NYC Grapples With Hospital Pricing Roulette…

“New York State law does not allow for-profit corporations to own or operate hospitals…despite their non-profit status, these networks increasingly act like for profit corporations.” — NYSNA Executive Director Pat Kane, RN

By Bob Hennelly

A New York City Council bill that aims to bring transparency and accountability to NYC’s opaque hospital pricing via a consumer-friendly website is a step closer to consideration by the full body after a Feb. 23 hearing.

Under the initiative sponsored by Council Member Julie Menin, the city would establish the Office of Healthcare Accountability. In addition to the website, the office would audit city expenditures on employee-related health care costs as well as make recommendations on how to contain those costs. The office would evaluate collateral issues contributing to the run up in healthcare costs like the profit margins of major insurance providers.

The proposal has garnered significant union backing as well as attracted early support from four four-fifths of the Council, Public Advocate Jumaane Williams, and four of the city’s five borough presidents.

“This office would help consumers maneuver through the complex world of hospital pricing for approximately 300 procedures since the information will be housed in one specific site and provide a standardized list for all procedures,” testified Henry Garrido, executive director of DC 37 and co-chair of the Municipal Labor Committee. “As consumers we price comparison shop for gas, groceries and even for expensive items such as homes and automobiles. Yet, there is no mechanism available for patients to compare the costs of medical procedures by hospitals.”

Garrido told the panel that a decade ago, “the cost of providing healthcare for city workers was $3 billion, about $800 million of that was hospitals. Ten years later that cost is nearly $12 billion and of that, hospitals are 62 percent.” 

The DC 37 leader continued. “Even when the number of procedures went down during COVID, where elective procedures were reduced because you didn’t have elective procedures anymore, the [hospitals] costs went up by 150 percent. How is it possible for hospitals to continue robbing workers of their hard-earned dollars?”

NURSES WEIGH IN

Pat Kane, RN, the executive director of the New York State Nurses Association, testified that the Office of Healthcare Accountability was necessary for unions and healthcare consumers concerned about affordability. 

“The hospital industry has experienced a wave of consolidation and the creation of large hospital networks that are also acquiring physician practices and other healthcare services to maximize their market power and generate profits,” Kane told the panel. “These hospital networks are all non-profits because New York State law does not allow for-profit corporations to own or operate hospitals… despite their non-profit status, these networks increasingly act like for profit corporations.” 

Kane said as the private non-profits were “shedding maternity and psychiatric services” they focused “their marketing efforts on patients with private insurance and leave low-income, underinsured and Medicaid patients for the safety nets to handle.”

The NYSNA executive director singled out New York Presbyterian Hospital. She said the hospital network had “some of the highest charges for many procedures in the city of New York” and was making “more than $1 billion in profits” while its CEO made more than $11 million, adding that she had “similar examples from many other big hospital networks.”

Representatives from Mayor Eric Adams’ administration said the measure had merit, but expressed some reservations about the proposal in its current form.  Daniel Pollak, First Deputy Commissioner, for the Mayor’s Office of Labor Relations pushed back on having the new office auditing city employee health costs.

OLR’S CONCERNS

“We negotiate city employee health costs with the Municipal Labor Committee. We work with them,” Pollak said. “We do our own audits, and we really feel that is a matter that is best left to that process between OLR and the Municipal Labor Committee, but overall, we are greatly in support of the effort to improve price transparency.”

Claire Levitt, Deputy Commissioner of Health Care Cost Management, also with the Mayor’s Office of Labor Relations, said the new office’s emphasis on hospital pricing transparency would strengthen the city’s hand in its negotiations.

“All this information on transparency will very much help inform what we are negotiating with the Municipal Labor Committee, with what are negotiating with the hospitals,” Levitt said. “We are to some extent, despite the fact that we have access to a great deal of information, we are still somewhat in the blind about hospital pricing and insurer pricing.”

Levitt continued. “And we hear from both the hospitals and the insurers that the information is confidential and while we have our own data, we don’t know all the things that drive that data.”

Witnesses at the hearing were not universally in support of the bill. In addition to push back from the Greater New York Hospital Association, members of the NYC Organization of Public Service Retirees testified in opposition over concerns the new office could undermine existing protections of their healthcare benefits.

END RUN?

