Health Tech

Geisinger CEO: Price variability won’t be solved unless payers & providers get on the same page

Price transparency data has revealed there is a high degree of price variance for healthcare procedures depending on patients’ insurance carriers and the location in which services are delivered. Jaewon Ryu, Geisinger’s president and CEO, said that the only way this variability can be addressed is by getting decision makers on the payment side much more aligned with the care delivery side of things.

A woman walks through a maze

If you’re talented enough to locate and make sense of the pricing information that hospitals and payers have been mandated to publish online, you’ll likely find a high degree of variability. The price for a single procedure can often vary by thousands of dollars when you check different insurance carriers.

For an example, we’ll look at Geisenger, a 10-hospital health system based in Pennsylvania. Its charge sheet reveals that the gross charge for a platelet-rich plasma injection is about $1,700. For inpatients with Aetna insurance, Geisinger’s flagship medical center charges around $500. But for inpatients with Aetna Better Health insurance, the price is only $193.79. It’s about $715 for inpatients with Cigna’s insurance.

Jaewon Ryu, Geisinger’s president and CEO, acknowledged that this picture didn’t seem right on Thursday at Reuters’ Total Health conference in Chicago. To him, the only way this variability can be addressed is by getting decision makers on the payment side of things much more aligned with the care delivery side of things. 

Because consumers wanted “different flavors of coverage,” insurers responded by launching their own varieties of health plans, Ryu said. But as a consequence, Americans are faced with a degree of variability — which can be problematic because the answer for one person may not be the answer for their neighbor, or sometimes not even the answer for someone living in their own household.

“The insurance side of the world, for most patients, is very poorly understood,” Ryu declared. “And I think it’s because the American healthcare system is set up as a fragmented, complicated system, and as a result, people don’t understand. Where did my benefits start? How much do I pay? What is the deductible? How does this apply? There’s a whole slew of questions around just the understanding of insurance coverage.”

If you’re managing the health of a population — as is the job for both payers and providers — Ryu argued it’s in your best interest to marry the payment world to the delivery world.

“I think we’re in a unique position at Geisinger, because we get to see both sides of this — the payment arm and delivery arm. And when you bring them together, we know that that’s when patients are happiest,” Ryu said, in reference to the work Geisinger has done through its health plan.

He pointed out that an important way to decrease variability and increase transparency is through the move to value-based care. 

Geisinger is not fully integrated into value-based care models — Ryu recognized the health system has one foot in the value-based world and the other in the traditional fee-for-service world. But he said he believes the industry is rightfully moving toward value-based care because these models are easier for patients to understand, and they focus on maintaining patients’ health rather than billing them for different services at alarmingly dissimilar rates.

To Ryu, the best example of how providers and payers should be shifting to value-based models is the work that the Centers for Medicare and Medicaid Services has done with the Medicare program to build accountable care organizations. CMS said the Medicare Shared Savings Program saved more than $1.6 billion last year.

Photo: Syolacan, Getty Images