(Updated Feb. 9) Of course we support price transparency in health costs. We think all prices should be public all the time.
So let’s examine the new Centers for Medicare and Medicaid Services (CMS) rule that hospitals should post their charges online in “machine-readable format” as of Jan. 1.
This policy is a tiny step forward but falls far short of being effective or useful for most people — and in some ways, it can be seen as a negative.
1. Charged or list prices are something like a manufacturer’s suggested retail price (MSRP) for electronics, or the rack rate at a hotel — they’re often fancifully high.
What the hospital actually receives for a given procedure is much much lower than the list prices in pretty much every case, either from an insurer or an uninsured patient paying cash.
So publicizing the list price has the paradoxical effect of causing people to believe that these prices — inflated and fanciful — actually represent what they cost. It’s related to the anchoring effect, first described by the eminent economists Daniel Kahnemann and Amos Tversky. Basically, it’s about how our brains work: If we don’t have information about something like a price, the first number we see becomes the anchor, and we then adjust our perceptions up or down from that anchor as we get more information. But we start from the anchor — so if your anchor is $10,000 for an MRI, you’ll resist me when I tell you that MRI can be easily obtained for $400.
And, if you see that MRI list price of $10,000, you might decide that you simply can’t afford it, and skip it. So posting these prices could actually be harmful.
2. People don’t know where to find these list prices anyway, even if they are posted online. And then they’re supposed to take one list price, then dig into another hospital’s web site, and compare these inflated list prices? I’m not sure that means transparency.
3. The price lists we’ve seen are in a hodgepodge of different systems. Some are not alphabetized. Many use the shorthand used in billing systems. What is a “HC PL STNT DRG ELUT I/C W/PL SGL”? a “HC INS TIPS”? It costs $15,571 at Vanderbilt Health in Nashville. By leaving out any numerical coding, or by using their own coding systems, the hospitals might be observing the letter of the rule but not really being helpful.
4. Several states (California, for example) have similar laws that have had little or no effect on runaway health prices. See, for example, the California Attorney General’s suit against Sutter Health for its high prices. Here’s a scorecard of all the attempts at transparency on the state level, from the National Conference of State Legislatures. Confused yet?
5. Why is this rule only for hospitals, and not for ambulatory surgical centers, doctors offices, labs, clinics, self-standing radiology or gastrointestinal or cardiac centers?
6. No, it doesn’t help people shop around.
7. It is interesting that the data is supposed to be supplied in machine-readable format. That suggests that CMS expects someone to aggregate the data into a database that would compare across hospitals. If the data was clean and consistent, that might happen. As it happens, the data is not clean and consistent. Also, is it meaningful? (See point No. 1.)
My friend Fred Trotter, a well-known health data nerd, has issued a call for CMS to make sure that the data is issued in a consistent schema. I don’t disagree that it should be consistent, but I want to note: The data is still problematic for all the reasons mentioned above.
“With a little help, we can likely get hospitals across the country to use the same data format for this data. That will make our lives much easier in the long term,” he added in an email to a health data nerd list that I am on. “”This is true even if you do not see an immediate use for this data. Hospitals will be releasing data and we need to try and teach them to start using standard data formats for their data releases.”
To make this exercise really useful, CMS could require hospitals — and other providers, such as doctors, clinics etc. — to post for each procedure not just the charged or list price, but also:
- The price that Medicare pays for a given procedure in that area, which is the closest thing to a fixed or benchmark price in the marketplace
- The cash or self-pay price (for a patient without insurance)
- The hospital, doctor or clinic’s negotiated rates with various insurance companies under different insurance plans for each procedure
The list price, what Medicare asked the hospitals to post, is the least meaningful and actionable of those prices.
Maybe the best thing that can be said about the CMS rule is that it seems to show that the government is acknowledging that the lack of transparency on prices is a problem, even if they don’t know what to do about it.
I’ve been doing this for 7 years now, and I have yet to hear a cogent argument for all this secrecy about prices.
People should know what stuff costs in advance.
