The new requirement to post charges online is only the first step. According to CMS, more changes are on the way.

“We are just getting started as we work to increase price and quality transparency throughout the healthcare system. We have to do more,” a CMS spokesperson says.

The spokesperson acknowledges the solution is not as simple as just posting prices: “We also need to make sure patients have the right information at the right time to make a decision.”

There is growing awareness that the posted prices are meaningless to consumers. This likely means that much more information will soon be expected from hospitals. “Hospitals should begin to prepare for legal demands to post not just their chargemaster, but the amounts they agree to with private and government payers,” says Barak Richman, a professor of law and business administration at Duke University.

Contracted rates are not usually made public. These are considered sensitive information and a trade secret. “This is information that hospitals are very eager to conceal,” Richman says.

It is less of a concern for hospitals to list average prices negotiated with health plans overall rather than specific payers. Alternatively, hospitals could report average prices for standard and frequent services or a charge-to-revenue ratio for assorted payers.

“Hospitals ought to consider making prices for common procedures much more widely available — not just online, but posted in ERs and elsewhere,” Richman offers.

Richman argues more meaningful price disclosure is necessary to protect healthcare consumers. “With adequate disclosure, hospitals could feel comfortable charging the prices they think are fair and competitive,” he says.

Some specialty clinics have made price transparency a core strategic feature. “But I know of no large hospital or hospital system that does that,” Richman adds.

Pricing has become so complicated that much is out of the hospital’s control. “Surely, the current system is wildly complex and will be very difficult to change. But it is not impossible,” Richman says. “The status quo hurts patients and insulates hospitals from necessary change.”

Whatever changes are coming, hospitals need to recognize that transparency is not going away. “Hospitals should get away from relying on their chargemaster altogether and instead work toward engaging in meaningful price competition,” Richman advises.

There is growing outrage over inflated chargemaster prices, which are many times more than what commercial and public health insurance plans pay. One recent well-publicized example: a $48,329 bill for allergy testing.1 This is terrible public relations not just for the individual hospital but for hospitals in general. “Soon, hospital charges will be associated with exploitive revenue strategies,” Richman predicts.

This gives revenue cycle leadership a very challenging problem to address. The biggest challenge, says Richman, “is developing pricing policies that do not exploit vulnerable patients.”

REFERENCE

  1. Ostrov BF. That’s A Lot Of Scratch: The $48,329 Allergy Test. Kaiser Health News, Oct. 29, 2018. Available at: https://bit.ly/2CVgnJc. Accessed Feb. 1, 2019.