The Price of Healing

Hospitals are now required by law to publicly post their prices on everything ranging from drugs to x-rays to organ transplants.

This requirement was initially introduced in the Affordable Care Act of 2010. But the new requirement for online prices reflects the Trump administration’s effort to encourage patients to become better-educated decision-makers in their personal care.

The hospitals must update these price lists at least once each year according to a Trump-era price transparency rule that took effect at the start of this year. It requires hospitals to post a range of actual prices — everything from the rates they offer cash-paying customers to costs negotiated with insurers.

Seema Verma, head of the Centers for Medicare and Medicaid Services, said, “We are just beginning on price transparency. We know that hospitals have this information, and we’re asking them to post what they have online.”

Many have complied, but…

Some hospitals bury the data deep on their websites or have not included all the categories of prices required. In addition, a substantial handful of hospitals have not disclosed the information at all. However, the disclosures that are available illustrate the vast differences in prices — nationally, regionally, and within the same hospital. But they’re challenging for consumers and employers to use, giving a boost to an industry that analyzes the data.

While it’s still an unanswered question about whether price transparency will lead to overall lower prices, KHN (Kaiser Health News) took a deep dive into the initial accumulation of data to see what it reveals. What they found is both shocking yet not surprising:

1) Prices are all over the place. 

Under the Trump-era rule, hospitals must post what they accept from all insurers for thousands of line items, including each drug, procedure, or treatment they provide. In addition, hospitals must present this in a format easily readable by computers and include a consumer-friendly separate listing of 300 “shoppable” services, bundling the total price a hospital accepts for a given treatment, such as having a baby or getting a hip replacement.

In some cases, the cash-only price is less than what insurers pay. And prices may vary widely within the same city or region.

For example, in Virginia, the average price of a diagnostic colonoscopy is $2,763. But the price tag across the state ranges from $208 to $10,563, according to a database aggregated by San Diego-based Turquoise Health, one of the new firms looking to market the data to businesses while offering some information free of charge to patients.

2) Even though patients can look up information, it’s incomplete.

The whole thing is convoluted and tricky. Patients can attempt to find the price information themselves by searching hospital websites, but even locating the correct page on a hospital’s website is difficult.

Hospitals say the transparency push alone won’t help consumers much because each patient’s situation is different and may vary — and individual deductibles and insurance plans complicate matters.

3) Third-party firms are trying to make searching prices simpler – and cash in. 

Because of the difficulty of navigating these websites, some consumers may turn to sites like Turquoise. Another such firm is Health Cost Labs, which will have pricing information for 2,300 hospitals in its database when it goes live this month.

Firms like Turquoise and Health Cost Labs aim to sell the data gathered from hospitals nationally to insurers, employers, and others. In turn, those groups may use it in negotiations with hospitals over future prices. While that may drive down costs in areas with a lot of competition, it might do the opposite where there are fewer hospitals to choose from or when a hospital raises its prices to match competitors.

4) If consumers are paying cash, they could use this data to negotiate. 

Patients who are paying cash or who have unmet deductibles may want to compare prices among hospitals to see whether driving farther could save them money. Uninsured patients could ask the hospital for the cash price or attempt to negotiate for the lowest amount the facility accepts from insurers. Insured patients who get a bill for out-of-network care may find the information helpful because it could empower them to negotiate a discount off the hospitals’ gross charges for that care.

But the data may not help insured patients who notice their prices are higher than those negotiated by other insurers.

Getting the data, however, relies on the hospital having posted it.

5) Hospitals still aren’t really on board.

Many in the hospital industry have long fought transparency efforts, with some hospital groups even filing a lawsuit seeking to block the new rule.

They argue the rule is unclear and overly burdensome. Hospitals don’t want their prices exposed, knowing that competitors might adjust theirs or that health plans could demand lower rates. Conversely, lower-cost hospitals might decide to raise prices to match competitors.

The rule stems from requirements in the Affordable Care Act. The Obama administration required hospitals to post their chargemaster rates, which are less useful because they are generally inflated, hospital-set amounts that are rarely what is actually paid.

The suit was dismissed by a federal judge last year.

When it comes to compliance, Jeffrey Leibach, a partner at the consulting firm Guidehouse says, “we’re seeing the range of the spectrum.” For example, they found earlier this year that about 60% of 1,000 hospitals surveyed had posted at least some data, but 30% had reported nothing at all.

In May, the Centers for Medicare & Medicaid Services sent letters to some of the hospitals that have not complied, giving them 90 days to do so or potentially face penalties, including a $300-a-day fine.

Shawn Gremminger, director of health policy at the Purchaser Business Group on Health, a coalition of large employers, says, “A lot of members say until hospitals are fully compliant, our ability to use the data is limited.” 

His group and others have called for increasing the penalty for noncomplying hospitals from $300 a day to $300 a bed per day, so “the fine would be bigger as the hospital gets bigger,” Gremminger explains, “That’s the kind of thing they take seriously.”

Hopefully, this will work itself out. This is good news in that it should cut down on surprise and hidden fees. It will also help in holding hospitals accountable. It’s a start in giving the power back to the people regarding their own healthcare. It’s a step in the right direction. 

Sources:

https://www.milliman.com/en/insight/hospital-price-transparency-march-2021-update
https://blog.turquoise.health/state-of-hospital-price-transparency-2000-hospitals-with-maps-march-2021/
https://www.beckershospitalreview.com/legal-regulatory-issues/hospitals-lose-appeal-in-price-transparency-case.html
https://guidehouse.com/insights/healthcare/2021/blog/hospitals-meeting-price-transparency
https://www.fiercehealthcare.com/hospitals/cms-sent-out-its-first-wave-warnings-to-hospitals-noncompliant-its-new-price-transparency

Contact Us

To place an order or ask a question: 800-609-6633

From Canada (or outside the US):
412-798-9800

To schedule an assessment:
888-865-9595

To phone the show:
M-F Radio show: 1-800-281-8255

Sat Radio show: 1-800-320-8255

Newsletter

Join our newsletter today and receive a 10% OFF coupon!