How would you do that? Ask. It’s not always easy, and it can be time-consuming and frustrating, but you need to ask. Follow these steps here in our post “Find out what stuff costs in health care: 10 easy questions.”
The rule, and how it’s working
The final rule from Medicare is here, in eyeglazing detail, all 2,593 pages from the Federal Register. Among other things, it requires requires hospitals to make public a list of standard charges on the Internet in a machine-readable format. The lists must be updated at least annually, according to the rule. (There’s a lot of other stuff in here too.)
It should be noted that the Affordable Care Act as written required hospitals to make prices public. CMS never really tried to enforce this, and there is some wiggle room in what needs to be reported under the law — but it’s clear that Congress wanted this to happen years ago, and it hasn’t really happened yet.
Beyond that, some other expected results:
These posted prices are hard to find, and they are in various formats and with various quirks. Because they’re dense and difficult to decode and inconsistent, it’s hard to see how an average person would find them useful.
Also, it’s natural to assume that the data actually means something, but it might not. Here’s one of the best analyses of the data that we’ve seen so far, from the Island Packet in Hilton Head, S.C. The numbers vary widely, but they don’t reflect what’s paid, only what’s charged.
The Denver Health listing, for example, has “Top 50 tests and procedures” as well as “Top outpatient procedures.” The first ones are categorized by DRG code (diagnosis-related group), citing the diagnosis that gave rise to the treatment, for example “renal failure,” APR460 being the code. The latter are listed by the five-digit Common Procedural Terminology code, which is the medical coding system that governs billing, for example colonoscopy (“HC Colonoscopy BX), code 45380. You might have as few as two CPT codes in a DRG episode of treatment or as many as hundreds. So it’s kind of apples to oranges. (For more about the coding systems, read this.)
Both groups seem to have a “facility fee,” for the hospital, and a “professional fee” for the doctor. In the outpatient, it’s identified as HB (Hospital bill, we surmise) and PB (Professional bill).
This may not be a final version; it does not look like a full list of charged prices, only the two “top 50” and “top outpatient” groups mentioned above. The procedure we commonly benchmark on, the MRI of the lower back without contrast (CPT code 72148) is absent.
In this case, the prices listed are indeed self-pay prices, and sometimes “estimate.” This is not the same as the Chargemaster price, the list or MSRP price. The site says:
What does “self-pay” mean?
“Self-pay is a term used to describe a situation in which a patient chooses to pay for hospital or clinic services directly rather than using a private health insurance plan, Medicare, Medicaid or Workers Compensation. Other common terms used when referring to self-pay are ‘uninsured patients’ and ‘private pay.’ Self-pay does not include charity care programs.
Who can choose the “self-pay” option at Denver Health?
“Denver Health is here to serve the population of the city and county of Denver. Residents of the city and county of Denver are eligible to receive services as a self-pay patient.”
One of the things that is interesting about this is that many hospitals say they cannot give self-pay prices to insured patients, often because the self-pay price might be lower than the negotiated or contract price that is specified in the contract with an insurer.
Colorado hospitals were required to post self-pay prices online as of Jan. 1, 2018, according to state law.
In Dallas-Fort Worth, the NBC affiliate talked to several hospitals. The Baylor, Scott and White system issued a statement saying, in part, “On the ‘Estimate Your Cost of Care’ page on BSWHealth.com, an automated price estimation tool is a reliable source for specific estimates of out-of-pocket costs because it combines our pricing (charges), contract terms and rates, and real-time eligibility and benefit information to produce a unique estimate for each patient. It is on this webpage that we are posting the list of standard charges mandated by the Centers for Medicare & Medicaid Services (CMS).”
The site has an estimator tool — requests must be made with name and date of birth, but no list of standard charges that is immediately visible, as of Jan. 15.
Cook Children’s told the station that it would post prices online on Jan. 1. Their list of 2,949 Standard Charges, accessed Jan. 15, is pretty opaque (what is “wet prep” and why is it $108? What is
“windowing of cast”??) but it exists.
