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This Simple Two-Step Plan Could Lower Healthcare Costs

Analysis  |  By Gregory A. Freeman  
   March 01, 2017

A strategy of requiring healthcare providers to publish their rates and offer the same discounts to all health plans could result in more competition and options for consumers, says one expert.

The best way to lower consumer costs for healthcare would be for hospitals to publish their rates and for the government to regulate the level of discounts providers can offer to payers, says Greg Borca, co-founder of SKYGEN USA, a collection of companies that help insurance plans with benefits management.

This idea is not new, but seldom pops up in discussions about repealing or revising the Affordable Care Act, but Borca says it would have a significant impact.

His option would work this way: The government would regulate the level of discounts, and if a provider were to go beyond that level with one payer, including Medicare, that deeper discount would become that provider's new established level for all health plans.

That approach would not only spur the creation of new health plans and free market competition, but also enable the price transparency that President Trump called for during the presidential campaign, Borca says.


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Regulating the discounts would make it easier for consumers to comparison shop accurately so they could take control of their spending and help bring down the cost of care overall, he adds.

"The one change that would most affect the cost of healthcare would be forcing providers to publish their rates like everybody else in the world does and then to charge those rates, essentially ridding yourself of these discounted environments," Borca says.

"Whether [providers] do that or not, establishing a discount rate and holding them to it would have a real impact."


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New health plans would be encouraged because the government-established discount positions them better to compete with large, well established plans, Borca says. Currently new health plans in a community are hard pressed to take the same discount offered to the bigger players, so the big health plans dominate.

"You'd have an opportunity for an explosion of new health plans if they knew didn't have to go out with hat in hand to negotiate for discounts similar to the ones the big insurance companies have," Borca says.

"If you back out from the health plans that came about to target Medicare or Medicaid opportunities, there have been very few new health plans created in the last 20 or 25 years. To be able to be competitive, you have to get similar discounts, but the hospitals are happy with their arrangements because of the volume, and they aren't going to offer the discount to a new, unknown health plan."


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Keeping rates secret and negotiating their relationship with each health plan gives hospitals and health systems a great deal of power. A plan that requires published rates and a uniform discount most likely would be opposed with some vigor by groups representing hospitals and health systems, Borca says.

The proposal would create more transparency for consumers, but the insight would come from the insurers instead of the providers. Even if a provider publishes its rates, the true cost of care will vary significantly from one provider to another and even within the umbrella health plan, he says.

"From a consumer standpoint, having the insurers publish their rates with each provider would give them the most control of their own healthcare choices," Borca says. "They can look at the discounts provided to their own insurers and make an informed decision about where to go for healthcare.

Gregory A. Freeman is a contributing writer for HealthLeaders.


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