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Pricing & Payment

The Precarious Pricing System For Hospital Services

Abstract

 
Over the past twenty-five years, the average ratio of hospital charges for services (gross revenues) to payments received (net revenues) has grown from 1.1 to 2.6. This reflects a transition from predominantly cost- and charge-based payment systems to regulated and negotiated fixed payments. Hospitals have been able to squeeze additional revenues from remaining charge-based payers and services by sharply increasing charges, negatively affecting the uninsured. Although protection of the uninsured seems warranted, it might be difficult to regulate hospital pricing systems in isolation from other controversial issues, such as the acceptability of cross-subsidies and the role of market forces.

This paper attempts to shed light on the forces that have generated the gap between billed charges and underlying costs by tracing the history of setting charges for hospital services and examining the role and implications of the chargemaster (catalog of retail list prices) for hospitals, purchasers, and patients. Data were obtained from a literature review and interviews with a small convenience sample of senior executives and other professionals working in the hospital industry in different parts of the country, including for-profit and not-for-profit settings.

Pricing Systems Take Shape

Top Pricing Systems Take Shape A Burgeoning Problem The Process For Setting... Judging Prices From Different... Discussion And Conclusions NOTES

 
The market for hospital services began to form during the Great Depression as the failing economy made it difficult for hospitals to get paid for services. At the time, no market existed for health insurance. Blue Cross was formed in 1932 under the auspices of the American Hospital Association (AHA), and Blue Shield was established by medical societies in 1939. Blue Cross and Blue Shield accounted for about 9 percent of total hospital expenses by 1948, and 27 percent by 1958, when nearly one-third of the U.S. population was enrolled in Blue Cross.¹

Blue Cross paid each hospital on a per diem basis—the average cost of a day of care in that hospital plus a small supplement.² Hospitals accepted such cost-based payments because Blue Cross did not require a hospital to collect deductibles or coinsurance payments directly from patients. Beginning in the early 1950s, an alternative form of health insurance was developed based on the principle of indemnifying patients for the costs they incurred. Such indemnity insurance products often required patients to pay a deductible and coinsurance to a hospital directly. To compensate the hospital for the added expense and annoyance of such collection efforts, which were not always successful anyway, most hospitals required indemnity patients to pay rates closer to what became known as billed charges.

Third-party payment systems expanded dramatically with the establishment of Medicare and Medicaid in the 1960s. In general, the two government insurance programs adopted Blue Cross’s payment system based on per diem cost. Although the government programs modified their cost-based fee-for-service systems several times during the 1970s, it wasn’t until 1983 that Medicare abandoned such an approach in favor of a predetermined payment system per admission (the prospective payment system, or PPS) that was not directly tied to the cost of care in each hospital.³ Most state Medicaid programs also abandoned cost-based systems and substituted a variety of predetermined fixed-price payment approaches.

From the 1960s until the mid-1980s, much of the growth in the private insurance market was for indemnity products, thus increasing the number of charge-based patients. In addition, many Blue Cross plans lost their special status with hospitals and were required to pay for the services of their members based on negotiated discounts off billed charges.

Thus, by the mid-1980s two major forms of hospital payment systems coexisted: legislated government rates, and privately negotiated rates based on charges. Although quite different in form and amount, both systems relied to some extent on the charges established by each hospital; however, each system generated a unique set of prices according to the identity of the payer and thus heralded the beginnings of differential hospital pricing.

A Burgeoning Problem

Top Pricing Systems Take Shape A Burgeoning Problem The Process For Setting... Judging Prices From Different... Discussion And Conclusions NOTES

 
Impact of Medicare and Medicaid. Initially, the payment rates established by Medicare under the PPS proved to be quite generous. As reported by the Prospective Payment Assessment Commission (ProPAC), a predecessor to the Medicare Payment Assessment Commission (MedPAC), most hospitals had large Medicare surpluses, with financial margins for Medicare patients averaging around 13 percent in 1985.⁴ After recognizing these overpayments, Medicare restricted future increases (updates) in inpatient payments to levels well below the rising cost of care. As a result, Medicare margins dropped to –2.4 percent in 1991.⁵

The steady tightening of Medicare payments in the late 1980s, as well as low reimbursement levels from state Medicaid programs, imposed financial pressures on hospitals, particularly those with a high proportion of public patients. Hospitals attempted to maintain their profit margins by increasing prices faster than costs to privately insured patients, a practice known as cost shifting. The gap between private payments and costs grew from about 15 percent in the early 1980s to 31.8 percent in 1992 (Exhibit 1).

