What Does Hospital Price Transparency Mean for You?
Suppose you struggle with chronic migraines. Your local imaging center did your first MRI a year ago and charged you $1,000, following your insurance claim. But in the last two weeks, your migraines have increased in severity, so you rush to the ER. Again, to rule out anything unusual, the ER doctor orders an MRI at the hospital. But this time, you get hit with a bill for $2,000 after insurance. Sound familiar?
This scenario isn’t uncommon. The price of an MRI can vary by thousands of dollars across different hospitals. Costs are often marked up based on each hospital’s budget and profits.
This price disparity isn’t limited to MRIs. Depending on where you go for treatment, the cost of knee and hip replacement surgery can vary too. For example, an in-network replacement in New Jersey can cost anywhere between $45,000 and $70,000, depending on which hospital you visit.
Depending on the patient’s insurance plan, they may pay more for treatment within the same hospital. But hospital price transparency seeks to put an end to this price discrepancy.
With hospital price transparency, healthcare can be more accessible. With access to information, people can choose high-quality care at lower prices. But here’s the catch: hospital prices are pretty complex. So, patients and healthcare payers need simple, user-friendly tools to understand the costs.
What’s the Hospital Price Transparency Rule, and When Was it Launched?
The Hospital Price Transparency rule went into effect on January 1, 2021, under the Affordable Care Act. Hospitals must publicly list their gross rates, discounted rates, and payer-negotiated rates (which refers to the rates insurers have negotiated with the hospital) for all health services online in two formats:
- A machine-readable file on the hospital’s website
- A consumer-friendly tool on the hospital’s website that lists 300 shoppable health services, out of which 70 are mandatory by the Centers for Medicare & Medicaid Services (CMS).
For example, here’s the hospital price transparency page from NewYork-Presbyterian Hospital. This information should be available to consumers without requiring personally identifiable information. If a hospital fails to comply, the penalty is $300 each day.
Yet, most hospitals are only partially compliant with the rule. For instance, many of them don’t list payer-negotiated rates or discounted cash prices. As a result, only 17% of hospitals are fully compliant.
That’s not all. An analysis by Peterson Center on Healthcare and KFF (Kaiser Family Foundation) found that patients found it challenging to compare prices for various treatments and services even when hospitals offered cost estimates. The main reason for this was a lack of clarity around the type of pricing. For example, some hospitals didn’t distinguish between outpatient and inpatient care, which is a significant cost differentiator for treatments.
Despite these roadblocks, research shows that price transparency has made healthcare more accessible and affordable for patients.
How Does the Hospital Price Transparency Rule Benefit You?
First off, without price transparency, hospitals could jack up treatment costs. The aim of varied prices could be simply to increase profits or deal with budget cuts, which often impact vulnerable patients the most.
But thanks to hospital price transparency, patients and employers now have the power of choice. In addition, the rule forces institutions like hospitals and insurers to keep healthcare prices low. But the benefits don’t end there.
Patients Can Make Informed Choices
The goal of hospital price transparency is to make treatment prices available so patients can research compare costs. Therefore, it’s in your best interest to know this information to make informed choices.
Before this rule, patients would only learn the cost of their healthcare after undergoing a procedure. Meaning you’d get hit with a large medical bill after treatment. Unfortunately, you also had no way to choose a lower price healthcare provider. In fact, 64% of patients say they have avoided or delayed care out of fear of the cost.
But with hospital price transparency, you can now see the cost of some medical tests and treatments in advance, be it a blood test or an X-ray. Now, armed with knowledge, you can choose a provider who offers you the most favorable price.
Healthcare Costs Go Down
Thanks to transparent pricing, once patients start choosing lower-priced care, other hospitals will be forced to follow. This domino effect will lead to a reduction in the cost of healthcare and out-of-pocket expenses for patients.
How do we know this? Most hospitals charge patients seven times what it costs them to provide care. But research shows that price transparency resulted in a 22% reduction in the prices of out-of-pocket medical care.
Employers and Unions Can Choose Better Health Plans for Workers
Hospital price transparency doesn’t benefit patients alone.
Hospital price transparency provides access to insurance providers’ negotiated rates with hospitals. So, employers and unions can choose the provider that offers the best rates to offer their employees. If needed, they can take it one step further and exclude hospitals with inflated rates from their health plan network altogether.
For example, 32BJ SEIU, a major union for property service workers, dropped NewYork-Presbyterian from their health plan network because the hospital charged 358% more than Medicare for the same services.
Hospitals and Health Maintenance Organizations (HMOs) can Remain Competitive in the Market
Price transparency levels out the playing field for hospitals and HMOs too. With transparent price disclosures, gaining a competitive edge is a little easier.
Research shows that 81% of people are unhappy with their healthcare experience. But hospitals may not need to compete with institutions with big budgets if their patient care is on par.
With costs out of the equation, patient attraction and retention can depend more on treatment outcomes and quality of service.
Take Full Advantage of Hospital Price Transparency with Compare.com
If you’re overwhelmed with information but don’t know where to start, don’t fret. Compare.com can help you find quotes on procedures across local hospitals in your area. In addition, Compare.com aggregates healthcare costs from hospitals and providers. So, you can find the information you’re looking for easily through a handy search engine.