In late June, President Trump signed an executive order directing HHS to develop rules requiring hospitals to publish clear and understandable pricing that reflects what people will actually pay for services. HHS Secretary Alex Azar added that the order should also make certain that providers and insurers provide patients with information about potential out-of-pocket costs they will face before receiving healthcare services.
While details about how the rules of the order will work are yet to be determined, hospital and health plan lobbyists criticized the order, saying it will increase prices and reduce competition. The President and CMS Administrator Seema Verma emphasized that the intention of the order is to combat the huge price variations that have long existed among healthcare facilities and make it easier for patients to find low cost, high-quality care.
The rule requiring hospitals to post their prices online, which became effective on January 1, 2019, really hasn’t done much to promote cost transparency. The problem is that the price lists, which payers refer to as chargemasters, break common procedures into complex, coded retail-priced components that mean little to the average consumer.
As an example, determining the cost of an ER visit would require knowing the codes and locating costs for all parts involved in the visit. Few people, if any, are familiar with these complex details. While giving consumers price information in an easy-to-understand format would be a big help, it appears that CMS Administrator Seema Verma was accurate when she described this as little more than a “critical first step”.
Over the Memorial Holiday weekend, I was invited to a swim party for my grand kids and 100 or so of their “closest” friends, held at the FGCU pool. (What a wonderful facility!) Shortly after I arrived I became engaged in a conversation with a local school teacher, who had recently been discharged from the hospital due to an emergency appendectomy. What she related reminded me of an article I had previously written in 2007 on Price Transparency and Consumerism. She was admitted through the hospital emergency room and diagnosed that she had to have an immediate appendectomy. A few weeks after very successful surgery she received a hospital bill and was “appalled” at the almost $30,000 in charges she had been billed for only two days in the hospital, plus thousands more in expected physicians expenses. I asked her whether any of the providers had discussed costs before her treatment and they had not. However, as she pointed out, she was in pain and really did not care what it cost, and that is part of the dilemma. When we are sick, we don’t really care what it costs, but since more than 75% of hospital admissions and surgical procedures are elective, (could be planned or scheduled in advance) we should care about cost and quality, if we only asked and were provided with the information. Continue reading