View larger version (17K): [in this window] [in a new window]   EXHIBIT 1 Hospital Payment-To-Cost Ratio, By Type Of Payer, 1980–2003

View larger version (15K): [in this window] [in a new window]   EXHIBIT 2 Total Hospital Gross And Net Patient Revenues, Community Hospitals, 1974–2003

All of these forces put pressure on hospitals to squeeze more revenues from a diminishing pool of other sources. The main technique used by many hospitals was to raise their billed charges. This raised to varying degrees the prices charged to payers not under contract, payers with contracts in which most or all payment rates were linked to charges, and services that were outside the scope of fixed- or negotiated-price contracts.⁹ Hospitals have continued to rely on charge-related sources of revenue, even from groups that generate very limited amounts of revenues such as self-paying patients. The gap between charges and actual payments (net patient revenues) now averages about 255 percent and is growing rapidly. Furthermore, the trends in the ratio of gross to net prices have been similar for in-patient services (adjusted discharges) and outpatient services (adjusted visits), with inpatient markups generally higher on average (Exhibit 3).

View larger version (15K): [in this window] [in a new window]   EXHIBIT 3 Gross-To-Net Price Ratios For Inpatient Discharges And Outpatient Visits, 1993–2002

Top Pricing Systems Take Shape A Burgeoning Problem The Process For Setting... Judging Prices From Different... Discussion And Conclusions NOTES

Factoring in operational costs. The cost of operating a hospital in part reflects strategic choices regarding mission (such as serving disadvantaged populations), jointly producing research and education, sponsoring social programs, and so forth. Thus, costs other than direct patient-related care can be combined in the accounting system and allocated across billable services, raising the total cost and introducing hospital-specific variation in nominal "service costs." Even for a given mix of services, hospitals might differ greatly in relative efficiency, leading also to different revenue requirements.

Unique accounting systems. Furthermore, each hospital has its own accounting system for allocating its various costs by department, type of service, and eventually individual line items in the chargemaster. In other industries, such as automobile manufacturing, there are standard costing systems, such as activity-based costing, which measure and allocate production costs precisely and accurately to each product and service. In the hospital industry, management information systems are not standardized in this way, and it is typical to allocate costs based on square footage and other proxy measures. Accordingly, sizable costs such as administration, depreciation, plant and equipment, and nursing hours (which is one of the largest expense categories) are allocated to billable services in ways that often do not accurately reflect their absolute or relative costs. Furthermore, it is not common for hospitals to have accounting systems that are even department-specific. Consequently, a large and often confusing source of variation in charge levels is a hospital’s particular cost accounting system.

Updating of codes. The full set of codes used by a hospital needs to be updated at least once a year. For example, the AMA publishes new CPT codes, typically allowing for a three-month lag of transition, after which only codes in the new system are allowed. This causes a hospital to scramble to make proper and timely changes to the chargemaster, which might number in the hundreds or thousands, depending on the facility. Throughout the year, changes to the chargemaster also can result from new technologies—truly new technologies emerging in the industry, or technologies and services that had not been performed in the past at that facility. Similar activities occur throughout the year, involving interactions between the finance offices and the clinical departments, to ensure that the codes are properly used and accurately represent the services provided and the definitions required by payers. These latter functions are intended to ensure compliance with regulations and contractual specifications, given that much of the information contained on a hospital bill flows directly from the chargemaster. Thus, for financial and legal reasons, the proper disposition of the chargemaster is vital to every hospital.

Goal of pricing. The goal of pricing is generally to cover resource costs, subject to institutional marketing strategies and markup policy.¹¹ Prototypically, pure pricing updates occur once a year, as a component of the budgeting process, which includes constructing an initial revenue model based on expected payer mix, service mix, and expected payer contract specifications, and an initial cost model based on current input costs, expected service volumes, and so forth.

Reconciliation of final cost and revenue models includes choosing an across-the-board price increase that reflects the strategic balance between shifting revenue requirements onto the combination of services and payers that are charge-related, and reducing operating costs for the hospital (for example, by decreasing the number of full-time-equivalent staff). This is reportedly often a stressful process for hospital executives, not to mention departmental staff, often involving the boards of directors for final deliberation and approval.

