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March 2019  Volume 17, Number 3        


Hospital Prices Now Must be Published Online — But is it a Game Changer?

Want to know how much a procedure is going to cost you at a particular hospital or medical facility? Look no further than the Internet.

The Centers for Medicare and Medicaid Services (CMS) previously required hospitals and other health care providers to make a list of their standard charges available to the public. New CMS regulations mandate that the pricing information for procedures and services also be posted online. Hospitals can use any format, as long as the information is accessible on the Internet and machine readable. The regulations went into effect at the beginning of the year.

A hospital's list of prices for billable items and services is called a Charge Description Master or chargemaster. Hospitals use the list to negotiate prices with insurers &mdsh; therefore the list is more of a bargaining tool and not a realistic reflection of the actual cost of delivering a service.

The federal rule is intended to increase transparency and make it easier for patients to compare costs between facilities. The prices, however, only tell patients what a procedure will cost if the hospitals and insurance companies are out of network or do not have contract agreements.

Advocates for transparency point out that consumers would never buy anything at a grocery store or restaurant without knowing the price. Why would they want to get a medical procedure without knowing the costs or being able to compare prices?

Challenges to Overcome

Patient advocates point out that the data alone might not necessarily achieve the goal of transparency.

Usually, only those who are uninsured pay the listed price. Individuals who have private health insurance pay a discounted rate for procedures if they go to a medical facility that is considered "in network." The facility charges a lower price and the insurance company covers part of the cost. The final bill depends on the patient's plan's co-pays, co-insurance and deductibles. Therefore, the list price won't tell a patient how much they'll really have to pay.

However, if a patient goes to a medical provider that is out-of-network, they might be "balance billed" the difference between what the chargemaster lists and what the insurance company pays.

Sometimes hospitals will use the threat of lists prices and balance billing a policyholder as a way to get insurers to negotiate with them and include them in their network.

Price shopping works best for elective, non-emergency procedures. For example, Lasik eye surgery prices have steadily decreased because of competition driving down the price more than three-quarters over 15 years. In 2017, Sen. Rand Paul, R-KY, pointed out that the average consumer wanting Lasik surgery calls four different doctors to compare costs.

Consumers also can check the prices for elective procedures such as physician office visits, lab and diagnostic tests and non-emergency surgery.

However, price alone should not be the determining factor. Quality of work is also very important, along with how many procedures the facility performs; patient satisfaction rates; and recommendations of physicians and friends.

In addition, medical-industry pricing can be complicated when a patient doesn't understand medical terms. For instance, if your doctor wants you to have an MRI, you also would need to know whether the test will be done with or without "contrast."

Going Forward

Since the price of a procedure often depends on the discount negotiated by an insurance company, many insurance companies have started to offer price comparison tools. However, these tools have their limitations. It's not always possible to compare prices ahead of time, particularly when there's an emergency. Also, other attributes such as location or a doctor's reputation are not accounted for.

There is also concern that the price comparison tool does not help at all. The Journal of the American Medical Association surveyed employees at two large companies in 2016 and learned that use of price comparison tools did not seem to lower health care spending for the companies' employees.

Keep in mind that even if you do look at the list prices to compare costs between medical facilities, they may not be be completely accurate. For example, Cartersville Medical Center in Cartersville, Ga., notes on its website that it doesn't guarantee the accuracy of the pricing information online.

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In this issue:

This Just In ... Expanded Hardship Distribution Rules Proposed for 401(k) Plans

Millennials — Changing the Health Care Landscape

Hospital Prices Now Must be Published Online — But is it a Game Changer?

Retirement Plan Options for Former Employees

How to Determine Whether Your Voluntary Plans Fall Under Safe Harbor



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