Anthem & OSU: Hospital price transparency files reveal the stakes in the fight between two healthcare giants
Healthcare is complicated, and patients are often caught in the middle. Health plans, employers, and government agencies are almost always looking for ways to pay less of healthcare costs, while providers (doctors, hospitals, clinics, pharmacies) will almost always be looking to be paid more. Typically, the only way both can get what they want (within the confines of relatively simple arithmetic) is if patients pay more. And while patients often do pay more (there’s a reason why healthcare is a leading cause of bankruptcy), that doesn’t stop providers and insurers from arguing over costs all the same.
It’s often difficult to say who is right or wrong in these negotiations. On the one hand, we think few of us enjoy seeing big chunks of our paycheck reduced due to medical premiums ($9K in premiums for single coverage and $26K for family coverage). On the other hand, we all want there to be a local provider for healthcare services when we need it (77% of rural counties are so-called medical deserts [though this figure may be dated]).
Ohio State University and Anthem
More recently, and close to home for those of us at 46brooklyn, THE Ohio State University Wexner Medical Center announced that it was at an impasse with Anthem Blue Cross and Blue Shield (Anthem). If a new agreement isn't reached by December 31, 2024, the Ohio State University Wexner Medical Center (OSUWMC) and The James Cancer Hospital (The James) will become out-of-network for Anthem's commercial insurance plans starting January 1, 2025, potentially affecting approximately 135,000 patients. According to reports, the dispute centers on reimbursement rates and payment practices. Ohio State alleges that Anthem has underpaid claims and resisted rate adjustments despite rising healthcare costs. Conversely, Anthem contends that Ohio State is seeking rate increases exceeding three times the inflation rate, which they argue would significantly raise healthcare costs in Central Ohio. This situation follows a recent development where Ohio State's contract with Anthem for Medicare Advantage plans ended, impacting nearly 28,000 patients who will lose in-network access to Ohio State providers starting January 1, 2025.
(Remember when we mentioned patients being stuck in the middle of quarrels between health plans and providers, this is what we meant.)
Now, there are those of us at 46brooklyn with Anthem as our insurer and OSUWMC as our provider — and OSU has served us well as students, patients, and Buckeye fans over the years. This means some of our team members got notices about this potential impasse between these health system and insurer giants. In talking around the dinner table about what to do (i.e., do we change insurers or change providers or wait it out), we remembered that in this day and age there ought to be a way to get some data to try to make an informed-ish decision on the matter (or at least try to get a better handle at what is going on). Then we remember the Hospital Price Transparency laws and that thankfully, Hospital chargemaster files are a thing, which theoretically enable us to get a sense of Anthem’s prices at Ohio State University (as well as all the other insurers working with OSU). We could therefore analyze Anthem’s prices against their peers, and while we may not necessarily understand the detailed nuances of the complicated negotiations or be able to discern who is right or who is wrong, the available data could give us tremendous insights into the spat and perhaps give us some basis for any potential decision-making as enrollees and patients. And so we did what loyal 46brooklyn readers know we’d do: unpack the data and let it speak. And boy, did the data have a lot to say.
Hospital chargemaster files: What they are and how are they used
Hospital chargemaster files are comprehensive, standardized lists of prices for every service, procedure, medication, and supply a hospital provides. These files serve as a hospital’s “price menu,” detailing charges for everything from routine blood tests to complex surgeries. Although originally intended for internal reference, chargemasters reflect a kind of “MSRP” in the hospital marketplace and have gained increasing notarity over the years.
This is because there is a requirement for hospitals to make their chargemasters public (under a federal rule implemented by the Centers for Medicare & Medicaid Services (CMS) on January 1, 2021. More specifically, the mandate is based on Section 2718(e) of the Public Health Service Act, which requires hospitals to annually establish, update, and make public a list of their standard charges for items and services. Moreover, the Hospital Price Transparency Rule obligates hospitals to provide a machine-readable file containing comprehensive information on the prices for all services and items in their chargemaster.
Through these rules and files, hospitals must disclose several types of charges, including gross charges (the full prices listed in the chargemaster), discounted cash prices (prices available to self-paying patients), payer-specific negotiated rates (the rates agreed upon with insurers [what we’re interested today]), and de-identified minimum and maximum negotiated charges.
