As Hospitals Post Sticker Prices Online, Most Patients Will Remain Befuddled

As of Jan. 1, in the name of transparency, the Trump administration required that all hospitals post their list prices online. But what is popping up on medical center websites is a dog’s breakfast of medical codes, abbreviations and dollar signs — in little discernible order — that may initially serve to confuse more than illuminate.

Anyone who has ever tried to find out in advance how much a hospital test, procedure or stay will cost knows the frustration: “Nope, can’t tell you” or “It depends” are common replies from insurers and medical centers.

While more information is always welcome, the new data will fall short of providing most consumers with usable insight.

The most deceptive part of this government mandated price listing is that it only applies to the uninsured patient. That’s because the price lists displayed this week, called chargemasters, are massive compendiums of the prices set by each hospital for every service or drug a patient might encounter. To figure out what, for example, a trip to the emergency room might cost, a patient would have to locate and piece together the price for each component of their visit — the particular blood tests, the particular medicines dispensed, the facility fee and the physician’s charge, and more.

Medicare, Medicaid and most insurers are contracted with hospitals for a much lower payment despite being billed by the hospital for greater amounts. These discounts can approach 50% . The average patient can review on their explanation of benefits what the hospital, or any provider billed, and what the insurer (or plan) actually pays.

Previously when insurance was indemnity coverage the average payment would be 80% of charges. As health insurance has evolved into comprehensive HMO plans, or Medicare Advantage Plans the payments are much less, ranging from 65% to less than 50%

Health insurance plans have always looked at hospital charges and provider charges as inflated. This thinking was during the time when Medicare and most insurers paid 80%, providers and hospitals hedged the system by charging more each year. Medicare set their rates according to what the provider charged their first year of practice. Medicare no longer does this because it encouraged inflation with each new generation of providers.

Today's revenue cycle management is unrecognizable prior to that of 1973 , when Congress passed the HMO ACT allowing contractual agreement by physicians with insurers, eventually leading to capitation and prepaid agreements.

The Health Maintenance Organization Act, informally known as the federal HMO Act, is a federal law that provides for a trial federal program to promote and encourage the development of health maintenance organizations (HMOs). The federal HMO Act amended the Public Health Service Act, which Congress passed in 1944.

While health plans consider their payments as proprietary and do not disclose what they actually pay this is counter to the intent of the Act. Until Congress passes a law prohibiting this practice, current events will continue. The Price Transparency Bill must be amended

As Hospitals Post Sticker Prices Online, Most Patients Will Remain Befuddled | California Healthline: The new rule took effect Jan. 1 but, for consumers seeking hospital price information, using it to find answers may be like searching for a needle in a haystack.