A professor's opinion piece prompted a formal rebuke from the AHA and CHA this week, as rising healthcare costs lead to more finger-pointing.
The steep year-over-year incline in healthcare spending may be spurring calls for action to curb out-of-control costs, but it isn't delivering a consensus on what should be done.
Glenn Melnick, PhD, a professor of public policy at the University of Southern California, penned an op-ed for The New York Times this month placing much of the blame on hospital emergency departments.
"The problem," Melnick wrote, "is that the rules give hospitals tremendous pricing power when they're negotiating with health insurance companies."
Higher hospital prices cost insurers more, ultimately leading to higher premiums for patients, so states should move to limit hospital prices for out-of-network emergency care, Melnick argued, suggesting that billed charges be capped at 125% of contracted prices.
"This change alone would result in immediate price reductions and savings to consumers exceeding many billions of dollars. And it would begin to restore some competition that would help keep prices down in the long run," Melnick wrote.
That piece drew a response Wednesday from the American Hospital Association and California Hospital Association, which noted that Melnick's academic position is funded by Blue Cross of California.
"Government payers, Medicare and Medicaid, set how much hospitals are paid for emergency care—there is no negotiation. And the rates paid by governments are far below the actual cost of care," AHA President and CEO Rick Pollack and CHA President and CEO Carmela Coyle wrote in a joint response. "Private health insurance companies, however, negotiate whether they will contract with hospitals and the rates to be paid. And those rates typically take those government underpayments into account."
Melnick's op-ed "grossly misrepresents the balance of power among hospitals and health insurance companies in negotiations," Pollack and Coyle wrote.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
A professor and researcher with USC argued that hospital emergency departments have 'tremendous pricing power' that drives costs for insurers and patients.
Hospital groups dispute the professor's analysis, contending that private health insurers have power to negotiate.