At the end of the day, we get several things of value from hospital chargemaster transparency, such as a basis for understanding potential chargers by providers based upon the types of insurance people have, transparency into pricing (despite criticism, these files allow patients and payers to see a hospital’s pricing for various services, aiding in informed decision-making and enabling organizations, such as Patient Rights Advocate, to advocate for reasonable billed charges), and can help providers, insurers, researchers, policymakers, and reporters assess pricing against industry benchmarks or past experience.
Now, like most things in healthcare, hospital chargemasters are no holy grail or place of data nirvana. Despite their importance, chargemaster files are often criticized for their complexity, lack of standardization, and disparity between listed prices and actual payments made after insurance adjustments. Prices can vary significantly across hospitals for identical services, making the files less practical for patients trying to estimate their out-of-pocket costs. Said differently, while chargemaster files are a cornerstone of the healthcare pricing system, their full potential as tools for transparency and fairness remains unrealized without further standardization and additional education for consumers.
Nevertheless, we roll with what we got in the public domain, and we at 46brooklyn are happy to work with the data as is (warts and all).
And here is one straight out of the playbook….
In seeking to evaluate the Anthem v. OSU dispute through the use of data (as data is what helps us understand reality), we started by accessing the OSU chargemaster files. As stated by OSU, while “[their] prices are the same for all of [their] patients,“ the standard charges in the files we download represent the set dollar amounts for services before any negotiated rates or financial assistance are applied.
You will also notice that on their website, there are files for OSUWMC as well as for The James. Both files are over a gigabyte in size and have millions of rows of data (6+ million, exceeding what programs like Excel can reasonably handle). So while machine readable they may be, consumer friendly they are not.
Luckily for us, despite the ‘tall csv’ formatting of the files (which creates many duplicative rows for seemingly little added value), we were able to access and format the data into more manageable summary of data using python.
At a high-level there are 42,848 services in the OSUWMC file (based upon the descriptions of billable items) and 43,171 services in the James’ file. There are 27 insurers with 66 unique plans accepted (one insurer can have multiple plans, including, but not limited to, a Medicare, Medicaid, and commercial option) at OSUWMC compared to 27 insurers with 59 plans at the James Cancer Center (why there are 7 fewer plans accepted at the cancer hospital that is effectively across the street from OSU Wexner Medical Center, we cannot say). If you are curious what a side-by-side comparison looks like — that is, what plans are at OSUWMC vs. the James — we’ve got you covered in Figure 1 below:
Figure 1
Source: 46brooklyn Research review of Ohio State University hospital chargemaster files
Within these data files, there are 23 columns of data for us to review and analyze (a complete list of the columns is as follows):
Figure 2
Source: 46brooklyn Research review of Ohio State University hospital chargemaster files
As can be seen above, any given line of data (i.e., any given health plan’s price for an item on the OSU chargemasters) has a few potential prices which may be relevant (Estimated Amount, Negotiated Dollar Amount, Gross Charge). In order to evaluate prices across many fields, we created a “comparison price” column, which is nothing more than attempting to take a logical approach to get effectively one price per health plan per service. We accomplished this by taking the prices in a step-wise comparison fashion. whereby we first looked for an Estimated Amount for the service for each payer to be published. If there was an estimated amount, we used that as the price for comparison. For those plans lacking an Estimated Amount, we next looked for a Negotiated Dollar Amount, and used that if present. Lacking either of the previous, we then assumed the price for the plan was the listed Gross Charge. If there was no listed price within any of these three places for the plan, we left the price null. Our specific code for this pricing coalescing is as follows if you’d like to check our work (we replaced the osu parquet as needed whether we were working with the OSUWMC or the James):
From there, it was relatively straightforward to perform an analysis of Anthem plan prices against all other OSU prices (and we did so, with the results summarized in the next section). Before we bias you with our analysis, and to demonstrate how we think it is possible it is to publish more workable files than those available on the website, we’re sharing our resulting comparison price file here (for OSU Wexner Medical Center) and here (for The James Cancer Center).
Can I see your insurance card please?
