Industry votes – why the new rules for transparency in hospital prices miss the mark

The intentions were good, but the new federal rules that were supposed to make hospital bills easier to figure out do not help much instead.

Hospital rates and reimbursements have long been a mystery wrapped around a digit. Why the same surgical procedure, aspirin or IV varies so much in cost between facilities, healthcare systems and doctors, has never been clearly understood by patients.

Today, Americans spend only more on hospital care – $ 1.2 trillion a year – than the gross domestic product of 170 nations around the world. There is no other product with so much cost and so little financial explanation to the paying customer.

Even healthcare providers who went into their field to provide good patient care are frustrated by the complexity of medical billing and reimbursement.

Therefore, the Federal Centers for Medicare and Medicaid Services stepped in. It adopted a new rule on price transparency in hospitals on 1 January, which should be a victory for consumers: “We believe that the impact of these final policies will help increase competition in the market, and ultimately reduce costs. for healthcare, making them more affordable for all patients. “

A year later, clarity remains almost as intangible as ever, despite significant investments by healthcare providers to comply with the mandate.

The rule requires hospitals to publish five types of fees for each hospital’s 300 most “purchase-friendly” services – those that can be planned in advance and, in theory, are most receptive to competitive prices.

Regulators hoped that price transparency would encourage patients to shop around among hospitals for the best deals on medical procedures. The problem is that it is almost impossible for non-experts to compare purchases for a hospital treatment.

To begin with, even the most routine hospital procedure involves dozens of variables – medications, tests, various specialists, recovery complications – that change from the moment a patient walks through the door.

It is difficult to compare e.g. the birth without knowing whether your birth will be straightforward or sedentary requires a cesarean section or epidural, and with a preterm infant or a premium that requires intensive care.

Yet the biggest problem that confuses price transparency is the extensive behind-the-scenes negotiations between hospitals, insurance companies and the government.

Few consumers realize that the price of their hospital bill is usually not very similar to the final amount paid by the insurance company or the government. Almost all bills involve financial give-and-take between the hospital, the government and commercial insurance companies.

Insurance companies that agree to send more patients to a particular hospital get better rates – a volume discount – while government plans like Medicare, Medicaid, the Department of Veterans Affairs and the Children’s Health Insurance Program (CHIP) pay bills based on their own price schedules.

The various amounts reimbursed for each hospital procedure are limited only by the number of managed care companies – about 1,300 in the United States – that cover the work.

If you need a knee replacement – and your hospital complies with the new transparency rule with an easily searchable website for the cost of procedures – then you might find a list price of e.g. $ 30,000.

But what will your insurance company actually pay? $ 20,000? $ 40,000? A joint project of the New York Times and the University of Maryland-Baltimore County showed very different prices for the same procedures within the same hospital. A recent Wall Street Journal story showed that some insurance companies are charged twice as much as competitors for the same procedure at the same hospital in Boston.

Even within an insurance plan, the cost to the consumer varies depending on the type of coverage. High deductible? An HMO? A preferred provider? At this point, the typical consumer is likely to have to put the deductible for headache medication.

the lesson? To get a reality check of their probable hospital bill, consumers need to research what their insurance provider will pay on various facilities.

But even armed with that knowledge, most consumers lack the ability to shop around at the best price. Just over half of Americans receive health coverage through their employer, and are therefore limited by what these plans cover and how much they reimburse for a particular procedure.

In light of this reality, the CMS Council sounds to consumers about “using this information to shop for the hospital that works for you” hollow.

As required by the new rules, a hospital can publish a procedural price, but the unpredictable variables of medical treatment, combined with a confusing web of behind-the-scenes price negotiations between health plans and hospitals, mean that the price is only a number – not the amount a consumer will eventually pay.

Until the massive managed care system is demystified and simplified, true consumer-focused price transparency for hospital bills will remain frustratingly out of reach.

Kyle Hicok is the President and General Manager of Cloudmed.

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