On January 1, 2019, hospitals were required to post prices online, in the name of full disclosure, and so that the “healthcare consumer,” aka patients, could shop around for the best deals. The list posted by institutions is called a “chargemaster.”
But there is a rub with such a list. “I don't think it's very helpful,” Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, told CNN recently. “There are about 30,000 different items on a chargemaster file. As a patient, you don't know which ones you will use.”
The lists are part of a push by the Trump administration to reform healthcare. In a speech in July, 2018, CMS Administrator Seema Verma laid out its goals as follows: But there is a rub with such a list. “I don't think it's very helpful,” Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, told CNN recently. “There are about 30,000 different items on a chargemaster file. As a patient, you don't know which ones you will use.”
“This administration is guided by four pillars; empowering patients, increasing competition, realigning incentives, and reducing barriers to value-driven care. As we transition to a system that delivers value to patients, we must start at the basic level of the interaction that a patient experiences when walking into a doctor’s office. We must cater to the needs of the patient, not providers.
“Our goal is to activate the most powerful force in our healthcare system for creating value: the patient.
“We will transform the individual patient into a consumer of healthcare – one that is empowered to shop for the provider that delivers the best care at the lowest price. As the American patient is seeking care, they will seek providers that deliver innovative, transformative care, those that leverage the technological efficiencies that we have seen from other industries. But in order for patients to become consumers of healthcare they must have transparency in pricing and in outcomes, so that they can shop for quality and value.”
Unfortunately, now that hospitals have posted prices, the result appears to be less transparent than hoped for.
A recent New York Times article shared a number of examples of the results of this public price-posting policy.
“Vanderbilt University Medical Center, responding to a new Trump administration order to begin posting all hospital prices, listed a charge of $42,569 for a cardiology procedure described as HC PTC CLOS PAT DUCT ART.
“Baptist Health in Miami helpfully told consumers that an “Embolza Protect 5.5” would cost them $9,818 while a “Visceral selective angio rad” runs a mere $5,538.”
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“This policy is a tiny step forward, but falls far short of what’s needed,” Founder and CEO of Clear Health Costs Jeanne Pinder told the paper, adding that, “the posted prices are fanciful, inflated, difficult to decode and inconsistent, so it’s hard to see how an average person would find them useful.”
Beyond the simple complexity and obscurity of the online prices, patients can't actually determine what will be covered and what they will have to pay themselves. As one commenter to the Times article noted, “I’m the chief medical officer for a large physician group. Here’s what needs to happen: the prices that consumers need to see are the rates paid by THEIR insurance company, and the relevant competitors, to the local hospital.
Beyond the simple complexity and obscurity of the online prices, patients can't actually determine what will be covered and what they will have to pay themselves. As one commenter to the Times article noted, “I’m the chief medical officer for a large physician group. Here’s what needs to happen: the prices that consumers need to see are the rates paid by THEIR insurance company, and the relevant competitors, to the local hospital.
“You see, the rates between companies are always different and because of the negotiating leverage insurers bring to the table, the raw hospital charges are artificially inflated. Of course, the list needs to be in plain English and if intended to be useful, estimates of the bundled cost for treatments should be created. For example, the payment for a procedure may not include all the costs of a hospital stay associated with the procedure. Now here’s the problem; negotiated rates with insurance companies are treated legally as proprietary information and insurers won’t allow them to be published – unless Congress passes a law.”
In line with this observation is another major problem – the administration didn't establish standard prices, leaving it up to the hospital to set costs for services, procedures and drugs.
“Without a standard definition, patients cannot make accurate comparisons between hospitals,” president of the Missouri Hospital Association, Herb B. Kuhn, told the paper.
The administration sees this chargemaster as the first step – not the last – in turning patients into comparison shoppers.
“Hospitals don’t have to wait for us to go further in helping their patients understand what care will cost,” Verma told the Times.
But some of the comments on the paper's article reflect the scope of the challenge for the average patient.
Said one commenter, “I was given an estimate of $10,000 for an outpatient procedure. I did everything I could to avoid increasing the cost, including refusing pain medicine and IVs. Ultimately, I was kept overnight through no choice of my own, but insisted that I stay less than 24 hours to avoid being charged for a full night’s visit. The result? A bill for $32,000 that I was forced to pay out of pocket.
I think part of the problem is that a patient loses control over their treatment without having the bargaining power or knowledge to make informed choices when a doctor decides they need a higher level of care. And doctors are accustomed, because of insurance coverage, to over-treat or test a condition that may not call for it. Until that changes, it is an improvement, but not a solution, to provide patients with a cost estimate.”