To start, we began our analysis by recognizing that there are five plans under the umbrella of Anthem in the OSU Wexner chargemaster files and three plans under the umbrella of Anthem in the James chargemaster files. And despite these plans being under the same insurance company (i.e., Anthem), the various Anthem plans often did not agree on the price of things (which made getting started on this analysis a little difficult). For example, within the OSU Wexner files, in 42,806 out of the total 42,848 services listed at least one Anthem plan had a price that was different from the other four plans (i.e., 99.9% of the time, which is colloquially known as all of the time). As a result, our first challenge was to evaluate how often it is that the same insurer, at the same provider, can have many different prices for the same service (déjà vu for those of us who study pharmacy prices). We know from our drug pricing studies, this is a common occurrence, but is it also common with hospital charges? It turns out that it is. In Figure 3 below, we evaluate the “oneness” of hospital charges against the insurers. Note that of the 27 insurers in the OSU Wexner files, 13 of them have only one plan, so they’re not included in the figure below (as they can’t have variability across their one plan price; at least in a way we can measure here).
Figure 3
Source: 46brooklyn Research review of Ohio State University hospital chargemaster files
As can be seen above, it turns out that this phenomenon is not unique to Anthem. Of the 14 health insurers with more than one plan that has OSU in network, nine of them generally don’t agree on prices across their plans. In fact, the Ohio State University’s own insurance plan (OSU Health Plan) is one that generally pays many different prices for the same service depending upon which arm of the health plan is paying its affiliated hospital (more on that later). Now, part of this is almost certainly a result of the methods we’re using to arrive at pricing to begin with (having a gross charge default within our comparison price probably creates more of a perception of oneness in price than may otherwise exist). For this reason, we only present this learning from the OSUWMC chargemaster file and not the James.
Nevertheless, when we recognize that much like drug pricing, hospital charges (which, to be fair, includes both drug prices and non-drug services) have many different and variable prices, we need to think of a different approach to analyzing Anthem’s prices against its peers.
If we had enrollment data — that is to say, if we knew generally how many people under each plan were being subjected to these varied prices — we’d use that enrollment data to weight the prices and give a “typical Anthem experience” against a “typical experience” of other plans (like what we did recently with Medicare prices). However, we do not have enrollment data for these plans; so we took an alternative approach.
To start, for each service listed, we identified the minimum reported price and the maximum reported price across all the plans (66 for OSUWMC or 59 for the James). We then identified the minimum Anthem price for that service (across the various plans, five for the OSUWMC file and three for the James) and counted up how many times Anthem would appear — at least on a service basis — to be the worst payer for OSU (minimum Anthem price is the minimum price for OSUWMC or the James). We then did the same thing for the maximum (compared the maximum Anthem price for the service against the highest listed price for the service). What we found is that for effectively all of the services at the OSUWMC, Anthem was almost never the worst payer and almost always had the possibility of being the best payer. The results are displayed below in Figure 4.
Figure 4
Source: 46brooklyn Research review of Ohio State University Wexner Medical Center hospital chargemaster files
Much like OSUWMC, at the James, Anthem was almost never the worst payer, but wasn’t often the best payer either.
Figure 5
Source: 46brooklyn Research review of Ohio State University James Cancer Hospital chargemaster files
Now, to be clear, this analysis doesn’t tell us that Anthem is right and OSU is wrong in the contract negotiations taking place. Obviously, this is a look at past data, and we have no way of knowing what either side is proposing in their new prospective arrangement. Further, even just focusing on these above numbers, there are a lot of factors and limitations of OSU chargemaster data that we do not know about, including the ever-elusive aggregate discount taken after all line-item services are added together. So while we think the above is interesting, we do not think it’s the full story, given the limitations that exist within hospital chargemaster data and our approach to develop a comparison price.
However, we did think of another analysis we could do that might (caveat emptor) address any of the limitations within the data. As previously identified, Ohio State University has its own health plan and has to pay effectively itself, with the resulting data splashed across these chargemaster files (yes, much like PBMs paying PBM affiliated-pharmacies, the same thing can happen with health plans and their affiliated providers, like hospitals). We therefore thought it would be a good idea to compare Anthem’s prices against Ohio State’s own prices for services to see what insights we might glean from a more apples-to-apples comparison (i.e., limitations of hospital chargemasters notwithstanding, these are the listed prices of Anthem against the listed prices of Anthem’s competitor, OSU Health Plan, within the data as presented). That is to say, insofar as the Ohio State Health plan represents a competitor to Anthem, we think it’s reasonable to compare the prices listed against each other, effectively fully contained by just the information within the files (and if not reasonable — meaning there could be confounding variables not reflected in the presented data that may bot allow for true apples-to-apples comparisons — it’s probably a good signal to policymakers that policy enhancements may be necessary in order for comparisons to be meaningful; otherwise what is the point of these files?).
