Holy Name Medical Center CEO Michael Maron on price transparency and Trump's executive order

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Michael Maron, president and CEO of Teaneck, N.J.-based Holy Name Medical Center, said he supports consistent pricing and price transparency in healthcare.

The 361-bed acute care facility is advocating for federal policy changes that will address pricing and reimbursement challenges, he said.

Becker's interviewed Mr. Maron about the biggest reimbursement problem in today's healthcare environment, his organization's efforts to address it and the federal government's price transparency efforts.

Editor's note: Responses have been edited lightly for style.

Question: What is the biggest problem in today's healthcare environment in terms of reimbursement and pricing?

Michael Maron: For decades, insurance companies and powerful provider systems have succeeded in keeping their negotiated rates veiled from public view, using nondisclosure agreements and restrictive contractual gag clauses. In a fee-for-service market, these unpublished rates contribute directly to skyrocketing insurance premiums every year and have led to the proliferation of high-deductible health plans in an effort to keep healthcare affordable. The current market has become a complex system of secret deals and discounts between insurance companies and health care providers. The public deserves to know which hospital systems and health care providers are driving higher costs. If we want to effectively lower the cost of healthcare, we need a transparent and consistent methodology for both providers and insurers.

Q: What is Holy Name Medical Center doing to address pricing and reimbursement challenges?

MM: We continue to be extremely vocal on this issue and advocate for policy change, despite broader pushback we're seeing from our industry counterparts. The reimbursement rate the insurer has negotiated with the health system is the true price to the consumer. If we want patients to behave like consumers, they need to know and understand price, which is currently in a black box, controlled by insurance companies.

Since every insurance company negotiates and pays differently, there is no consistent pricing methodology. These payers all have their own rate structures that determine how they pay. This is why patients encounter such huge disparities and gaps in pricing, because insurers negotiate different rates with each hospital and health system. 

So, two patients go to two different hospitals for open heart surgery but receive two completely different bills. Those charges are based on rates and pricing methodology negotiated by the insurer. There's a misconception that low-cost care is not high-quality care. That could not be further from the truth, as we know a hospital's size and market power play a significant role in cost to consumers.

Q: President Trump signed an executive order last month that aims to increase price transparency, promote competition for health services and limit excessive consolidation in healthcare. What do you think that executive order will do to meet industry challenges?

MM: This executive order is a good first step — if it's implemented correctly.  As I've said, transparency is needed in making patients smarter consumers, and the president's EO should help here. I know that's not a popular position with my colleagues, but it's something we should all be supporting. 

The public has a right to see which hospitals and health systems are driving higher costs. Transparency in pricing means consumers can truly shop for their services. If federal regulators look at components of the EO with a positive lens, they'll see requiring transparency for insurers will not only reduce consumer costs but will also reduce tax dollars when implemented in public health plans and benefits.

There is language in the bill that I do not find helpful or productive, specifically as it relates to "re-injecting competition into healthcare markets by lowering barriers to entry, limiting excessive consolidation and preventing abuses of market power."

As a nation, we've invested significant dollars into a fixed infrastructure, so if we interpret "re-injecting competition into healthcare markets" in a way that undermines the value and fixed costs of an emergency room for example, we're allowing urgent care centers and other competitive facilities to open up in the market. 

A better outcome would be to say, "Here's how we're going to pay across the board in a given market on a methodology. You, the hospitals, decide to negotiate with payers consistently so there's one methodology of what your ER rates on all levels are going to be."

You've got to make [ER rates] public so everyone knows before they choose to go to existing ER "A" or existing ER "B," they know pretty much in a range [of what the out-of-pocket cost will be].

 

More articles on healthcare finance: 

Washington state surprise-billing law takes effect at end of month
6 CFOs name their greatest challenges
For-profit hospital stock report: Week of June 24-28

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