New Rule Forces Hospitals to Post Their Price Lists Online

As of Jan.1 2019, the federal government is requiring all U.S. hospitals to post their price lists online. The requirement, which Centers for Medicare & Medicaid Services Administrator Seema Verma called “a small step towards providing our beneficiaries with price transparency,” is intended to empower health care consumers “to shop for the provider that delivers the best care at the lowest price,” Veema said in a speech before the California Commonwealth Club in July, 2018.

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Yet true pricing transparency may still be a long way off, experts warn, in part because the price lists (also known as chargemaster files) are huge, difficult-to-decipher coded lists of diagnostic tests, supplies, medicines and procedures that will mean little to anyone but a hospital billing clerk. What’s more, patients will generally have no idea which items in a hospital’s chargemaster file may be necessary when they fall ill.

“There are about 30,000 different items on a chargemaster file,” explained Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, in a statement to CNN. “As a patient, you don’t know which ones you will use.”

What’s more, hospitals are not required to “bundle” charges in any meaningful way. A hospital’s charge for a hernia repair, for example, might include the cost of the procedure, but not the charge for use of the operating room, the anesthesiologist, and post-operative monitoring. Similarly, the charge for an MRI will typically include only the cost of the scan, not the radiologist’s fee for reading and interpreting it.

Too Much Medical Jargon

Medical jargon and indecipherable abbreviations also get in the way of understanding the price lists, according to CNN’s report. For example, the University of California San Francisco Medical Center’s chargemaster files lists the following charge:

“Chemother,Non-Hormone Anti-Neopl, Sub-Q/Im — $445”

It’s unlikely that a layperson would recognize this as an abbreviation for a non-hormonal chemotherapy injection given under the skin or into the muscle. But even if they did, they wouldn’t know if the charge includes the cost of the actual drug or just the charge for injecting it. 

Even seemingly matter-of-fact charges can be difficult to interpret. Rochester, Minnesota’s Mayo Clinic, for example, lists two charges for an uncomplicated vaginal childbirth: $3,030 for “labor and delivery level 1 short,” and $5,236 for “labor and delivery level 2 long.” But how can a consumer know the difference between a level 1 labor and level 2?

The short answer is they can’t.

The Impact of Insurance

Further complicating the issue is the fact that hospitals’ price lists only show the “cash charge,” not the “negotiated charge” that the provider sets with various insurers, (often hundreds or even thousands of dollars less than the cash charge). Insurers take advantage of the concept of economy of scale to induce providers to offer services for far below what might be called their “market rate” — offering them a cadre of thousands of patients in exchange for a significantly reduced price. So, only patients who are uninsured are going to pay the listed charge.

That said, even insured patients can incur additional costs if they use “out of network” providers who do not contract with their insurer for the lower negotiated price. Typically, healthcare consumers can avoid this issue by choosing doctors and hospitals that are in-network with their insurer. But hospitals aren’t required to disclose when they use out-of-network doctors. So, for example, a patient may choose an in-network hospital and physician when scheduling elective surgery and later discover (when they get the bill) that the anesthesiologist assigned to the case was an out of network provider. The result: Thousands of dollars in unexpected costs. 

Better Than Nothing?

Still, some experts believe that giving the public access to the various hospitals’ price lists will improve transparency to a certain extent, even if the amounts listed are not what patients typically pay. And according to Anderson, simply forcing hospitals to reveal some of their more exorbitant charges may embarrass them sufficiently to encourage them to adjust their listed costs.

Still, it’s unlikely that the new policy will help patients become better consumers of healthcare. According to Jan Emerson-Shea, vice president of external affairs for the California Hospital Association, California hospitals have been posting their price lists online for over a decade. And “from a practical standpoint, I’m not sure how useful this information is,” she said. “What an individual pays to [the] hospital is going to be based on what their insurer covers,” she told CNN.

Ariel Levin, senior associate director for state issues at the American Hospital Association, agrees. “[The policy] falls short of that end goal because it really doesn’t help consumers understand what they are going to be liable for,” she said.

And so for now, despite all the hoopla, most consumers will still find out what a hospital stay will cost them when they get the bill in the mail.