Texas Health Resources said it would also post prices in machine-readable format on Jan. 1, but as of Jan. 15 directs folks to TxPricePoint.org, and offers lists of charges, by hospital, for specific diagnoses, including this four-in-one example at Texas Health Arlington Memorial Hospital,
“CRANIOTOMY W MAJOR DEVICE IMPLANT OR ACUTE CNS PDX W MCC OR CHEMOTHERAPY IMPLANT OR EPILEPSY W NEURO,” each of which appears to cost $270,043.02. Mind the $.02.
New York area
Northwell Health in New York has an estimator tool based on the Medicare rates. It also has a Chargemaster list on that page. It explains: “Northwell Health is committed to being transparent about its charges. The information provided in the file below contains a listing of our charges for inpatient and outpatient services provided by our hospitals, also known as our chargemaster. The chargemaster is not a helpful tool for patients to comparison shop between hospitals or to estimate out-of-pocket costs for health care services. Your own charges and out-of-pocket expenses will depend on the actual services you receive, the terms of your insurance coverage, and/or your eligibility for financial assistance. To get the most accurate estimate for patient care services, please call 1-877-483-2213.”
The Northwell site does let you download an Excel spreadsheet with a puzzling 2,054 lines for each of the several Northwell hospitals. But the download I got didn’t have any CPT codes identifying the procedures, which means all you have to go on is the cryptic descriptions. There are many more than 2,054 lines in the CPT code base.
Also the spreadsheet initially wouldn’t let me compare the different hospitals, and misbehaved in other small ways. Then the other hospitals were visible on a second download.
I did look at what appears to be the MRI of the lumbar spine without contrast, line 1,392, price $3,816. That’s a high price by the standards of what we know in the New York area (see our price list here). The price seems to be the same across all Northwell hospitals.
NYU Langone: NYU Langone makes you fill out name and email to get. You could ask them how many pepoelhave done so.
Once you get it, you get MS-DRG, Medicare Severity– Diagnosis Related Group. There are three separate ones called “ear” ranging from $48,666 to $110,252.
Six separate “traumatic stupor and coma: from $44k to $154k “
Hospital for Special Services, the premier NYC orthopedic hospital:
Patients should be aware, however, that the charge amount may not be useful in predicting their actual cost of care. Other factors, like insurance coverage and income level are often more relevant than the charge amount. In most cases, the listed hospital charges for individual healthcare services will be different than the amount you will actually pay for those services. For an estimate of your out-of-pocket cost, please call the HSS Insurance Advisory Service. In addition, uninsured or low-income persons may apply for financial assistance.
A listing of HSS standard charges is available. Additionally, average charges for HSS inpatient care is available and presented by “DRG”, a system that groups inpatient care into major categories. If you have any questions about these listing of charges, please contact the Corporate Compliance and Internal Audit Department at 212.774.2070.
Here’s another, from Piedmont Healthcare in Atlanta.
“In compliance with the Center for Medicare & Medicaid Services, (CMS) hospital price transparency guidelines, effective January 1, 2019 Piedmont Healthcare is providing a link below to each Piedmont facility’s Chargemaster price list. The prices do not always reflect all cost associated with the service and the service may be represented by multiple line items. Per CMS guidelines the price lists will be updated annually each July.
“The prices on the lists are our standard gross charges for services and do not reflect insurance discounts Piedmont Healthcare has negotiated with most of our patient’s insurers. The best way for you to get an accurate estimate of your out of pocket expense would be to call the Patient Financial Care team at 1-855-788-1212 (select option 3) or send an email to firstname.lastname@example.org.”
The Piedmont Atlanta hospital price list is largely incomprehensible. It is a .txt file, which took forever to load, and it’s not clear to me even at this point how many entries there are. The codes on this spreadsheet do not match the CPT coding system or any other one we’ve ever seen, so it would be hard to find your procedure and then compare with other hospitals’ prices.
Our old favorite MRI of the lumbar spine, without contrast, seems to show a list price of $4,734, which is extremely expensive.
