Secret price lists inflate taxpayers’ health care costs

State Treasurer Dale Folwell asked a simple question: How much should North Carolina taxpayers be shelling out for state workers to receive care at UNC Health medical facilities?

The University of North Carolina Health Care System’s answer: That’s a secret.

State employees won’t tell the state how much it ought to pay the state to treat state employees. If that absurd sentence hurts your brain, we hope the discomfort subsides before a visit to your nearest university hospital or clinic is necessary. God only knows what neurologists are charging these days.

Folwell, the elected keeper of the public purse, is trying to do his job by managing the state health plan’s costs. So he recently filed a public records request seeking UNC Health’s provider contracts with BlueCross and BlueShield of North Carolina, which administers the plan for state workers and retirees, to ensure the contract rates are being applied correctly.

“We know what we’re billed,” Folwell told the Carolina Journal newspaper. “We’re trying to figure out what we’re supposed to pay.”

UNC sent him the contracts — with “all the relevant information blacked out,” the News & Observer reported, noting “Some of the pages are nothing but pitch-black rectangles.”

Folwell responded with a tongue-in-cheek press release praising the hospital system for its transparency. The name of that hospital system, however, was redacted, along with enough black boxes to make the document impossible to parse.

UNC Health says the rates it negotiated with BlueCross and BlueShield are exempt from disclosure under the North Carolina Public Records Act, citing a broad exception for contract confidentiality.

“All health care agreements between hospitals, doctors and insurance companies are proprietary business agreements, and therefore considered confidential,” a UNC statement provided to the News & Observer reads. “In addition, independent audit firms routinely examine insurance contracts to ensure the correct contract rates are being applied.”

That’s not good enough for Folwell, nor should it be. He said last month he’ll ask State Auditor Beth Wood to put the state employees’ health plan under her microscope.

UNC might have been better off coughing up the contracts. Wood’s team has a nose for waste, fraud and abuse, having flayed Cardinal Innovations Healthcare and recently exposed the N.C. Alcoholic Beverage Control Commission’s lack of financial control. If UNC Health has overbilled the taxpayers by a penny, the state auditor’s office will make hay.

Folwell is on a noble crusade for price transparency in health care. Not only is the state health plan in the dark about the contract reimbursement rates for which it’s on the hook, but individual patients usually have no comprehension of how much a procedure will cost — or how much of the bill they’ll be stuck with after private insurers have paid their share.

Health care is the only service we can think of where competition is nonexistent and consumers are essentially powerless. If an auto mechanic won’t provide a reasonable estimate, you see another mechanic. Try that with hospitals and you’re likely to die of natural causes before you’ll get a straight answer.

State lawmakers could easily require UNC Health to make its insurance reimbursement rates public. It’s a commonsense step voters ought to demand. But as long as insurers are picking up most or all of the tab, patients aren’t likely to rebel, even if those patients are state workers and the cost is indirectly coming out of their own pockets in the form of taxes.

As a Republican legislator, Folwell rose to the rank of speaker pro-tem in the North Carolina House. Today we doubt many General Assembly powerbrokers would deign to return his phone call. Could lucrative campaign contributions from the insurance and hospital lobbies be buying their silence?

Public support for price transparency might be our only hope of ever turning the tide. So the next time a candidate champions competition or extols the virtues of the free market, ask him or her why doctors and hospitals don’t have to compete for our business.

Treasurer Dale Folwell is a voice in the wilderness. Those invested in maintaining the status quo are convinced the issue is too complicated, the public is too disinterested and the health care cartels too insulated for him to effect any meaningful change. We can prove them wrong.

Cost competition should matter to anyone who’s ever flashed an insurance card at the doctor’s office and suffered a shock when the bloated bills start showing up in the mail. If perturbed patients marched on Raleigh, perhaps we’d find price transparency to be an effective remedy for some of health care’s financial headaches.

Editor’s Note: A version of this editorial previously appeared in the Johnstonian News’ sister newspaper, The Wilson Times. 

Leave a Comment