hospital price transparency [ultimate guide]

Table of Contents

Doctors looking at x-rays in emergency room

INTRODUCTION

"Hospitals will compete for more patients. As a result, they need to offer the same or better service at a cheaper price."

COMMONWEALTH FUND

Price transparency in healthcare makes prices available and visible for consumers. The Healthcare Price Transparency Act provides healthcare price transparency tools for consumer use. The hospital price transparency policy covers consumers nationwide. The CMS carries out a transparency policy for Medicare and Medicaid.

Federal rules governing hospital price transparency took effect on January 1, 2021. The law attempts to remove the mystery of the cost of healthcare for consumers. “Hospitals will compete for more patients. As a result, they need to offer the same or better service at a cheaper price.” 

Scriptsmart LLC is a healthcare patient advocate. We research prices for medical services and prescription drugs. We also negotiate reduced out-of-pocket costs for consumers in disputes over medical bills.

Americans spend more than $3.5 trillion on healthcare. The approximate per capita amount is about $11,500. The nation’s healthcare delivery system is the most expensive in the world. (Martin et al., 2021)

Hospital price transparency is a consumer right. Insurance companies and providers negotiate prices for covered patients. Patients are unaware of costs before treatment. Sometimes costs exceed consumer budgets.

This Guide is about how price competition will impact the healthcare industry. Competition for patients is good for the healthcare industry. Competition is a consumer engagement strategy to drive down prices. 

The transparency rules will result in a change in consumer behavior. Consumers will follow price transparency and begin shopping for lower-priced providers. Price transparency in healthcare is a way to have competition among hospitals. The result is lower prices and higher quality of care. 

Consumers will be able to research and compare healthcare prices. The law enables consumers to view negotiated prices between insurers and providers. The expectation is lower healthcare prices driven by competition. 

Transparency in healthcare assists consumers with budgeting for healthcare expenses. Consumers are better served with price disclosure before treatment. 

Hospitals in non-compliance with the transparency rules face sanctions. The initial penalty for an infraction was $300 per day, but the policy is under review by CMS. 

The aim of rules is affordable healthcare through competitive pricing for healthcare services. A consumer is in a stronger financial position through information. 

THE HEALTHCARE PRICE TRANSPARENCY ACT

The Healthcare Price Transparency Act would require hospitals to post a price for each procedure or service. This transparency in healthcare will allow consumers to know what they are paying for and be able to negotiate for a better price. 

The Healthcare Price Transparency Act was passed to help reduce healthcare fraud and waste. In addition, hospitals must present this information in a format easily readable by computers. 

This act requires that all healthcare services must be listed separately, at full price. This will reduce the number of “out-of-pocket” expenses that Americans must pay. 300 “shoppable” services must be listed separately with full price. This allows consumers to make more informed decisions about what they should or should not pay for cost-sharing: Hospitals must disclose the out-of-pocket expenses a patient is expecting to pay for their services.

If a hospital has financial information like another hospital, then they can comparison shop. Transparency for hospitals is not enough, because they are still able to charge different prices for the same procedure. Hospitals are not on board with compliance.

Few hospitals have reported any data at all. Hospitals found to be in noncompliance by CMS may face penalties. Employers or insurers are eyeing the hospital data in negotiations. (CMS Completes Historic Price Transparency Initiative | CMS, n.d.)

WHAT DOES THE HEALTHCARE TRANSPARENCY ACT ACCOMPLISH?

The Healthcare Price Transparency Act provides consumers with the costs of healthcare services. Consumers can use these rules and the Affordable Care Act to decide the costs of healthcare. 

The bill requires hospitals to disclose their prices for “300 shoppable” services. Disclosures include financial performance and drug costs. All information must be maintained in a machine-readable file. (CMS, 2021)

What is the purpose of hospital price transparency?

The purpose of hospital price transparency is to help patients and providers make informed decisions about the cost of medical services. The idea is that when consumers can see what providers charge for a particular service, they can make more informed choices about which provider to use and what procedures are worth it. 

Why are healthcare prices hidden?

