Tom's Take | July 25th, 2019

How effective has the new requirement for hospitals to publish procedure costs been in improving price transparency?

Tom’s Take: Before diving into this one, here’s a little background on the topic.

 

As a potential solution for improving price transparency in health care, a new federal requirement went into effect on January 1. It states that all hospitals operating in the U.S. must post prices online for the services and procedures within their chargemasters (a full list of billable items) and then update them accordingly at least once a year. (See more in this Tom’s Take from March.)

 

But what seemed like a smart idea hasn’t exactly had the desired result so far.

 

First off, one of the main issues with this requirement is that hospitals are only mandated to post costs in a “machine-readable format.” This has led to hospitals using complex, technical terminology or medical codes/abbreviations for procedure listings. It’s left patients scratching their heads in frustration when they’re not able to find services based on the more common names – think “hip replacement” or “spinal fusion” – they’re familiar with.

 

There’s also been confusion with costs. Hospitals are posting their list or “sticker” prices, which usually don’t reflect what a patient with health plan coverage or Medicare will actually pay. There can also be quite a bit of variation in what kind of care will be required when a patient is treated and the length of each hospital stay. Due to the sheer volume of services listed and the unpredictability of what will be required, it’s pretty tough to add up costs for billable items in advance.

 

On top of all that, the requirement doesn’t dictate where chargemaster information needs to appear online, so it’s oftentimes buried deep within websites, meaning patients must do some serious digging to get to it.

 

While making this cost data public was intended as a step toward improved price transparency in health care, the reality is that it hasn’t been all that helpful to the patient. But that doesn’t mean health plans – especially self-funding – aren’t doing things to be proactive about the issue. There are many tools out there designed to educate plan members with cost info on health care services by location and help them choose the best options. Plus, the reference-based pricing (RBP) model continues to grow in popularity as it establishes fair and transparent costs for many procedures upfront.

 

The new requirement may not be as effective as hoped, but if health plans and consumers continue to advocate for knowing what care costs in advance, that can only mean progress in the right direction for price transparency!


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