What we found shocked us.
In setting up a similar analysis to the one above (Min Anthem compared to Min OSU Health Plan; Max Anthem Compared to Max OSU Health Plan), what we found is that Anthem’s lowest price is effectively always higher than OSU Health Plan’s lowest plan price. Similarly, Anthem’s highest price is always higher than OSU Health Plan’s maximum price. Note: we’re giving no credit for equal prices in this analysis, just lower vs higher.
Figure 6
Source: 46brooklyn Research review of Ohio State University hospital chargemaster files
The above figure is kind of wild. When OSU pays itself (charges itself?), it generally does so in a way that is lower than what Anthem would pay?
What’s more, is that in looking at the type of plans Ohio State is offering, the OSU Department of Athletics is generally always the highest price point for Ohio State Wexner Medical Services (less so for the James), whereas other plans like the OSU Student Health pay less.
Figure 7
Source: 46brooklyn Research review of Ohio State University hospital chargemaster files
Look, we’re not sure what makes the James so unique in these analyses (outside of being a cancer hospital), but it’s noteworthy that even within a singular health system (OSU), the hospitals and the relationships with insurers is not “one.” While there are 27 insurers at both hospitals, there are fewer individual plans at the James than OSUWMC (in fairness, transplant services probably aren’t needed at the cancer hospital). Nevertheless, we can infer (though we haven’t directly looked) that because results are different from OSUWMC to the James, the prices for things can vary whether they’re given at the James vs. OSUWMC (even if they’re effectively right across the street from one another — it’s actually possible to walk from one building to another via adjoining hallways). All of this is to say, in our effort to study data to improve our riveting dinner conversations about hospital chargemaster prices and health insurance coverage, we’re clearly left with more questions than answers.
It’s a banana Michael, how much could it cost?
While we are still getting a handle on these chargemaster files, admittedly, these are not the results we expected to find, nor do we think they provide any clear-cut answers into what is going on (we have no knowledge of what OSU and Anthem are debating in their contract negotiations, nor do we know if any of the data we’ve highlighted above plays a role in their deliberations). For OSU’s part, at least within the public domain, they’re stating that the reason for the contract dispute isn’t just financial — Anthem reportedly denies their medical claims more than any other insurer and is reportedly slow to pay (based upon a measure of dollars owed outside of a 90-day window). However, we think it is reasonable to compare the prices within the file as contained for Anthem against the prices within the file as contained for OSU Health Plan, and these are the results when we conduct such an analysis.
We have seen and studied how impactful drug pricing disparities can be with regard to outpatient drugs in programs like Medicare, Medicaid, and commercial markets. What we’ve seen and learned in those studies would seem to offer us parallels into our developing study of hospital chargemasters, which provide more visibility into an otherwise opaque and disjointed world. We’ve said before, and will say it again: when there are a dozen different prices for product, there is effectively no such thing as “the price” for that product. Who decides who gets charged the high rate for their care and who gets charged the low rate? Is one more deserving of care because their insurer is a ‘good’ payer? Is a provider’s cost to deliver care any lower simply because your health plan or insurer represents more potential covered lives (and therefore can command a lower price)?
We’re not sure there are any good or satisfying answers to these questions that could be given (regardless of us acknowledging that we don’t have any concrete ones in this analysis).
What’s more is that we also recognize that when pricing disparity exists, the impact of a ‘good’ or ‘bad’ payer on the bottom line for a provider can be massive. Calling back to our outpatient pharmacy research experience, the overall reimbursement picture for a pharmacy can be one where 50% or more of the claims are underwater, propped up by the 5% or so of claims that pay exceptionally well. Cutting off or changing the dynamic of either the lower quartile or upper quartile of payment can result in massive swings to the bottom line because of how disparate the experience is. Maybe hospital payments could learn a thing or two from what we think we’ve learned on the pharmacy side. Maybe a transparent, cost-plus future may be a worthwhile pursuit in the medical services world too.
Regardless, the truth we will continue to cling to is that this payment system is incredibly messed up for patients and plan sponsors, who don’t really understand what is going on and what normal and reasonable should look like. As calls to improve upon the foundation of hospital price transparency appear to be ignored and as price disclosure appears to be eroding, we believe that even the limited insights that these files present are a good indication that broader and more comprehensive price disclosure across the healthcare and insurance delivery systems are a good thing for purchasers.