“Our fear is that this new office proposed by Intro 844 may be a way for the city and the union to get around the judge’s decision in our last round of court and usurp the current protections the City Council currently offers retirees,” said Mary Pizzitola, retired FDNY EMT and the president of the NYC Organization of Public Service Retirees [NYCOPSR]. “Why do we think this? Because the city and the MLC have made a practice over the last few decades to water down health coverage, create obstacles in that coverage with prior authorization, narrowed networks of providers and increased co-pays on employees and retirees in the name of savings.”

Pizzitola added that she was skeptical that creating another Mayoral office would make any difference calling out what she said was OLR’s current inability to “manage its current fiduciary responsibilities” with it taking “hours” for OLR “to answer a call.”

The president of NYCOPSR reiterated her group’s call for a Blue-Ribbon panel of all stakeholders to come up with ways to ensure quality affordable healthcare for New York City civil service retirees without forcing them into a controversial for-profit Medicare Advantage style plan. Pizzitola testified her group had flagged many examples of waste in the current system including, “the city paying for two deceased spouses of retirees for over five years, and the city paying for full family GHI plan for a couple on Medicare Advantage, and these are just a few.”

David Rich, Greater New York Hospital Association’s executive vice president of government affairs, testified the new office “oversteps the city’s jurisdiction by re-interpreting federal regulations and then judging hospitals according to its own interpretation of federal rules.”

Specifically, Rich cited recent requirements being promulgated by the federal Centers for Medicare & Medicaid Services that he said were already in place requiring hospitals to publicly disclose their pricing.

“There’s been more heat than light surrounding this bill and the rhetoric has been unfortunate,” Rich said. “Accusations of greedy hospitals making enormous profits are unwarranted and couldn’t be further from the truth. More than 75 percent of hospital payments in New York City are set by the state and federal governments through Medicare and Medicaid.”

According to Rich, “hospitals lose money on every single Medicare and Medicaid patient because of these government-set rates. Medicare only covers 85 percent of costs and Medicaid only covers 61 percent. No enterprise can survive for such underpayment of their services unless they can negotiate higher payments from insurers, or they are subsidized by the state.” 

Rich said he believed the measure “virtually ignores behemoth national for-profit health insurance companies that make enormous profits in New York’s healthcare economy and ships those profits out of New York to their parent organizations and shareholders. It is ludicrous to believe that if somehow hospital payment rates were reduced these plans would share savings with consumers. They would merely add to their profits.”

Council Member Julie Menin, the bill’s lead sponsor, took issue with Rich’s assertion the measure would not help drive healthcare costs down.

“I strongly rebut that,” Menin countered. “If you look at other jurisdictions that have done price transparency — the state of California saw a 20-percent reduction and some savings. The state of New Hampshire five percent, the state of Massachusetts similarly. Obviously, we know price transparency works. That’s the intent behind the bill to drive down costs and to give consumers the valuable information they need to be able to look at the different price disparities.”

Menin, who previously served as the New York City Commissioner of Consumer Affairs and Worker Protection, insisted the wide variation in pricing needs more public scrutiny and the federal regulations on pricing disclosure were not yet effective.

“The issue is really the skyrocketing hospital prices,” said Menin. “Whether it’s $55,000 at Montefiore for a C-section versus $17,000 at another hospital — whether it’s a $10,000 colonoscopy at one New York City hospital versus $2,000 for another — it’s the skyrocketing hospital prices that are causing this issue and that’s why this bill is meant to address transparency.”

Cora Opsahl is the director of 32BJ SEIU’s Health fund which provides healthcare benefits to over 210,000 32BJ union members and their families. According to Opsahl, the building services union provides health benefits with no employee premium sharing and is self-funded.

As a consequence, 32BJ’s Health Fund has access to hospital pricing information through the claims data they receive from their third-party administrator.

“We have a 20-person analytics and data engineering team that uses this information in addition to other publicly available data, to drive our decisions,” Opsahl testified. “However, because a recent report showed that less than 10 percent of New York hospitals are in full compliance with federal transparency laws, we are very limited in our ability to make valid comparisons across hospitals and providers.” 

Opshal continued, “It is also very challenging to gather data from so many different sources and do the work to make sure it is viable. For employers that don’t have the analytics team that we have, it is even more challenging. A centralized entity that collects and disseminates this information would be a game-changer for us and many other employers who are trying to manage hospital prices.”