New Health Plan Sets Its Own Rates

A new health plan in Ohio is setting its own prices for doctors and hospitals — and challenging the idea that its the providers who can determine payment rates, the Cincinnati Enquirer reports, via USA Today. At least nine Cincinnati-area employers with more than 5,000 employees already have signed up for the new plan, called TrueCost by Custom Design Benefits. Employers who fund their own health plans say it allows them to manage or even reduce health care costs because payments are set at Medicare rates plus a 40 percent "provider bonus." But hospitals and doctors say that isn't enough money. They insist they didn't negotiate the payments, won't honor the plan and will send bills to patients for their full charges.

TrueCost's big change is that it sets prices based on Medicare rates. "Medicare pricing is consistent, defensible, fair, rational, and transparent," says a Custom Design Benefits brochure describing the plan. That contrasts with the current system, where providers set their own charges and negotiate discounts with health plans and plan administrators bringing large groups of consumers. Employers argue that they have to do something to deal with rising health care costs, and feel they have exhausted all reasonable options when it comes to shifting more costs to employees and their families.