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KFF Health news reported on the increasing prevalence and impact of contract disputes between healthcare providers and payers ("21 insurer-provider standoffs in the third quarter of 2023, a 91% increase over the same period the year before"). When providers and payers cannot come to an agreement, patients suffer the hassle of finding new doctors who are in-network. Even when providers and payers do come to an agreement, it is often at the end of a game of brinkmanship in which patients are warned to prepare for the possibility of needing to find new doctors.

KFF Health news reported on the increasing prevalence and impact of contract disputes between healthcare providers and payers ("21 insurer-provider standoffs in the third quarter of 2023, a 91% increase over the same period the year before"). When providers and payers cannot come to an agreement, patients suffer the hassle of finding new doctors who are in-network. Even when providers and payers do come to an agreement, it is often at the end of a game of brinkmanship in which patients are warned to prepare for the possibility of needing to find new doctors.

The article does point out the asymmetry where patients can only select a health insurance plan once a year (absent certain life events), but providers can leave an insurance network at any point in a year. The article comments "That is particularly galling for patients because, whether obtaining insurance through an employer or buying it on the marketplace, they generally choose a policy based on whether it covers their desired doctors and hospital or an expensive drug they need." It seems reasonable to require that in-network status for provider institutions (e.g. clinics or hospitals) must be made known at least one month before open enrollment, and by contract, should remain in effect for the entire year following that open enrollment period.

One law professor speculates that the rise in contract disputes is because of hospital price transparency regulations that went into effect in 2021. Since providers can now see how much payers are paying their competitors, they can use that information to negotiate for better compensation -- if so, this is most likely an unintended consequence of the pricing transparency regulation.

Millions of Americans have medical debt. KFF Health News reports that "More than 100 million people in America — a startling 41% of adults — are saddled with medical bills they cannot pay," while Health System Tracker (a collaboration that involves KFF) says that "20 million people (nearly 1 in 12 adults) owe medical debt." Regardless of the actual number, the issue seems common enough that KFF Health News published a piece outlining some of the efforts that the Consumer Financial Protection Bureau is taking to address the issue. Among them, "In the past two years, the CFPB has penalized medical debt collectors, issued stern warnings to health care providers and lenders that target patients, and published reams of reports on how the health care system is undermining the financial security of Americans."

Millions of Americans have medical debt. KFF Health News reports that "More than 100 million people in America — a startling 41% of adults — are saddled with medical bills they cannot pay," while Health System Tracker (a collaboration that involves KFF) says that "20 million people (nearly 1 in 12 adults) owe medical debt." Regardless of the actual number, the issue seems common enough that KFF Health News published a piece outlining some of the efforts that the Consumer Financial Protection Bureau is taking to address the issue. Among them, "In the past two years, the CFPB has penalized medical debt collectors, issued stern warnings to health care providers and lenders that target patients, and published reams of reports on how the health care system is undermining the financial security of Americans."

As another step, the federal agency is reported as trying to prevent medical debt from appearing on consumer credit reports. An interesting argument is that "the agency found that medical debt is typically a poor predictor of whether someone is likely to pay off other bills and loans." The original intention of credit reports was to help lenders assess whether an individual is likely to repay loans, so if medical debt is a poor predictor, then it appears less relevant to one's credit report than other factors.

Perhaps an even stronger argument is the sheer volume of mistakes in medical billing "Medical debts on credit reports are also frequently riddled with errors, according to CFPB analyses of consumer complaints, which the agency found most often cite issues with bills that are the wrong amount, have already been paid, or should be billed to someone else." Medical bills can be difficult to understand, expensive, and correcting them can take patients an inordinate amount of time. With that in mind, perhaps unpaid medical debt should be treated differently from other types of debt.

The Inflation Reduction Act (IRA) had many provisions to reduce consumer pricing across many industries. For health care, the IRA was perhaps most known for allowing Medicare to negotiate drug pricing, but the legislation included other measures as well. KFF Health News published a piece that describes one man's frustration with high prescription drug costs and his role in influencing the IRA with regards to drug costs for Medicare patients.