Individual items within the chargemaster are subject to smaller- or larger-than-average increases. This aspect of price setting is more crafty and high-tech than determining the average rate of increase. Here, an arsenal of consultants and computer software might be used to determine optimal increases in charges for various services. Optimality implies a higher payoff for a given rate of increase, which is a function of the volume and payer mix for that service; the sights are set on the largest increase in net revenues for a given increase in charges. About 20 percent of services are charge-related in the short term—that is, paid based on full or discounted charges per se—although a much higher percentage of services are paid nominally on the basis of charges through contract language that uses charge levels as reference points for discounts and to derive fixed payment amounts.¹²

Integrating the costs of new technologies. Another factor spurring differential price increases across services is the degree to which new technologies are infused into an existing service category. For example, the arrival of a new and expensive device can increase the cost of a service, although the service nominally appears the same. The adjustment process under Medicare to pay more for a service is painfully slow, working through data lags associated with the cost-reporting process. The allowed costs under Medicare will eventually respond to the cost of the new technologies, but this can take many years and will occur only as most U.S. patients, using a particular DRG, receive the more expensive treatment. For an individual hospital, however, its higher cost of care is often reflected in the higher charges it registers for the specific DRG category. Such higher charges translate into higher prices for charge-related services much more quickly.

Avoiding price inconsistencies. Hospitals try to avoid blatant inconsistencies in their pricing structure, but do not always succeed.¹³ For example, the volume and payer mix for a unilateral chest x-ray might send a signal to the software (and consultants) to push for disproportionate increases in related charges, which could result in charges that exceed those of comparable bilateral chest x-rays. Such inconsistencies are sometimes spotted and manually corrected after the fact, but a typical hospital might have many embedded in its chargemaster.

Setting default payment rates. Each private payer has a default payment rate (for example, 40 percent of billed charges) for services not governed by fee schedules or other fixed payment amounts, which can affect something on the order of 20–30 percent of all services. Hospitals vary in their mix of payers, resulting in different proportions of total services reimbursed according to fixed prices versus charge-based amounts; they correspondingly differ in terms of the proportion of revenues that are based on prices they set versus prices that reflect the market or regulatory clout of major payers.

Impact of prices themselves. Finally, prices set by competing hospitals do exert modest pressure to limit an individual hospital’s price increases. Conversely, willingness to institute aggressive price increases by a local market leader could excuse or encourage other hospitals in the area to follow suit.¹⁴

Judging Prices From Different Angles

Top Pricing Systems Take Shape A Burgeoning Problem The Process For Setting... Judging Prices From Different... Discussion And Conclusions NOTES

 
Influence of competition. From the viewpoint of the individual hospital, the process and outcomes (charges) of the price-setting process are logical; the charges fulfill their purpose by supplying revenues, albeit from a shrinking base of charge-related payers and services. The pricing process is peculiar to each facility, affected by local market conditions (including competition), its own mix of services and payers, and its own cost structure and resulting revenue requirements.

Evidence for this can be seen in Exhibit 4 with regard to urban versus rural areas, while the same pattern emerges with respect to differential regional managed care penetration (data not shown). In urban areas and areas with high managed care penetration, gross prices (charges) are generally higher. However, because such areas have more competitive environments, discounts are also higher, resulting in very similar net payments. Nevertheless, payers with weak market power are more vulnerable to higher gross prices in the more competitive areas.

View larger version (17K): [in this window] [in a new window]   EXHIBIT 4 Gross And Net Prices Per Discharge In Urban And Rural Hospitals, 1993–2002

Self-paying patients. Perhaps worst of all, billed charges can be perceived as shocking, or even punitive, to the uninsured. As hospitals increasingly raised their charges and set prices by negotiating discounts from their chargemasters, those with the least bargaining power received the smallest discounts. An unfortunate consequence of this system is that self-payers, including the uninsured, were usually forced to accept the charges that hospitals stipulated. This created, probably inadvertently, a rather pernicious outcome in which patients who had the least ability to pay for their health care were charged the highest prices. This has resulted in considerable problems for some patients with very high health care personal debt, aggressive efforts at collection, and avoidance of needed services.¹⁷

