When the United States Centers for Medicare and Medicaid Services (CMS) enacted its price transparency rule on January 1, 2021, the Agency was expecting that price transparency would make things easier for consumers. However, that doesn’t seem to be the case, and in fact, it may be clouding patients’ understanding of the medical field and billing.
Under the transparency rule, hospitals must make public five types of charges – the gross charge; the discounted cash price; payer-specific negotiated charges; the de-identified minimum negotiated charge; and the de-identified maximum negotiated charge – for each of its most “shoppable” services (ones that can be scheduled in advance and therefore, are most likely to be susceptible to competitive pricing).
Complications and variations of treatment make financial decisions difficult when pre-planning procedures. For example, if you’re expecting to delivery a child, you have no way of knowing whether you will have an uncomplicated delivery, or if you will need a c-section or epidural, or if your baby will need care in the NICU post-delivery.
Further complicating things is that there continues to be behind-the-scenes negotiations between hospitals, insurers, and the government. The price on most hospital bills sent to patients are not often the final price paid to the hospital, as most bills involve some negotiating between the hospital and payors. Insurance companies that agree to send more patients to certain hospitals get better prices from those hospitals while government plans (i.e., Medicare, Medicaid, Tricare, and the Children’s Health Insurance Program (CHIP)) pay based on their own price schedules.
If you are comparison shopping for a particular procedure and your hospital posts its prices on its website, you may find a listed price of $20,000, but whether your insurer will actually pay a total of $20,000 or some other negotiated amount is unknown. The New York Times and University of Maryland teamed up on a research project that found varied rates for the same procedure at the same hospital. As one might expect, some insurers are charged more than their competitors for the same procedure as well, as confirmed by a Wall Street Journal study. Plus, the cost to the patient often varies depending on the type of insurance coverage – do they have a high deductible? An HMO or PPO plan?
All of these variations and differences often means that the transparency requirements as currently written do little to help patients truly understand what their out-of-pocket costs would be, which is often what a patient who is price-comparison shopping wants to know. The easiest way to understand what their out-of-pocket cost would be is likely to find out what their insurance provider will pay at different facilities for the same procedure and what their co-pay would be for that procedure at the different facilities.