The healthcare industry gives distinct reasons for the nondisclosure of pricing data. The lack of drug price transparency contributes to excessive out-of-pocket costs for medications. The deliberate cloak of secrecy results in confusion among consumers. (Longman & Meyer, 2020) 

Transparency in healthcare is uncommon due to fears of diminished revenues. Increased profits result by preventing consumers from shopping for services. Loss of revenue is a major concern for the healthcare industry. Industry studies raised alarm about price-conscious consumers. Consumer abandonment or reduced use of expensive medications and procedures cause apprehension. (Mummadi et al., 2020)

Hospital Price Transparency
Unable to identify if you cannot see

It is not easy for consumers to compare the costs of healthcare products and services.  Prescription drugs are a case in point. Do you know how to compare prescription drug prices? Hiding prices leads to mistrust of the industry. The Healthcare Transparency Act permits consumers to review average prices while making decisions.  

The Healthcare Transparency Act rules promote consumer research of prices. Comparative shopping of fees for services is beneficial for all concerned. The Centers for Medicare and Medicaid (CMS) have hospital disclosure rules as well. 

CMS installed two new transparency rules:

  • The information must be public
  • The information must be machine-readable.

Healthcare is an essential service. Informed consumers can reduce their out-of-pocket costs. The promotion of shopping for services results in a robust healthcare marketplace. 

How can a consumer use the Healthcare Transparency Act to lower out-of-pocket costs?

  • Hospital price transparency promotes competition among providers
  • The government provides a tool to compare prices among hospitals and clinics.
  • Care Compare, includes visit cost estimates information for new and returning Medicare Patients.
  • Medicare patients should use Blue Button to access their claims history.

What is Blue Button 2.0 and why is it beneficial to consumers?

Blue Button 2.0 is a service provided by Medicare.gov. Eligible patients can download Medicare claims data and share it with others. More than one million Medicare beneficiaries share data with medical professionals. (Share Your Medicare Claims (Medicare’s Blue Button) | Medicare, n.d.)

What is price transparency and why is it important to healthcare?

Price transparency is the act of making prices available to consumers. The transparency rule pricing enables consumers to estimate out-of-pocket costs before scheduling treatment. Informed consumers are in a stronger position to dispute a medical bill if questions arise.

Healthcare providers must include prices at all stages of the supply chain. Hospital price transparency provides consumers with the ability to engage in value-based shopping. Most consumers will often choose a lower-priced provider.

Reasons for making healthcare providers more transparent include:  

  • Providing consumers with a useful tool for making better-informed decisions about their healthcare.  
  • Patients shop around for a provider who can provide them with the most value for the money spent. 
  •  Strengthening patient trust in the healthcare system. (Blase, 2020)

What are the pros and cons of hospital price transparency?

The pros and cons of healthcare price transparency are many. In some cases, healthcare price transparency has reduced healthcare spending. Some studies conclude increased transparency leads to a decrease in healthcare use.

People may be unable to make informed decisions about their health without transparency. Consumers benefit by having greater access to out-of-pocket information before treatment.

How does The Healthcare Price Transparency Act Influence Balance Billing?

Surprise bills often occur when a consumer receives treatment from an out-of-network provider. The No Surprises Act of 2020 requires good faith estimates of costs from providers. Consumers to make informed decisions about contracting for extra costs.

The Transparency Rules enable consumers to negotiate prices on equal terms with providers. These two laws ensure consumers have adequate price information before treatment.

What does Interoperability in healthcare mean and why should I care?

The idea of interoperability in healthcare is the concept that data sets within different healthcare systems will be able to hand off data, whether that data is in the form of medical records or laboratory test results. Data sharing is the concept of interoperability.

Interoperability in medical practice
Data Sharing In Medicine

The CMS Interoperability and Patient Access rules promote data sharing. Patients and providers access information using smartphones.

The regulations make it easier for patients to access claims and costs. Requiring hospitals to send automated admission, discharge or transfer is essential. This policy encourages better coordination of care. (Figge, 2014)

How can healthcare systems use price transparency and interoperability?

Consumers have a right to know healthcare costs before treatment. Electronic health data are replacing paper healthcare records. Interoperability promotes the rapid exchange of data among providers. This process optimizes treatment decisions in real-time.