In our interviews, hospital officials reported that they were reluctant to bill the uninsured for less than full charges because of insurers’ common negotiating practice of insisting on being charged the same as the lowest-paying customers. They also cited Medicare guidelines and kickback regulations as reasons for not offering discounts to self-pay consumers. Related to this, they have operated with the understanding that they were subject to prosecution for fraud and abuse if they gave discounts without prior negotiation to any patients (even if they were poor and uninsured).¹⁸

Recently, adverse publicity has resulted in a clarification of Medicare rules that does permit hospitals to give larger discounts to low-income patients. Thus, many hospitals have recently adopted more systematic and proactive remedies to the financial problems faced by the uninsured and exacerbated by the inflated charges.¹⁹ These include granting the uninsured prices that are equivalent to common preferred provider organization (PPO) products or typical health maintenance organization (HMO) or other managed care contracts.²⁰

Other payers. It was thought for many years that the Medicare payment formulas had built-in mechanisms to adjust for differences in charge-to-cost ratios. However, some loopholes were found in the Medicare payment system involving billed charges, something the Centers for Medicare and Medicaid Services (CMS) administrator blamed on a small number of hospitals for "gaming the current rules" by rapidly inflating charges.²¹ Specifically, Medicare pays additional revenues to hospitals for high-cost outliers—a common practice also in analogous stop-loss provisions in private insurance contracts. Defining outliers (or stop-loss thresholds) and determining the amount of additional revenues owed for such cases depend heavily on a hospital’s charges. Although Medicare adjusts a hospital’s charges to estimate its costs, some hospitals inflated their charges at such a rate that the adjustment system overestimated the costs of their patients, thus tripping the outlier threshold faster. With additional payments also based on a percentage of charges, the effects of inflated charges can be compounded.

In addition to outliers, distorted and inflated charges can affect payments through other means. Some types of hospital admissions are exempted from prospective payments and, in turn, highly influenced by charges.²² Also, payments for the facility component of outpatient services are directly based on charges. These payments average approximately 5 percent of the total medical services payments (10 percent of the outpatient department, which in turn is about half of total medical services).

A question arises as to whether patients insured through "consumer-driven" high-deductible health savings accounts (HSAs) or health reimbursement arrangements (HRAs) should be protected from inflated billed charges in the same way as the uninsured are, particularly by government action. In our interviews, hospital representatives often expressed reluctance to automatically grant such discounts.²³ Having to collect revenues directly from patients is a costly and unwanted activity for many hospitals—something that insurance was supposed to stop. Additionally, they argued that part of the justification for discounts in the first place is the guarantee of patient volume, which cannot be given for insurance products that include few subscribers.

Discussion And Conclusions

Top Pricing Systems Take Shape A Burgeoning Problem The Process For Setting... Judging Prices From Different... Discussion And Conclusions NOTES

 
There are different ways to look at the issues surrounding the chargemaster. For one, it is an accounting tool doing an accounting function. Like most businesses, hospitals need to generate and implement financial models to ensure adequate revenues and continued operations. The strategies and methods used to determine charge levels, which greatly affect revenues from many sources, have resulted in rapidly growing charges and wide variations among hospitals. Hospital executives recognize that charges have grown relative to costs over time but defend such behavior as their only alternative to compensate for reduced margins from large private payers, as well as losses incurred in treating the uninsured, publicly insured patients, and certain high-cost patients.

Data examined in this study seem to support their contentions. For example, more competitive urban areas and markets with higher managed care penetration require higher markup policies to realize similar net revenues. In other words, hospitals seem to be affected systematically by market forces, in addition to the impact of lower payment rates from public payers. Thus, we conclude that powerful payers have pushed many hospitals into the position of "price takers" for a large proportion of all services, pressuring them into being aggressive "price setters" for some of their other patients to maintain target revenues.

The chargemaster sits at the vortex of government regulation, rapidly growing health care costs, growing segments of the population lacking sufficient or any insurance, and an enduring philosophical legacy of "optimizing reimbursement." The chargemaster might be an accounting tool, but its role reflects and, in turn, affects some of the deepest controversies and stressors in the U.S. health care system. Meanwhile, an urgent need exists to shield bystanders to this practice—the uninsured—from the unintended consequences of being asked to pay the highest prices for services. Many people in the hospital industry appear to have been slow to realize the adverse consequences of runaway list-price inflation for these most vulnerable patients. Prevalent thinking was that the pricing system was a necessary and largely mechanical method to cross-subsidize, with charges not equally discounted to all payers but designed to generate extra revenues from a limited number of patients. With efforts now in place to lower quoted prices to the uninsured, perhaps the most politically charged symptoms of the pricing system might be abated. Furthermore, with the U.S. Department of Health and Human Services (HHS) now disavowing the "regulation" that all patients (that is, the uninsured) must be charged full amounts (before negotiated discounts), perhaps the fictional charges will vanish and be replaced with accounting and pricing systems that more closely reflect the trend in actual costs—in other words, a return of the pricing system to the role once served by billed charges.