The Inflation Reduction Act (IRA) had many provisions to reduce consumer pricing across many industries. For health care, the IRA was perhaps most known for allowing Medicare to negotiate drug pricing, but the legislation included other measures as well. KFF Health News published a piece that describes one man's frustration with high prescription drug costs and his role in influencing the IRA with regards to drug costs for Medicare patients.

Some of the other measures besides allowing Medicare to negotiate pricing include reducing the limit that Medicare patients might pay when paying for their own medications. Other measures limit the pricing of insulin and free vaccines for lower-income patients. While Medicare patients should benefit from having to pay less for medications, those measures seem to push costs around, either to the insurers (which then increase monthly premiums) or to the government. Allowing Medicare to negotiate pricing appears to be the only measure to actually reduce costs to the overall healthcare system.

The article notes that one pervasive issue is that medications in the US cost significantly more than the same medications in other countries -- maybe more than ten times as much. As prescription drug costs mount -- whether for patients or for the government -- perhaps there will be additional efforts to reduce the pricing differential across countries.

KFF Health News published an article describing a conflict between Anthem Blue Cross and UC Health. More than half a million patients could be affected (needing to find new healthcare providers) if the two large organizations do not come to an agreement. From a commercial perspective, these types of conflicts are understandable: one side wants to be paid more and the other side wants to not pay as much as has been demanded. The two large organizations engage in brinkmanship to gain larger concessions.

KFF Health News published an article describing a conflict between Anthem Blue Cross and UC Health. More than half a million patients could be affected (needing to find new healthcare providers) if the two large organizations do not come to an agreement. From a commercial perspective, these types of conflicts are understandable: one side wants to be paid more and the other side wants to not pay as much as has been demanded. The two large organizations engage in brinkmanship to gain larger concessions.

An underlying problem that exacerbates the problem is the consolidation of the industry within fewer, but larger, organizations. Having many, smaller buyers and sellers would allow for much more robust price discovery. As it is, "Stremikis noted that as mergers occur in the health industry, patients are left with fewer choices. Any time there are disputes, disruptions are felt more widely."

While larger organizations might theoretically achieve some economies of scale, "A KFF analysis found widespread evidence that consolidation of health providers leads to higher health care prices for private insurance. The same brief from 2020 found some evidence suggesting that large, consolidated insurance companies are able to obtain lower prices from providers, but that has not necessarily led to lower premiums for patients." Concentration of market power into just a few organizations rarely seems positive for consumers.

Should the same service be compensated differently if performed in a clinic versus in a hospital? Hospitals think that services performed in their facilities should be compensated more, and they have been receiving higher payments for many years. KFF Health News published an article that gives an overview of some recent legislative efforts to even out the payments (known as site-neutral payments, since under this arrangement, the payment amount should not vary depending on the facility in which the service is rendered).

Should the same service be compensated differently if performed in a clinic versus in a hospital? Hospitals think that services performed in their facilities should be compensated more, and they have been receiving higher payments for many years. KFF Health News published an article that gives an overview of some recent legislative efforts to even out the payments (known as site-neutral payments, since under this arrangement, the payment amount should not vary depending on the facility in which the service is rendered).

Hospitals have argued that keeping their facilities open is very costly. Additionally, since they must be willing to accept emergencies, they need to staff for a certain patient volume, even if that patient volume does not materialize. To cover these costs, hospitals have relied on higher payments for the same services that can be performed at clinics. With a quick glance, the logic presented by hospitals might be plausible, but hospitals expect higher payments even for services rendered at clinics that they have bought. Instead, a more fair compensation scheme should equalize the payments for services, regardless of facility, and hospitals who provide emergency medical care should probably be paid a fixed amount every month. Under the current arrangement, hospitals generate more income and can use that income to buy out clinics, further increasing the cost of medical care.