Transparency rules promote efficient delivery of healthcare. Enhanced communication among insurers and providers benefits the consumer. Reduced out-of-pocket costs speed up reimbursements.

Hospitals in noncompliance with the rules face penalties. Reporting provisions are for the public good.

Making healthcare affordable is the goal of the policy. This also helps patients who are unable to pay for expensive medical treatment to get the care they need. Growth in out-of-pocket expenses for healthcare exceeds the ability to pay for many. (Figge, 2014)

What happens after hospitals make their price information public?

Competitive prices benefit a consumer who shops for value. Shopping increases the quality of care and promotes better outcomes.

What did the bill do to promote more transparency in healthcare pricing?

Consumers now have access to a website for price comparison purposes. A list of standard procedures is at HHS (The Department of Health and Human Services).

Hospitals must post price information about three hundred ” shoppable ” services. CMS listed 70 of the wanted services. The remaining 270 are per medical center discretion. (Federal Register Medicare and Medicaid Programs CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Limpidity Must-haves for Hospitals to Make Standard Charges Public. n.d.)  

Reduced premiums and out-of-pocket costs are the goals of the legislation. Congress expects that consumer shopping will cause a gradual reduction in healthcare prices. 

What are the requirements for hospital price transparency?

The law has an immediate impact on insurance companies and healthcare providers. Personally- subsidized employer plans and insurers must make the following information public: 

  • Negotiated price information for all covered details between the plan and in- network providers.  
  • True payments and charges from out-of- network providers.  
  • In- network negotiated rates and true net prices for all covered traditional pharmaceuticals.  
  • Cost- sharing estimates for certain common services by January 1, 2023. 
  • Hospitals must grant access to information through an online portal for consumers.  

All services must also be available in a machine-readable format. 

 

How can consumers use hospital price transparency to negotiate medical bills?

Most information will be available to consumers before the consumer selects a provider. A consumer is in a stronger position to negotiate prices before treatment. Patient behavior will influence negotiated prices between payers and providers.

Infographic Negotiate Medical bills
INFOGRAPHIC: Reduce Medical Bills

Is this a good idea or not?

Hospital price transparency is a concept long overdue in America. Healthcare is the only major service accessible to consumers without price disclosure. The healthcare system in America does not favor the consumer. Shopping for medical services based on competitive prices is good for the economy. 

There are three major advantages to hospital price transparency: 

  • Faster and more accurate health care assessment  
  • Reduced medical fraud (of which Medicare fraud is the most prevalent) and  
  • Newer, more effective ways of utilizing healthcare resources. 

The healthcare industry will remain profitable under this legislation. Reduced cost-sharing for payers and consumers is the result of competition. 

What are additional steps taken by CMS to promote Hospital price transparency?

Requirements under the rules include the following:

  • Post Physician and Nurse Practitioner fees
  • Charges for common outpatient procedures
  • Give patients access to their health information in a secure and understandable format
  • Reduced payments to hospitals and clinicians not providing consumer access to information

What are some challenges in achieving hospital price transparency?

There are multiple challenges in achieving Price clarity. Challenges include the following issues:  

  • Current and accurate information  
  • Protection of patient sensitive information under HIPAA (Health Health Insurance Portability and Accountability Act)  
  • The healthcare system isn’t uniform.  
  • Also, tools matching as price schedules and healthcare cost estimators are different.  
  • Delivering information in a reasonable measure of time  
  • Provider uneven access to technology  
  • Price visibility can be problematic to achieve due to the complexity of healthcare.  

 The challenges in achieving Price Clarity include changing traditions and customs. It isn’t about the price you’re paying; it’s also about how your healthcare provider is treating you. 

How does a policy change affect health care prices?

The healthcare industry gives assorted reasons for the nondisclosure of pricing data. The deliberate cloak of secrecy results in confusion among consumers. 

It is not easy for consumers to compare the costs of different health insurance plans. Hiding prices leads to mistrust of the industry. The Healthcare Transparency Act permits consumers to review average prices while making decisions.  