At Piedmont Mountainside in Jasper, Ga., the same procedure has the same price.
Here’s a page that contains another, from St. James Hospital in Hornell, N.Y. I downloaded it; it has 6,866 lines, no codes (just those cryptic descriptions).
Confusingly, there are two spreadsheets to download; one is “DRG pricing” and it has just four entries.
The Bon Secours hospital system uses its own PX code for categorization. There are 5,133 prices in the Rapahannock list, and 61,069 in Richmond.
Here’s a sample from the Richmond list. What does any of this mean? And can these prices be compared with other hospitals’ prices? You can probably guess the answer.
VCU Health has a place on its site that suggests it’s where the price list will be, but as of 2:47 pm on Jan. 1, it wasn’t there.
New Orleans area
Here is the Thibodeaux Regional Medical Center page. Like others, they seem to use their own coding system for one of two spreadsheets, while the other uses a DRG coding system and gives a range of prices.
At the Ochsner Health site, we couldn’t find any evidence of a chargemaster.
Jefferson Health’s transparency page is here.
The Hospital of the University of Pennsylvania page is here. The list is 14,830 lines long, and is organized by what is apparently the hospital’s coding system, marked “PX code.”
Sioux Falls, S.D., area
Allegheny Health Network, northern New York.
Riverland Medical Center (Top of website)
Ochsner-LSU Monroe (Click “Patient Estimates”)
Southeast Health, Missouri
UAMS Health, Arkansas
Baptist Health, Little Rock, Ark.
CHI St. Vincent, Little Rock, Ark.
Ballad Heath’s list for JCMC, Niswonger & Woodridge
Ballad Health’s list for Holston Valley and Bristol Regional
St. Thomas Health, part of the Ascension group, seems to have outsourced this function to the for-profit, venture-funded MDSave.com. If you click on the St. Thomas Health “shop” tab, you are directed immediately to an MDSave page. This does not seem to comply with the CMS rule, and indeed would serve to direct patients to pay MDSave’s commission for directing patients to St. Thomas. Ascension Health also has a “hospital pricing” tab on the footer menu on the St. Thomas website, which appears to be the chargemaster function.
TriStar Centennial offers a list of services, the price range and the estimated hospital stay.
The Vanderbilt Health site forces you to agree to terms and conditions, and also to give a valid email address, before receiving the charges. This is the only one I saw that requires that. Vanderbilt’s 51-page list can also be accessed at this link, without sign-in. It’s mind-numbing.
Nemours Children’s Hospital: click on “Where can I find the Nemours chargemasters” to download the file.
Freeman Health in Missouri
Mercy Hospital in Joplin, Mo.
CHI St. Joseph Health (includes Saint Joseph Hospital, Saint Joseph East, Saint Joseph Berea, Saint Joseph Jessamine, Saint Joseph London, Saint Joseph Mount Sterling and Flaget Memorial Hospital.)
Northwest Specialty Hospital Click on “Resources” and select “Patient Pricing Information.”
Kootenai Health, Couer D’Alene, Click on “Patients and Visitors” and selecting “Price Estimates.” A link named “Pricing for Common Procedures” at the bottom of the “Pricing Estimates” page shows pricing.
North Texas Medical Center didn’t post prices, but told a local reporter they think they’re in compliance with the order. See story here. Then in early February, they posted prices here, explaining that they now believed they were in compliance with the CMS order. See story here.
University of Arkansas for Medical Sciences
Baptist Health of Arkansas in Van Buren, Fort Smith, North Little Rock, Little Rock, Stuttgart, Hot Springs County, Heber Springs, Conway, Arkadelphia
Medical City Weatherford, Weatherford, Tex.
Lake Cumberland Regional Hospital, Somerset, Ky.
|Hilton Head Regional DRG Averages||XLSX||37.33 KB||12 Dec, 2018||Download|
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|Coastal Carolina Part 2||XLSX||74.75 KB||12 Dec, 2018||Download|