Why Carriers Markup Health Insurance Rates

Walgreens just agreed to a $100M settlement involving a case where they were alleged to charge insured patients more than cash pay patients. Now, you might be thinking... wait a minute... isn't this how hospital pricing works... the "negotiated" or "discount" rate for insured patients is often more (MUCH more) than the cash rate? And you'd be right. But I haven't seen any class actions against hospitals or insurance carriers... probably because the whole house of cards would crumble. The $100 million class-action lawsuit against Walgreens claimed that the pharmacy giant manipulated its “usual and customary” (U&C) price reporting to overcharge insured customers. Walgreens offered significant discounts on hundreds of generic medications through its Prescription Savings Club (PSC), where cash-paying members could access prices as low as $5, $10, or $15 for a 30-day supply. However, instead of reporting these lower cash prices as the U&C rate, which would have applied to insured customers as well, Walgreens allegedly reported much higher prices to insurers. This practice violated industry standards, which require the U&C price to reflect what a cash-paying customer would typically be charged. As a result, insured customers ended up paying inflated copays and deductibles, often at a far higher rate than those purchasing the same medications directly through the PSC without insurance. The complaint argued that Walgreens’ practice was deceptive and led to significant overpayments by insured patients, employers, and health plans. Folks - this happens every day with carriers and hospitals. Employers think they are getting a great negotiated discount from using carrier networks, but the numbers show that they are getting hosed - and so are their employees who may be on the hook for a substantial amount of the inflated costs because of huge deductibles. A cardiac MRI with a cash price of $1,218 is billed at a “discounted” rate of $3,678 for UnitedHealthcare patients—a staggering 200% markup. A defibrillator priced at $21,088 for cash-paying patients shoots up to $78,395 under United’s “negotiated” rate, marking it up by more than 270%. Why? Hospitals set artificially high sticker prices (chargemaster rates), and then insurers negotiate discounts off those inflated amounts. But these “discounted” rates are still far higher than the cash price. And, because patients are often required to use in-network providers, they’re locked into paying more—even though they have insurance. So ... how is the Walgreens case any different from business as usual with hospitals and carriers agreeing to pay inflated prices. Actually... not just agreeing...but mandating that employers and employees pay inflated prices. Who is looking out for purchasers... certainly not carriers... definitely not hospitals... and I even question whether the folks signing the contracts for employers are looking out for their own members. Ignorance is no longer an excuse.

Carriers Could Easily Lower Employer #HealthcarePrices... But Choose Not To. Why Not? Two Words: #MedicareAdvantage Employer-Sponsored Health Insurance rates paid to hospitals are 200-500% of Medicare rates for the same services. However, Medicare Advantage rates (through the same insurance companies as the Employer-Sponsored Health Insurance plans) are about 95-105% of Medicare rates. Why is there such a large difference? 1. Health Insurance Carriers and Hospital Systems negotiate for #TotalContractValue. Therefore, insurance carriers convince hospital systems to accept low Medicare Advantage rates in exchange for giving in to much higher Employer-Sponsored Health Insurance rates. 2. Health Insurance Carriers desire much higher #profit margins on Medicare Advantage members. In fact, Employer-Sponsored Health Insurance margins are only $745/member/year, whereas Medicare Advantage margins are $1,730/member/year... more than DOUBLE. 3. Employer-Sponsored Health Insurance membership is largely #stagnant, while Medicare Advantage membership is #growing rapidly. It has increased from 15 million to 33 million members in the past 10 years. 4. Most Employer-Sponsored Health Insurance members are on Self-Funded plans (65%), so the Health Insurance Companies are NOT bearing most of the #risk on the higher-costing claims... Self-funded employers and their employees are. Implication: #DirectContracts between employers and hospitals and ASCs can achieve better rates than Health Insurance Companies because these direct negotiations are not 'muddied' by Medicare Advantage. Sources at AHealthcareZ YouTube Channel. #Healthcare #HealthInsurance #EmployeeBenefits

United and other big carriers now own doctors, clinics, and hospitals, and experts say this creates a dangerous loophole in the MLR rules. “Insurers that own medical clinics may be able to use these relationships to game medical loss ratio requirements. There is no MLR requirement for providers. This creates an incentive for the insurer to direct spending to these affiliated provider entities, which may charge inflated prices, allowing the insurer to increase its reported MLR without delivering more care or improving quality.” We are already seeing it- -A Stat report in 24 found that UnitedHealth pays its own Optum physicians more than others in the same markets. -A WSJ story in 23 revealed that insurers and PBMs overcharge for generics when purchased within their own networks. One more trick in a very long playbook of overcharging. https://lnkd.in/gfX6_MCK