The Healthcare Transparency Act rules promote consumer research of prices. Comparative shopping of fees for services is beneficial for all concerned. The Centers for Medicare and Medicaid (CMS) have hospital disclosure rules as well. 

How can you change healthcare pricing?

Consumers can have a profound impact on healthcare pricing due to transparency. The medical industry responds to competitive pressures like any other industry. 

Consumer hanging by very last dollar
Medical bills taking his last dollar!

The healthcare industry has been unsympathetic to appeals for price controls. Government subsidies, price controls, and patent laws must change. Healthcare price transparency will make the industry more responsive to consumer needs.

What's the perfect way to offer price transparency to patients?

Consumers need alternatives to the traditional healthcare delivery system. Greater access to business and medical records that affect treatment is necessary.

What's so great about selling healthcare at a discount?

The public will gain greater access resulting in better health outcomes. Consumer ignorance is the foundation of the American healthcare system. Discounts flow through service providers, insurance companies, and the pharmaceutical industry. Consumers and the Federal Government support the entire enterprise.

CONCLUSION

It is too soon to determine the impact of the new Price Transparency Rules. The hospital price transparency law has only been in effect for a brief period. The belief is that increased competition will be driven by better-informed consumers. The objectives of increased data-sharing and robust competition among providers should result in lower costs.

Saving out-of-pocket expenses is a top priority for the majority of consumers. But many questions remain unanswered. We continue to track the impact of the new rules on the medical industry. Guiding consumers towards the resolution of medical bills is our business.

We share essential methods of cost reduction of medical expenses with consumers. Covid 19 expenses and surprise medical billing practices continue to threaten consumer budgets.

Most consumers do not have experience interpreting medical bills. Resolving medical bill disputes is time-consuming and often causes frustration. The process takes time and is filled with confusing terminology and codes. Scriptsmart LLC is well-informed about best practices to reduce medical bills.

Consumers must discuss how to resolve hospital bills and medical debt early. It is best to tackle the issues before the debt is sent to a collection agency. Contact us at (877) 436-9111 for a free 30-minute consultation. We will be happy to discuss a potential resolution to any outstanding issues.

SOURCES:

Blase, B. C. (2020, June 16). Make Transparent Health Care Prices A Price Of Any Future Aid To The Health Care Industry | Health Affairs. Health Affairs. https://www.healthaffairs.org/do/10.1377/hblog20200615.566069/full/

CMS. (2021). 10 Steps to Making Public Standard Charges for Shoppable Services. C.F.R. https://www.cms.gov/files/document/steps-making-public-standard-charges-shoppable-services.pdf

Federal Register :Medicare and Medicaid Programs: CY 2020 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates. Price Transparency Requirements for Hospitals To Make Standard Charges Public. (n.d.). Retrieved September 9, 2021, from https://www.federalregister.gov/documents/2019/11/27/2019-24931/medicare-and-medicaid-programs-cy-2020-hospital-outpatient-pps-policy-changes-and-payment-rates-and

Figge, H. (2014). Interoperability: Sharing and Interpreting Data With Health Information Technology. U.S. Pharmacist. https://www.uspharmacist.com/article/interoperability-sharing-and-interpreting-data-with-health-information-technology

Longman, P., & Meyer, H. (2020). Why Hospitals Keep Their Prices Secret | Washington Monthly. Washington Monthly. https://washingtonmonthly.com/magazine/july-august-2020/why-hospitals-keep-their-prices-secret/

Martin, A. B., Hartman, M., Lassman, D., & Catlin, A. (2021). National health care spending in 2019: Steady growth for the fourth consecutive year. Health Affairs, 40(1), 14–24. https://doi.org/10.1377/HLTHAFF.2020.02022

Mummadi, S. R., Mishra, R., & Mummadi, R. R. (2020). Price Transparency in the Electronic Health Record. JAMA, 323(3), 281–281. https://doi.org/10.1001/JAMA.2019.18576

Share your Medicare claims (Medicare’s Blue Button) | Medicare. (n.d.). Retrieved September 8, 2021, from https://www.medicare.gov/manage-your-health/share-your-medicare-claims-medicares-blue-button

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