Lehigh County Controller Exposes Insurance Industry Failures and Price Gouging Costing Consumers Millions

Controller Pinsley Finds Millions in Potential Savings

ALLENTOWN, Pa., Oct. 25, 2022 /PRNewswire/ -- The Lehigh County Controller's Office released a landmark healthcare audit that exposed failures of the healthcare industry and demonstrates need for strong laws regarding transparency.

"Our audit exposes the rot in the insurance industry, waste in our healthcare system and the failure of our third-party insurance provider to get the best rate for our employees and taxpayers. Lehigh County could potentially save up to $12 million over the course a three-year contract," said Lehigh County Controller Mark Pinsley.

The Controller's Office major finding looked at "cash-pricing" or "self-pay", or what consumers would pay without health coverage, and compared that against Medicare rates and other insurer rates. The office identified instances where the county is paying more than hospital listed cash prices and significantly more than Medicare.

The findings validated the County's 2022 Medical Renewal Process where the firm ELAP estimated $4 million in savings for Lehigh County, utilizing a process called reference-based pricing which involves adding a small mark-up to the rate of Medicare reimbursement to produce savings.

"Healthcare companies routinely claim to create savings, and provide the efficiency of the private sector. Yet time and time again, we're shown that insurance providers and hospitals care more about profit than people, whether its spending 25% of dollars on administrationⁱ or making consumers pay far more than the true cost of a procedure, pricing gouging is rampant in our healthcare system," said Controller Pinsley.

Lehigh County's audit also exposes the need for stronger federal and state guidelines around transparency. The audit made use of the Hospital Transparency Provision of the 2021 Consolidated Appropriations Act which requires hospitals to make publicly available all pricing data related to cost of procedures. However, the enforcement provisions are weak, charging the largest hospitals no more than $2 million a year for non-complianceⁱⁱ, allowing them to effectively build non-compliance into their annual budgets. In addition, Pennsylvania lags behind other states in establishing an All-Payer Claims Database that compiles all hospital data into a usable website for healthcare consumers.ⁱⁱⁱ

"It's clear that even when we try to reform a broken system the rules are rigged, hospitals avoid real punishment for obscuring costs and leaving consumers are left behind. We've learned savings don't come from healthcare providers or hospitals, but from diligent employers demanding the best rates and holding big insurance companies and powerful hospital networks accountable," said Controller Pinsley.

The audit discovered instances of overcharges, difficulty in obtaining information from our third-party provider, the Controller's Office identified almost $250,000 in potential recoverable funds. The difficulty in obtaining financial data for a professional audit suggests an impossible situation for an everyday consumer.

"This audit speaks to a healthcare system that is fundamentally broken, wasteful, shrouded in mystery, resistant to transparency and beholden to profits. This report should spur to action, consumer advocates, healthcare champions and elected officials across the country," said Controller Pinsley.

ⁱ https://www.americanprogress.org/article/excess-administrative-costs-burden-u-s-health-care-system/
ⁱⁱ eCFR :: 45 CFR 180.90 -- Civil monetary penalties.
ⁱⁱⁱ Interactive State Report Map | APCD Council

Media Contact:
Joshua Siegel
610-782-3082/484-892-1463
[email protected] 

SOURCE Lehigh County Controller's Office