Hospital Price Transparency: What You Should Know

In April 2018, the Centers for Medicare & Medicaid Services (CMS) proposed a new policy that would require hospitals to post their standard charges online, while also making health records easier to access and share.Hospital Price Transparency: What You Should Know

According to Next Avenue, this latest effort to improve hospital price transparency across the healthcare sector is scheduled to take effect on January 1. Learn more about the need for transparency and the new policy, which will be enacted in 2019.

The Need for Hospital Price Transparency

One of the biggest problems with hospital pricing is that there is no standardized process – in many cases, pricing is not posted or even accessible for prospective patients to access, resulting in a wide disparity in service fees from one hospital to another.

Although it may seem strange to view healthcare as a commodity to be bought and sold, the reality is that hospitals are suppliers and patients are consumers.

Garrett Ball, a Medicare insurance agent, says “we rarely make purchases without knowing how much something will cost and we shouldn’t do that with [hospital or] medical care either.”

A standardized approach to hospital price transparency is necessary for several reasons, including:

  • Giving control back to the patient and empowering them to make informed healthcare decisions
  • Helping reduce high hospital bills for patients
  • Holding healthcare facilities accountable for their decision-making and reasoning regarding pricing
  • Making hospital pricing equitable and fair

While this most recent call to action from the CMS establishes a succinct plan for hospital price transparency, this is not the first time the issue has been brought forth. Reuters shares, “In 2014, the Government Accounting Office called on the Centers for Medicare and Medicaid Services to make pricing information available.” Unfortunately, in the years since, there has been little improvement; in fact, according to a study initiated by medical students at the University of Toronto and published by JAMA Internal Medicine, hospital pricing has become even more of a mystery.

Researchers conducted the study by canvassing 120 U.S. hospitals and surgeons’ offices to get price quotes for a full hip replacement surgery and then compared the data from the 2011 quotes versus the 2016 quotes.

The results were alarming:

  1. The number of hospitals that could provide any price information, including a complete or partial price for the procedure dropped from 48% to 21% from the first study to the second one.
  2. The proportion of hospitals unable to provide any price rose from 14% to 44%.

Not only are the vast majority of hospitals (79%) unable to provide an accurate estimate of the cost for a medical procedure, nearly half of the hospitals were unable to provide any pricing details. This is not good news for patients attempting to make an informed decision regarding their healthcare and the affordability of a medical procedure.

The Position of the American Hospital Association

The American Hospital Association (AMA) acknowledges that the current hospital pricing transparency model is inadequate and is committed to establishing consistent pricing information for consumers and their families. As it stands today, the AHA has a policy regarding hospital pricing transparency – established in 2006 – that requires information to be easy to access and presented in common language that is easy to understand. There are currently 42 states that require hospitals to make information on charges and payment rates available to the public.

The AHA also recently participated in a “multi-stakeholder task force” led by the Healthcare Financial Management Association, which resulted in a commitment to follow specific actions in order to move forward on the path of transparency, including:

  • Ensuring all pricing information is presented in consumer-friendly language
  • Expanding existing state transparency efforts
  • Providing consumers with a Summary of Benefits and Coverage (SBC) to better understand pricing
  • Researching what consumers find useful and following a patient-centered approach based on the results

With the January 1, 2019 deadline looming for hospitals to provide online-accessible transparent pricing, those who don’t get on board stand to face reduced Medicare payments and may find it harder to qualify for CMS incentive payments.

What does hospital price transparency mean to you and what do you think about this new policy? We’d like to hear your thoughts in the comments below.

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