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At a time when medical care is at the forefront for so many people, the new year is providing them with a new data point: the prices that hospitals charge for their services.
Beginning Jan. 1, a federal rule says hospitals have to list the costs of at least some of their services in accessible, consumer-friendly language. Equipped with this information, potential patients can shop around and make a better-informed decision before setting foot in a hospital, the feds say.
President Donald Trump touted the new rule on Friday, writing on Twitter TWTR, +0.70%, “hospitals are now required, effective immediately, to publish their REAL PRICES, which will create competition and drive down costs MASSIVELY.”
“We believe consumers should be able to know, long before they open a medical bill, roughly how much a hospital will charge for items and services it provides,” said the Centers for Medicare & Medicaid Services (CMS).
The price transparency rules are a welcome change, for sure, health care experts told MarketWatch. But the numbers only reveal so much — and they still don’t cut to the core of massive medical costs that can bankrupt a person.
“Our issue with transparency is it is only a tool, it is not the savior,” Caitlin Donovan, senior director at the National Patient Advocate Foundation. It’s an open question what disclosed prices will do for insurance rates in the future, she and others told MarketWatch.
The rule is trying to manage patient price expectations just like a new law that bars surprise out-of-network medical bills. That law was part of a $900 billion COVID-19 rescue package Trump signed last week.
That law takes effect in 2022 and Donovan said it “is going to be much more impactful for patients.”
Here’s a look at what’s changing now.
What do hospitals have to show the public?
Hospitals must list the price they charge for at least 300 “shoppable services,” and explain them in understandable language, according to the CMS website.
A core 70 services are mandated for disclosure and the hospital picks another 230, a CMS spokesperson added. The price factors in the usual side costs associated with a procedure. This includes things such as “X-rays, outpatient visits, imaging and laboratory tests or bundled services such as a colonoscopy,” the website said.
The list will show the discounted cash price for people paying on their own without insurance coverage. It will also show the negotiated price a hospital has reached with payers, like an insurance company — but keep in mind that’s not the ultimate, out-of-pocket cost, which matter to consumers who still have co-pays and deductibles to reach.
Hospitals will also show their highest and lowest negotiated rate for service.
Before the new rule, a certain set of rates were already potentially available upon request but generally consumers would have found them “probably baffling and not very useful,” said Dr. David Blumenthal, president of the Commonwealth Fund, a philanthropy focused on public health.
Even with hospital services in plain language, it will still be tough for cost-conscious patients to first game out all the treatments they’ll need once admitted and then calculate the extent of insurance costs, Blumenthal said.
But it’s possible people will be able to do that within several years, he added. Insurers and tech companies may apply predictive analytics to the disclosed numbers so they can estimate all the permutations of care and figure out what a patient’s final bill will be ahead of time.
The figures on discounted cash prices may be useful now for people who are uninsured and facing a big bill they can’t afford, Donovan said. By researching a range of prices, they may be able to bring a lower counter offer in the negotiation process.
Where can patients find the hospital’s price list?
It should either be on the hospital’s website itself, or on another website that the hospital provides a clear link to. If people can’t find the hospital’s list, they should first contact the hospital, a CMS spokesman said. If they are still hitting a roadblock getting the list, they can file a complaint, the CMS spokesman noted. The link is here.
The American Hospital Association, comprised of more than 5,000 hospitals, health care systems and network, fought the rule in a court battle ahead of implementation. Last week, the District of Columbia Circuit Court of Appeals upheld a lower court decision siding with the federal government.
In a statement, Melinda Hatton, the association’s general counsel, said the organization supports price transparency and anything that will help patients plan their out-of-pocket costs. But the organization “continues to believe that the disclosure of privately negotiated rates does nothing to help patients understand what they will actually pay for treatment and will create widespread confusion for them,” she said.
The organization is still determining how to proceed in the case, but the lack of a pause in the rule’s enforcement “ignores the overwhelming burden of the pandemic on hospitals,” she said.
What is missing from the hospital price lists?
Quality of care, according to Patricia Kelmar, health care campaigns director at U.S. PIRG, a consumer advocacy organization.
“Price isn’t everything and what would be more helpfulf would be value-based price,” she said. If someone knows they’ll avoid infections, complications and have shorter recoveries and one hospital instead of another, that will weigh heavily in the decision-making process, she said. “Those things matter just as much to a patient,” she said.
Like others, Kelmar likes the fact that consumers are about to get more information. But “so much of our healthcare system really isn’t ‘shoppable,’” she said. Someone might live in an area with just one nearby hospital , or they might have a health care plan with scant in-network options.
“The transparency in those situations might be helpful for budgets, but it isn’t necessarily, in reality, ‘shoppable,’” she said.
Donovan echoed the point that a person’s medical decisions aren’t purely about money. “Instead of designing a system for patients, we keep trying to change patients to fit our system,” she said.
What’s next on healthcare price transparency?
The newly-enacted law blocking surprise bills for out-of-network care is a big deal, Kelmar and Donovan both said. “This is a significant improvement for patients because it is protecting them from prices they had no control over avoiding,” Kelmar said.
The law applies to regular care in a hospital and also emergency care, Kelmar noted. It covers ambulances transporting patients by air, like helicopters, but it doesn’t cover ground ambulances.
Thirty-two states already have their own laws against surprise billing, Kelmar noted. The federal law will cover the remainder and, importantly, apply to healthcare plans answering to federal laws that states cannot regulate.
One-in-five patients undergoing elective surgery were blindsided by out-of-network bills, according to a February study reviewing treatment for 350,000 people. People with surprise bills ended up owing $2,011 more on average, the researchers found.
The law’s core features are slated to take effect on Jan. 1, 2022, according to the Associated Press.
