As part of a new federal rule, the Centers for Medicare and Medicaid Services (CMS) now requires hospitals to post their prices for services online. Going into effect on January 1, 2019 set prices for all billable must be publicly posted online.
This new rule applies to all hospitals including rehabilitation and psychiatric facilities. It is part of a broader push by the current administration towards pricing transparency building on rules in the Patient Protection Affordable Care Act.
The goal is to spur competition between hospitals, provide for a more informed consumer, and help patients better understand what they will pay for care. At least this was the intent. In reality, these “a la carte” price lists known as the chargemaster can vary from hospital to hospital depending on the services rendered. Hospital care is complex and how facilities price for services is even more difficult to understand. One hospital may charge more for newborn delivery but less for emergency room care. How does the consumer make a decision based on this information alone? Even just one encounter at the hospital could entail dozens services leaving the patient to have to piece together each component of their care (lab tests, x-rays, medications etc…) to arrive at a final cost. Who can predict that?
Throwing another monkey wrench into the equation is the fact that these list prices do not account for the discounts off the published prices that those with insurance will receive. Further complicating this is that each insurer negotiates different pricing arrangements with each hospital. In many instances, the consumer with medical insurance is best off using the pricing tools that the health insurers offer as a way to predict their cost rather than trying to figure it out by looking at the chargemaster. Only the uninsured and those who are out of network actually pay billed charges and even then, these costs may be reduced or significantly discounted.
Currently, there are no penalties to hospitals who do not provide the required cost information. However, most are complying with the requirement. In fact, some facilities had already been providing cost information prior to the ruling.
While consumers still may not have a clear idea on their final cost, this push towards transparency is a step in the right direction. Employers who desire a high performing healthcare plan should seek out price transparency tools. If you would like to discuss price transparency, please contact our consultants for guidance.