The fine print can make a world of difference in any transaction. Nowhere is that more true than in healthcare, where complex, often opaque contracts dictate how trillions of dollars are spent each year. These documents govern everything from how much employers and families pay for healthcare to what services they receive for their money.
Why You Should Care About Healthcare Contracts
Your employer likely has a contract with an insurance company for a medical plan, which has agreements with hospitals, doctors, and labs. There may even be another contract with a broker who helps select the plan. Prescription drug benefits? That’s likely under yet another contract. While these arrangements may seem far removed from your day-to-day life, they directly impact your healthcare costs and access. Unfortunately, the companies offering these services often have standard contracts, leaving small employers and individuals with little room to negotiate. In short, you’re frequently playing by their rules.
The Problem with Lopsided Agreements
Lopsided contracts can have serious consequences. Take pharmacy benefit managers (PBMs), for example. Employers hire these intermediaries to negotiate lower drug prices with pharmaceutical companies. However, some contracts allow PBMs to profit from deals with drug companies – the entities they should negotiate against.
Similarly, some health insurance contracts allow insurers to pay hospitals more than what the hospital initially billed, inflating costs for employers and, ultimately, for individuals. Worse still, certain contracts have attempted to block employers from accessing data about how their health plan money is being spent, despite recent laws meant to prevent such restrictions.
Efforts to Level the Playing Field
Fortunately, change is on the horizon. Healthcare advocates and organisations are working to even the playing field, starting with more transparent contracts. One notable example is the 32BJ Health Fund, which covers over 200,000 building service workers and their families.
This month, the fund published a template contract to establish fair and favourable terms with insurance providers. This proactive approach is a first step toward empowering employers and individuals in the healthcare marketplace.
Transparency and Reform in Healthcare Contracts
Other influential figures are also pushing for change. Billionaire Mark Cuban, known for disrupting the pharmaceutical industry with his low-cost mail-order pharmacy, advocates for companies to publish their health plan contracts. He argues that this would force transparency and accountability in the system.
Cuban has even hinted at plans to make some contracts public as early as next year. In addition, a new nonprofit called the Nautilus Health Institute aims to “transform health plan market norms” by providing contract language that is more favourable to healthcare buyers. This initiative is designed to be freely available for anyone to use, democratising access to better contract terms.
Don’t Ignore the Details
Although the fine print in health care contracts may seem mind-numbing, overlooking these details can have significant financial consequences. As Dave Chase, one of the founders of Nautilus Health Institute, said, “If you don’t sweat these details, you get robbed blind.”
Facing off against companies with deep pockets and armies of lawyers, it’s crucial to have the right tools and language to ensure a fair deal. In a world where healthcare costs are continually rising, paying attention to the contracts that govern these services is more important than ever. Employers and individuals can gain more control over their healthcare expenses and outcomes by pushing for transparency and fair terms.