SEE REPORT: “North Carolina Hospitals: Extreme Price Markups, Failures in Transparency for Shoppable Hospital Services.”
(Raleigh, N.C.) – North Carolina State Treasurer Dale R. Folwell, CPA, released a report that shows extreme variations in hospital prices, huge price markups from Medicare rates, and widespread failures in price transparency.
The report’s findings raise troubling questions about health care affordability and North Carolina’s justice system. The report found massive disparities among hospital prices, and failures in price transparency that have crippled patients’ ability to protect their financial health. This is especially troubling given an earlier report found that North Carolina hospital systems sued 7,517 patients over medical debt, using the court system to charge interest on medical debt judgments and to place liens on family homes. When patients tried to fight back, they argued that they could not even tell whether they had been charged a fair price.
At the request of Treasurer Folwell, researchers from the North Carolina State Health Plan for Teachers and State Employees investigated hospital prices and hospital compliance with federal price transparency rules across 16 common shoppable services at 140 hospitals. Researchers from the Johns Hopkins Bloomberg School provided data analysis based on June 2023 data from Turquoise Health, a software company that collects and displays hospital prices for patients and researchers to facilitate price transparency in health care.
North Carolina hospitals levy massive price markups of up to 1,120% on routine care and basic services. 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 even a simple urinalysis, the most expensive hospitals charge up to 12 times what more affordable hospitals ask patients to pay.
High hospital prices are eating into workers’ wages and hurting families’ ability to get ahead. Workers lose 20% of every paycheck to health care costs with hospital systems receiving almost half of the health care spending in the United States. North Carolina’s public employees and taxpayers face a $24 billion unfunded liability for the State Health Plan. Without price relief, its reserves are at risk of falling below the required threshold in less than two years.
Treasurer Folwell is calling on the North Carolina House of Representatives to protect patients and their families by passing Senate Bill 321, the Medical Debt De-Weaponization Act. The Senate unanimously passed the bill despite opposition from hospital lobbyists. The Treasurer expressed appreciation for that vote and thanked the Senate for including hospital price relief for the State Health Plan in its proposed budget.
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 problem of hospital noncompliance 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.