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OP-ED: We need action to control out-of-control health care costs.

Bill Hammond
CEO of Texas Employers for Insurance Reform

As a businessman and former legislator, I get a lot of questions from employers of all sizes, entrepreneurs, and individuals seeking to make their dreams into realities.  One of the most frequent questions I get is:  What keeps me up at night regarding matters of state politics and policy?  The answer is health care. The fact is many Texans are discovering they cannot afford health care because costs are rising at unsustainable rates. Business owners want to offer jobs with decent wages and affordable benefits, but affordable benefits may not continue to be an option in Texas.

I am not sure when the Texas health care industry transitioned from a health care delivery model to a profit model, but it is clear they have as the numbers demonstrate. According to the Health Care Cost Institute from 2014 to 2018 higher prices accounted for 74% of total health care spending increases above inflation on a national basis.  In the meantime, Texas has experienced an increase of 13.8% in spending for that same period.  In other words, providers are charging more for the same services.

We have all read the stories about providers who have taken advantage of the current COVID pandemic and have charged thousands of dollars for a single COVID test that costs $50.  Even with the great strides taken by Texas legislators, emergency providers and facilities continue to gouge when they are offered the opportunity.  State law can only reach a portion of the insurance market.  However, state law can reach 100 percent of all health care facilities and providers.  It is finally time to realize that the problem is not the insurance benefit purchased by employers.  The real problem is the providers and facilities who are driving health care costs even higher.

Another insidious way for providers to profit from those who suffer from health maladies are by recommending patient treatments and interventions that seek to enhance their own financial benefit rather than patient well-being.  In August, the Centers for Medicare and Medicaid Services (CMS) concluded that provider “financial motivation is the most likely cause” for a 736 percent increase in claims volume for certain serious back surgeries.  CMS decided that “prior authorization is an appropriate method to control these volume increases.”   Prior authorization is a review by medical professionals at an insurer to make certain that a provider does not prescribe an unnecessary drug or procedure for medical conditions. Yet, already in this legislative session a proposal has been filed to prohibit prior authorization for any medical services.

The loud protests about prior authorization (PA) you hear from some physicians and their private-equity investors, and organized medicine stems from their awareness that PA can expose their sleight of hand.  The financial consequences suffered by employees because of the fraud, abuse, and overcharging in health care in Texas is both morally and economically indefensible.  Private equity, entrepreneurial physicians and others seek to profit from a health care system that is allowing them to enrich themselves by proliferating and generating indefensible billings for unjustified medical care.

Here is what Texas should do to combat these attempts at unjust enrichment:

  • Mirror CMS by relying upon prior authorization to combat providers who are motivated by financial considerations. Prior authorization is the last-ditch attempt to stop unjustified medical care.
  • Empower Texas state agencies to better protect the public by bolstering their abilities to pursue allegations of fraud and prosecute health care providers who recommend unnecessary health care for financial reasons; and
  • Regulate the business of medicine and broaden current medical gouging laws to stop health care overcharging.

Bill Hammond, CEO Texas Employers for Insurance Reform