Americans Can Now See Hospital Prices Online
A new Trump administration regulation going into effect on Jan. 1 requires hospitals to post their prices online in hopes that people will begin to comparison shop for medical care.
The regulation requires hospitals to post consumer-friendly information about the prices of 300 services that can be scheduled in advance, such as X-rays, blood tests and knee replacement surgeries. Prices for emergency services aren’t included.
Consumers should be able to see the “negotiated prices.” Those are rates each insurance company has agreed to pay for that service. Up until now, hospitals said those rates were confidential.
The prices consumers will see only includes what the hospital provides. For example, patients trying to figure out how much a cataract replacement will cost should be able to find charges which include the cost of the emergency and recovery rooms, but not the billing information for the surgeon or the anesthesiologist.
Hospitals have argued in court that all the pricing information will confuse consumers. The regulation gives them the option of creating an online price estimator instead of posting prices.
Charlotte’s Novant Health will post the online estimator. This will allow customers to go on its website and choose the service they want. Once they enter their insurance information, the estimator will calculate how much customers will pay after copays and deductibles. Novant Health Vice President Melonie O’Connell says it will be much more consumer friendly.
She cautions, however, that it's still an estimate. It’s impossible to predict all the services a patient needs before they get into the operating room.
The regulation also requires hospitals to post even more detailed pricing data on a larger list of items in what’s called a “machine-readable” format. That means it's helpful for researchers and people with data analytics skills, but not by most patients.
Cynthia Fisher of the free market group Patient Rights Advocate said she hopes an enterprising data scientist will turn all this information into an app like “Travelocity,” so consumers will eventually be able to shop for hospital services the way they shop for airline tickets.
Georgetown University health law professor Katie Keith says the regulation could be a “game changer” for those who have been trying to get price information. She thinks data entrepreneurs could use it to create new cost comparison products.
“The administration made it really clear they want to unlock the power of that data and allow it to be used for public purposes,” Keith said. “We’ll just see who picks up the ball and runs with it.”
How Will Price Transparency Lower Costs?
The regulation’s proponents like Fisher say that if enough people choose hospitals that offer lower prices, it will force other hospitals to cut their prices in order to compete. They believe it will harness market forces to reduce health care costs.
Others, including researchers for the health policy foundation the Commonwealth Fund, think the health care market is too complicated to be fixed with price data alone. In a report, they argue that people care about quality, too, when choosing a hospital or provider. They’re concerned people will confuse price with quality and choose higher-priced hospitals, which will end up increasing health care costs. They’d like to see a regulation that incorporates information on health care quality as well as price.
The Politics Of Price Transparency
Hospital associations have fought the regulation. They argue, among other things, that it will push up prices because hospitals will have to hire more people to post all the information.
North Carolina Hospital Association Senior Vice President Cody Hand says he worries it will hurt hospitals in poorer areas because they frequently have to shift uncompensated costs from their charity care patients to those with private insurance in order to make ends meet. Their private patients may pay more than those at richer hospitals, he said, and once prices are posted people might be less likely to go to those hospitals.
Hand says there’s cost-shifting from Medicaid and Medicare patients too, because those programs don’t always cover the full costs.
“It’s kinds of the dirty little secret that people who are forcing the regulations on insurance companies and hospitals don’t want to say that those rates are so disparate because the government is paying far less than the cost of care for Medicare and Medicaid,” Hand said, “and they’re not owning their own role in that.”
The American Hospital Association sued to stop the regulation, but earlier this week the U.S. Court of Appeals for the District of Columbia denied its appeal. Hospital lobbyists are now trying to convince the Biden administration not to enforce the regulation.
There’s currently broad bipartisan support for the idea of price transparency. Congress just passed a number of provisions which will force drug companies to be more transparent in their pricing.
“Folks are sick and tired of not having access to health care cost and quality information,” said Keith. “So we’re not going to see the end of transparency any time soon.”