When taxpayers are footing the bill, the cost of goods or services should be transparent. From coffee shops to beauty shops and wherever seniors gather throughout America, the talk these days is about modern science and how those who have been in pain for years can now have routine knee or hip replacements.
Other medical devices such as pacemakers and stents are extending the lives of and improving the quality of life for older Americans. As the first of 78 million baby boomers begin to retire this year, they will enroll in Medicare and many will have these procedures.
The problem is the federal government is paying top dollar for anything from a titanium shoulder to a spinal implant. Medical device manufacturers require hospitals to sign confidentiality agreements that make it impossible for hospitals to disclose or document the cost of devices in order to inject true price competition into the $153 billion medical device marketplace. Some physicians earn consulting fees for the products they recommend to the hospital.
Hospitals bill health insurance companies including Medicare and Medicaid for the surgical procedure, including the medical device. Hospitals, consumers and the government have no idea whether the device, for example, has been marked up hundreds of percentage points because there is no ability to compare it to what other hospitals pay for the same products.
It’s a practice that has to stop as it’s contributing to the insolvency of Medicare and Medicaid. If we want these programs to continue, then we have to bring some sanity and transparency into the pricing of these medical devices, and the public should be able to see where the majority of their taxpayer dollars are going, and which companies are benefitting.
There is pricing and transparency in everything from medications to bed pans. But the cost of an implant or other medical device is one of the few items in healthcare that is hidden from the consumer and the taxpayer.
A 2009 report by McKinsey Global Institute found that hip implants cost 60 percent higher in the United States than the United Kingdom, Germany, France and Italy; knee implants cost 32 percent higher than in those countries. It is all because of confidentiality agreements and lack of transparent pricing of these devices.
And with tens of millions of potential patients utilizing such devices annually, it is an enormous bill adding to our national debt.
Currently, the average hip replacement procedure can cost about $50,000, which is a bundled cost for the surgery, hospital stay and the device. Medicare and Medicaid traditionally wind up paying 70 percent of the cost of a typical hip replacement.
Like pharmaceuticals, device manufacturers market their products directly to surgeons and other physicians. But unlike drugs, the prices of medical devices are not published and neither patients nor hospitals are offered a choice between medical devices when a doctor selects a specific device – nor can they find out the quality or price difference among the various products on the market.
The only way to bring down costs is to shed daylight on the price and bring transparency to what is charged to providers – and taxpayers. That’s why Congress should pass legislation banning exclusivity agreements at hospitals that accept Medicare, Medicaid or any other government programs.
In 2007, two United States Senators, Chuck Grassely, of Iowa, and Arlen Specter, of Pennsylvania, introduced legislation requiring price transparency in medical devices. Unfortunately, it never came up for a vote.
States and the federal government are already taking steps to make the cost of healthcare more transparent. More than 30 states including Georgia, Florida and Indiana are publishing healthcare data online for consumers to access. Health insurers such as Blue Cross Blue Shield of Georgia, United, Aetna and WellPoint also are making healthcare pricing and quality information available on the web.
Most of this healthcare transparency is focused on total price and care quality related to hospitals, physicians and prescription drugs.
So we can shop –often online — and compare the price of a new car or a month’s supply of blood pressure medication or a pair of blue jeans. We also, as health care consumers, can determine whether a generic drug or a brand name best serves our needs. But, we are barred from comparing the quality, medical outcomes or price of an artificial hip or knee.
That just doesn’t seem right. Especially when we the taxpayers are paying when the bill comes due, no matter what the charge.