By MATTHEW DALE
Did you know that as of January 2021, price transparency is being mandated for hospitals? But what exactly does that mean for company healthcare plans, third-party administrators, healthcare sharing organizations, employers, and employees?
It means U.S. hospitals are now required to provide clear, accessible pricing information online about the items and services they provide in two ways: 1) as a comprehensive machine-readable file and 2) in a display of shoppable services in a consumer-friendly format.
The Centers for Medicare & Medicaid Services are already requiring hospitals to publicly display their negotiated rates with insurers along with the cash pay price for over 300 shoppable medical services.
For healthcare consumers, this should mean they can shop for the hospital that performs the best knee surgery or other medical procedure for the lowest cost in their area. Unfortunately, the implementation of price transparency has been difficult, to say the least.
The American Hospital Association and other industry groups have spent large amounts of money to block the rule but were unsuccessful. Now, hospitals are trying to get around the rules. A Wall Street Journal investigation found that hundreds of hospitals implemented website code to block search engines from returning results for price inquiries.
Technically, hospitals are following the price transparency rule, but by deliberately hiding data from search engines or making it nearly impossible to find, consumers are unable to locate a hospital or surgery center they can afford. That’s just one example of how hospitals are avoiding price transparency. The AHA has made it clear they are not happy with price transparency and they’ll do whatever they can to avoid this new rule, but why?
Listing prices increases competition and there’s more money to be made when prices are not available. If patients can’t see the procedure price, they’re most likely going to choose the most prestigious or well-known hospital. They’re going to find the hospital that’s great at advertising even if that hospital is the most expensive in their area. That facility may have the same quality and outcomes measures as another down the street, that charges significantly less. When patients can easily see prices, the most expensive hospitals will inevitably lose patients and money. Additionally, hospitals have also urged the current administration to reverse price transparency because they don’t want people to see their negotiated rates with insurers. It raises serious questions when Medicare says a procedure should cost around $6,000 but a hospital charges $80,000 instead based on who’s paying.
If hospitals are preventing search engines from locating prices, creating confusing lists that consumers have to click through multiple pages to find, or simply not adhering to the price transparency rules and opting instead to pay the daily $300 penalty, how is price transparency going to help healthcare consumers?
Platform technology is the answer. The ideal solution is a single, comprehensive platform for consumers to review all procedure prices across hospitals around them. This might sound like a fantasy, but my company Point Health has created a Smart Healthcare Platform that allows consumers to shop for thousands of healthcare services. And we’re not the only ones who see value in platform technology; companies like RxSaver, GoodRx, and Healthcare Bluebook also have solutions to help consumers make better healthcare decisions.
Price transparency can create the most impact for health plans, employers, health sharing organizations, and third-party administrators by creating plans that encourage patients to shop for care. When these entities use technology and services that promote healthcare consumerism and patient empowerment, we’ll see simplified and more widespread price transparency. Ultimately, price transparency is just one big step towards better healthcare for all.
Matthew Dale is the CEO of Point Health.
Thank you again to The Health Care Blog for featuring my article! It’s great to see people share their thoughts in the comments.
@Pedro Absolutely agree that hospitals and other providers don’t want to compete on price, but that’s where the market is heading. From the research we’ve done at Point Health, a higher price very rarely means higher quality. You’ll find several studies that show there is no correlation. Thanks for sharing your insights, I find it valuable to hear people’s opinions and thoughts on all healthcare issues. Conversations like this will lead us all to a better healthcare system.
@Barry, great point on the affordability of ASC’s vs. hospitals. This is something we’ve also seen in our data. We always encourage our members to explore options like ASCs so they can find the best care at the most affordable price. Always excited to see a fellow price transparency advocate!
Ah, the American health care system – don’t you just love it.
First, hospitals and providers don’t want to compete on price. People with health insurance are prevented from shopping because insurers have contracts with hospitals/providers (in/out of network). As well do patients really want a lower price or do they want a trusted and competent doctor – you’ll find lower prices infer less quality.
The only solution to this is Medicare for all with mandated prices.
I’m a big believer in price transparency and I’ve been advocating for it since 2006. I would like to offer the following comments. First, patients often think more expensive care is better care or more thorough care even when it isn’t. Second, patients care mostly about out-of-pocket costs as opposed to insurance company contract reimbursement rates. If they’ve reached their deductible for the year or their out-of-pocket maximum limit, then they probably don’t care about costs at all. Third, much care is not shoppable, especially care that must be delivered under emergency conditions.
To help consumers who do care about costs, it would be helpful if there were navigators similar to those who help patients choose insurance plans. Physician office staff could also be helpful in this regard, especially for those patients who let their doctor know that cost is an important issue for them. Finally, price transparency is most valuable in the hands of doctors if they will use it since it’s doctors’ decisions to prescribe drugs, admit patients to the hospital, refer them to specialists, order tests, consult with patients and perform procedures themselves that drive virtually all healthcare costs.
What we should also be trying to do is drive as much care out of hospitals as we can if it can be done safety. United Healthcare, for example, tells us that many surgical procedures can be done in an ambulatory surgical center (ASC) for half the cost of doing it in a hospital even when the same doctor does it in both places. The reason is that hospitals must operate around the clock and ASC’s don’t. Hospitals also have vastly more fixed overhead. If we want hospitals to maintain significant surge capacity that remains empty most of the time, taxpayers should pay them to carry those mostly unoccupied beds from a separate pool of money so that expense won’t have to be covered from patient revenue.