New Mandate for 2021 - Hospital Price Transparency
There have been some exciting updates to Medicare for 2021 that directly benefit consumers: see our article on the Insulin Trial Program. Another big piece of news to come from Centers for Medicare and Medicaid services is the Hospital Price Transparency ruling. So, what exactly does this new rule mean for you and what potential benefits and pitfalls might this entail?
First, let’s describe exactly what this ruling is requiring. By January 1, 2021 Hospitals will be required to make a machine readable list of every service and item they offer. These services will include key pieces of information:
Gross charges
Negotiated prices with insurers (including min/max negotiated charges)
Cash price for uninsured patients
They must also include at least 300 “shoppable services” they offer to patients ie: joint replacements, diagnostic scans, etc. These services will have to be described in plain language that is accessible by patients including the same previously mentioned info.
In a nutshell, this ruling is intended to make pricing more readily available and accessible to the consumer. In theory, comparing prices for similar/same services between two hospitals should give the consumer a fairly accurate idea of what charges to expect. This is something that has long been kept hidden from the public, for the most part. With healthcare spending increasing 8% per year on average, this could have big implications. It could also highlight “surprise” medical bills, exorbitant charges for simple services and many of the billing pitfalls the medical insurance industry currently faces. The intent of this new mandate is to reduce healthcare spending overall.
The hospital industry isn't exactly thrilled about this new requirement. They challenged the ruling in court, ultimately being denied solidifying this rule into effect on Jan 1, 2021.
There are however a couple of things to consider. First, if you have insurance, these prices for services are already listed in the plans information. In fact, this is a requirement for insurance companies to provide. Added to that; your specific insurance plan, type of network, deductibles will all affect pricing differently.
Another point to consider is that the prices listed will be more of a ballpark estimate than exact price. In an NPR article, Gerard Anderson, professor of public health and management at Johns Hopkins Bloomberg School of Public Health says “You’ll get the average price, but you are not average.” In other words, illness is not always simple with defined treatment. If complications arise, unexpected costs could be bundled into overall cost.
The functioning idea behind all of this is with pricing information readily available to the public, it will force hospitals who charge more than others in the same area to lower prices to remain competitive in future negotiations with insurance companies and employers. However, it could also have the inverse effect, where hospitals who charge less than other to raise prices.
It’s also an uncertainty as to how widely this information will even be used. It does require some leg work from the individual consumer to research, time that many people currently don’t necessarily take.
How exactly all of this plays out still remains to be seen. It does seem to be a step in the right direction of making healthcare more transparent and accessible by the public. If you would like to find more information about this, you cna visit CMS’ official website by clicking here.
So, what do you think? Is this something that you will use and find beneficial? Is there something we missed or didn’t discuss? We are always happy to hear comments and suggestions from you. Please feel free to leave a comment or send us a message. Thanks for reading!
https://www.cms.gov/hospital-price-transparency