The financing and pricing of services for the poor and uninsured seem to be legitimate and important issues for government. Beyond that, however, new laws and regulations about the chargemaster per se (about hospitals’ prices in private markets, charge-to-cost ratios, and so forth) seem more likely aimed at symptoms rather than underlying health market problems. It would seem dubious or questionable for government to restrict hospitals’ ability to seek additional revenue by limiting their ability to charge some payers higher prices while still expecting these institutions to provide care to all patients regardless of what they can pay.

Having said that, public payers need to give further consideration about the data and methods used to set prices by formula. Although outlier problems might have been curtailed, incentives and distortions remain in the relative weights given to various services. These distortions might be sending their own "wrong signals," to the extent that some high-technology or specialty services are being overpaid, and perhaps in the process are encouraging overuse of those services and underprovision of less lucrative ones.

There are increasing pressures in the U.S. health care system to become more price-competitive and price-transparent. Price competition, managed care organizations, and consumer-driven health care, all of which might be positive in their own right, have pushed the decades-old system of chargemasters, price discrimination, and cost shifting almost to the breaking point. Perhaps the government will recognize that its payment for services on behalf of its beneficiaries should be commensurate with the cost of care. But such an outcome seems highly unlikely now. Thus, we will either push this system beyond its limits—forcing hospitals to focus and specialize on the most profitable patients and provide fewer and less intensive services to those who pay less—or continue to require hospitals to be "tax collectors" by charging more to those who can and will pay more, so that those who cannot or will not pay more receive care.

ALTHOUGH IT IS UNDERSTOOD why some patients are charged grossly inflated prices, we hope that in the future a hospital pricing system can be established that minimizes such differential pricing. However, simply wishing for this result won’t make it happen. Meanwhile, we believe that all stakeholders, including hospitals, must give greater attention to questions about how to improve the efficiency of their operations and to adopt aggressive procedures to eliminate services that have limited value or might indeed be harmful.

Editor's Notes

 
Christopher Tompkins (tompkins{at}brandeis.edu) is an associate professor in the Schneider Institute for Health Policy, Heller School for Social Policy and Management, Brandeis University, in Waltham, Massachusetts. Stuart Altman is the Sol C. Chaikin Professor of National Health Policy at the Heller School. Efrat Eilat is a doctoral candidate and research associate there.

The authors acknowledge support for this project from the Federation of American Hospitals. They also thank the hospital executives they interviewed (and promised confidentiality to) for the valuable information and insights they provided, and Brandeis colleagues Robert Mechanic and David Shactman for their comments on an earlier draft.

NOTES

Top Pricing Systems Take Shape A Burgeoning Problem The Process For Setting... Judging Prices From Different... Discussion And Conclusions NOTES

 

