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State report shows extreme variations in hospital prices in North Carolina

Blend Images/Jon Feingersh
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North Carolina’s State Treasurer has released a report he said shows extreme variations in hospital prices, huge price markups from Medicare rates, and widespread failures in price transparency.

Treasurer Dale Folwell said the report’s findings raise troubling questions about health care access and affordability, and North Carolina’s justice system.

The report shows that North Carolina hospitals levy massive price markups of up to 1,120% on routine care and basic services, and the most expensive hospitals charged commercially insured patients as much as 1,670% more than other hospitals for the same service.

Follwell said, “Patients are under siege in North Carolina. Too many hospitals are hiding their prices, overcharging patients and then suing them for medical debt. Thousands of families have lost their upward mobility to hospital lawsuits, but we don’t even know if they were sued over inflated prices. Too many hospitals continue to give the middle finger to presidential executive orders.”

Folwell is calling on the North Carolina House of Representatives to protect patients, taxpayers and their families by passing Senate Bill 321, the Medical Debt De-Weaponization Act.

Key Findings of the report:

North Carolina hospitals charge commercially insured patients more than 700% of Medicare rates for some common shoppable services

  • Even services as simple as a urinalysis test can carry a 1,120% median markup from Medicare, forcing patients to pay a median $28.80 while Medicare pays a median of just $2.36.  Whether the extreme price inflation is needed is dubious. The majority of North Carolina hospitals self-reported profiting off Medicare rates over six years.
  • Many of the largest price disparities appeared in radiological services, including CT and MRI scans. Hospitals inflated their $1,167.23 median commercial price for a CT scan of the brain by 976% from Medicare’s $108.44 median rate. These disparities have ties to state Certificate of Need (CON) laws, which restrict the supply of health care equipment and facilities. The U.S. Federal Trade Commission has criticized CON laws  for encouraging “anticompetitive” behavior and increasing prices.
  • Uninsured patients are also exposed to high price markups. Across the majority of the 16 shoppable services, hospitals charged uninsured patients more than 150% more than Medicare rates. A fourth of the 16 analyzed shoppable services had a higher markup on “cash” prices than on commercial rates.

North Carolina hospital prices vary wildly, costing some patients thousands of dollars simply for choosing one hospital over another

  • The most expensive subset of North Carolina hospitals charged commercially insured patients as much as 1,670% more than other hospitals for the same service, and such price disparities can cost patients and businesses tens of thousands of dollars.
  • For example, a commercially insured patient might pay $1,418.04 or $13,469 for gallbladder surgery — a price difference of 850% that depends only on where they seek care.
  • Patients get little in return for paying high prices. Past research shows that high prices do not guarantee safer or better care.
  • The most expensive subset of hospitals inflated prices for commercially insured patients as much as 24 times of what Medicare pays for common services.

Too many North Carolina hospitals are violating federal rules to hide their prices from patients

  • On average, only 51% of hospitals disclosed commercial insurance prices across 16 common shoppable services, and this disclosure rate dropped to 42% for cash prices across the 16 shoppable services. Just five hospitals disclosed commercial prices for every service.
  • The lack of transparency is especially severe for “cash prices,” further hurting uninsured patients already vulnerable to high costs, crippling medical debt and hospital lawsuits.
  • Just 27 hospitals published commercial prices for obstetric care during childbirth, denying insured women the opportunity to shop for affordable care when expecting a child.

North Carolina lawmakers are already considering reforms to strengthen hospital price transparency, provide price relief to state employees and protect patients from crippling medical debt

  • The Medical Debt De-Weaponization Act would require large providers to post price information and would give enforcement powers to the North Carolina Attorney General, as well as strengthening consumer protections against medical debt. The bill unanimously passed in the Senate and is awaiting action in the House.
  • The North Carolina Senate’s proposed budget would require the state’s hospitals to cut costs for the State Health Plan by $125 million beginning in 2024, creating critical savings that would account for nearly 8% of the State Health Plan’s projected $1.56 billion spending on hospital expenditures in 2025.