problem.

Hospital policies may be the most effective intervention point to deal with the crisis of medical debt. Hospitals have the choice to offer robust financial assistance, set reasonable prices, not sue patients, and pay their fair share in community benefits if they are nonprofit. By adjusting their policies, hospitals have the power to alleviate the long-term financial suffering caused by our broken healthcare system.

Financial barriers to healthcare can trap patients in a vicious cycle: they avoid healthcare to avoid debt, but the lack of care exacerbates their conditions so when they finally get care, they’re in worse health. The debt they incur discourages them from future care, and thus the cycle continues.

“The last thing that hospitals want is for their patients to face financial barriers.”

-Molly Smith of the American Hospital Association in The Dallas Morning News

Social responsibility includes protecting patients from financial harm. We must do better.

As millions of Americans face medical debt, it’s increasingly important for hospitals to give their fair share in financial assistance – especially given the huge tax breaks they receive. But how many hospitals are actually giving back their fair share? Join the Lown Institute on April 11 as we discuss fair share spending, medical debt, and reveal which hospitals give back the most – and least – to their communities.

The post Are Hospitals Driving Medical Debt? appeared first on Lown Institute.

An overview

The price of insulin has been a hotly-debated topic for decades, as prices rose exorbitantly and patients’ ability to pay dropped. In 1999, a vial of Humalog cost $21. Just twenty years later, the same vial costs $332. That’s a 1000% increase. Given that patients can die without it, it should be easier to access. Instead, some Americans have been rationing or foregoing their medication.

For years, advocates have been demanding reasonable pricing from the “big three” insulin manufacturers Eli Lilly, Sanofi, and Novo Nordisk. In 2018, the Right Care Alliance organized a coalition of patients and healthcare workers to protest the price of insulin. They showed up at the doors of Sanofi’s offices in Cambridge, MA with two mothers carrying the ashes of their children who died because they couldn’t afford insulin. In November of last year, a journalist trolled Eli Lilly by impersonating their Twitter account and tweeting “We are excited to announce insulin is free now,” sparking deep public discussion on the unreasonable drug pricing. 

While the Inflation Reduction Act capped insulin prices at $35 a month for those covered by Medicare, it didn’t help those with Medicaid, private insurance, or no insurance. Just a few weeks ago, President Biden called for insulin price caps for all in his State of the Union speech.

The basics

Eli Lilly is the first of the major insulin manufacturers to willingly cap their insulin prices. Their new pricing policy drops a vial of insulin from $82 to $25 and is capping monthly out-of-pocket costs at $35. The company also announced a new insulin product intended to compete with a version of Sanofi’s insulin. It will be listed at a 78% discount compared to Sanofi’s pricing.

For those with commercial insurance, the $35-per-month cap will be implemented automatically when they fill their prescriptions at participating pharmacies.

For those with public insurance: Medicare members will see their prices capped at $35 a month due to the Inflation Reduction Act. However, this only applies to plans like Part D and Medicare Advantage. Right now, vials and injection pens qualify for this price reduction. This will be extended to include insulin pumps beginning in July.

For those without insurance: Costs can be capped at $35 monthly IF you acquire a savings card online.

It’s about damn time

Activists, patients, and clinicians have all been begging insulin manufacturers for decades to drop their prices. But prices kept rising despite their pleas. Over the last 20 years, overall insulin prices have risen an estimated 600%. Some patients who couldn’t afford the rising prices rationed their drugs, used expired medication, crossed country borders, and died trying to get the medication they needed. Meanwhile, the Eli Lilly CEO raked in $21.3 million in a single year. 

Excessively high pricing is not unique to insulin. According to recent data, drugmakers raised prices on nearly 1,000 drugs in just January of this year. This includes top-selling drugs that haven’t changed in years, but will now cost patients more money. Drug pricing is based on what the market will bear, regardless of the cost to patients. With insulin, it may just be the case that manufacturers sense impending regulations and would rather set their own pricing than fall subject to more governmental regulations. Another factor is state action; some states have been pushing for importing insulin, and California is even trying to manufacture and sell insulin to undercut Big Pharma.

It’s clear that insulin manufacturers could’ve lowered these prices all along. After all, insulin was always intended to be accessible and affordable. By enacting these aggressive price reductions, Eli Lilly is admitting to abuse and profiteering at the expense of people’s lives. If they could make this change today, why couldn’t they do it last week? Last year? Why did they continue to raise prices and prioritize excessive profits when it is evidently feasible to have a reasonable price and still maintain a profit margin? If they’d lowered prices sooner, how many lives could’ve been saved?

The post <strong>After decades of profiteering, insulin manufacturer finally cuts the price</strong> appeared first on Lown Institute.

Now insurance companies are facing a similar requirement. In July 2022, insurers became subject to another government regulation around price transparency. They now have to publish their negotiated rates to everyone they pay: hospitals, surgery centers, doctors, labs, etc. They also have to include the amount they paid for out-of-network care.

Too much data?

The good news is that insurers, unlike hospitals, complied with the rule very quickly (the high penalties for noncompliance likely played a role). The bad news is that the amount of data is too massive for pretty much anyone to use.

Alec Stein, a data administrator at software company Dolthub, estimates that there could be one trillion prices posted from insurers. For just ten insurers, the amount of data is larger than “the Library of Congress, the LibGen catalog, the full uncompressed English Wikipedia, and the entire HD Netflix Catalog — combined,” Stein writes.

While some healthcare data shops like Turquoise Health are able to utilize these files, the average consumer would have an incredibly hard time deciphering the data.

“There’s just an incredible amount of frustration. CMS really needs to rewrite the requirements here, otherwise it’s never going to achieve the policy goals that were laid out by the administration,” said Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms, in Modern Healthcare.

Experts like Corlette have proposed changes to make the data more usable. CMS could standardize the requirements for machine-readable files–as they have done for hospitals— so that the same coding and naming conventions are being used. They could also require insurers to provide the data in subfolders or smaller files to make them more accessible for researchers.

Next year insurers will be required to publish what patients should expect to pay out-of-pocket for 500 “shoppable services” such as knee replacements or MRI scans, which is designed to make this data more usable for patients.

The role of transparency

We need more than just transparency to make our healthcare “market” function. But this is a step in the right direction, because it shines a light on the extreme and arbitrary variation in prices among hospitals and insurers. For example, the Wall Street Journal used this data to compare the cost of an ER visit at hospitals in the Boston area and found huge differences even for patients with the same plan.

In JAMA, researchers used price transparency data to compare prices of common cardiovascular tests and procedures at some of the most prestigious U.S. hospitals. They found that the median price of common tests such as an echocardiogram or stress test ranged from a few hundred dollars to thousands, depending on the hospital. For example, the median insurer-negotiated price of a stent or balloon angioplasty was $657 at the Cleveland Clinic but $25,521 at Cedars-Sinai hospital.

Socially responsible hospitals should not overcharge their patients. We look forward to having more usable data from both insurers and hospitals, to highlight hospitals that are providing care at a great value, and where there is room for improvement.

The post Price transparency comes to the insurance market…but there’s a catch appeared first on Lown Institute.