1. Authors’ calculations based on J.S. Thompson, "Insurance against Costs of Hospital and Medical Services in the United States," Journal of the Institute of Actuaries 87 (1961): 20–55 (for Blue Cross Blue Shield expenses); and U.S. Census Bureau, Statistical Abstract of the United States, 1962, July 1962, http://www2.census.gov/prod2/statcomp/documents/1962-01.pdf (accessed 16 June 2005) (for hospital expenses).
2. Thompson, "Insurance against Costs."
3. The PPS was based on the complexity of a patient’s diagnosis using a diagnosis-related group (DRG) technique. See A.N. Johnson and D. Aquilina, "The Cost Shifting Issue," Health Affairs 1, no. 4 (1982): 101–106.[Medline]
4. J.K. Iglehart, "The American Health Care System: Medicare," New England Journal of Medicine 327, no. 20 (1992): 1467–1472.[Medline]
5. Prospective Payment Assessment Commission, Report to the Congress: Medicare and the American Health Care System (Washington: ProPAC, June 1997), 78.
6. G. Taylor, G.M. Arzente, and J. Feffer, Evolution of Hospital Pricing Practices (New York: Banc of America Securities, March 2004).
7. Centers for Medicare and Medicaid Services, "Table 3.31: Medicaid Beneficiaries by Eligibility Group, 1975–2001," September 2004, http://www.cms.hhs.gov/charts/healthcaresystem/chapter3.pdf (accessed 5 July 2005). For Medicaid payment-to-cost ratio, see Exhibit 1 in the text.
8. This figure takes into account the impact of the Balanced Budget Refinement Act (BBRA) of 2000, which relaxed some of the BBA’s restrictions. Authors’ calculations based on S. Guterman, "Putting Medicare in Context: How Does the Balanced Budget Act Affect Hospitals?" 1 July 2000, http://www.urban.org/UploadedPDF/medicare-context.pdf (accessed 5 May 2005).
9. G. Melnick, "Hospital Pricing and the Uninsured," testimony before the House Ways and Means Subcommittee on Health, 9 March 2004, http://waysandmeans.house.gov/hearings.asp?formmode=view&id=1224 (accessed 12 November 2005).
10. M. Drach, A. Davies, and C. Sagrati, "Ten Steps to Successful Chargemaster Reviews," Journal of the American Health Information Management Association 72, no. 1 (2001): 42–48.
11. Ibid.
12. The common situation of having many contracts refer to the billed charges, even nominally, means that hospitals would need to renegotiate and replace existing contracts to remove or alter those references, if, for example, new regulations were introduced to govern the price-setting process (for example, a limit on the charge-to-cost ratio).
13. W. Cleverley, "What Price Is Right?" Healthcare Financial Management 57, no. 4 (2003): 64–70.
14. Institute for Health and Socio-Economic Policy, The Second Annual IHSP Hospital 200: Hospitals, Big Pharma, HMOs, and the Health Care War Economy, September 2004, http://www.calnurse.org/files.calnurse.org/assets/fulltextreport1.pdf (accessed 17 June 2005).
15. Melnick, "Hospital Pricing and the Uninsured."
16. Examples are "Charges and LOS for Deliveries Vary Widely by Geographic Region, Analysis Concludes," Data Strategies and Benchmarks 2, no. 10 (1998): 154–157; "Huge Geographic Variation in PTCA and CABG Charges, LOS," Data Strategies and Benchmarks 1, no. 1 (1997): 11–13; "Use These Data to Benchmark Cholecystectomy Costs," Data Strategies and Benchmarks 3, no. 1 (1999): 12–14; and "Hospital Charges for Colorectal Cancer Vary Widely among States," Health Care Cost Reengineering Report 4, no. 1 (1999): 14–16.[Medline]
17. C. Pryor et al., Unintended Consequences: How Federal Regulations and Hospital Policies Can Leave Patients in Debt (New York: Commonwealth Fund, June 2003).
18. See also J. Prottas, "Costs, Charges, and Medical Debt: What Is the Real Goal?" American Heart Hospital Journal 3, no. 1 (2005): 39–44.
19. American Hospital Association, "Alert: Four Related Issues Drawing Media and Congressional Attention—Know Your Organization’s Policies," February 2004, http://www.hospitalconnect.com/aha/key_issues/bcp/20030610ma.html (accessed 10 June 2005).
20. See, for example, Henry J. Kaiser Family Foundation, "New York Hospitals Agree to Give Discounted Rates to the Uninsured, Wall Street Journal Reports," 2 February 2004, http://www.kaisernetwork.org/daily_reports/print_report.cfm?DR_ID=21989&dr_cat=3 (accessed 10 September 2005).
21. CMS, "Testimony of Thomas A. Scully, Administrator, Centers for Medicare and Medicaid Services, on Medicare Payment for Hospital Outliers," before the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education, 11 March 2003, http://www.cms.hhs.gov/media/press/testimony.asp?Counter=738 (accessed 21 April 2005).
22. B.O. Wynn, "Inflation in Hospital Charges: Implications for the California Workers’ Compensation Program," testimony before the California Senate Labor and Industrial Relations Committee, 15 January 2003, http://www.rand.org/pubs/testimonies/2005/CT202.pdf (accessed 30 September 2005).
23. However, at least one hospital system indicated that patients with health savings accounts operated by large payers that are already under contract would be responsible for the high deductible but otherwise would receive the prevailing discount for that payer.

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