Posted hospital prices may be confusing, but it's an important first step, CMS says

Hospitals are now required to post their chargemaster prices online, but the information is confusing and often unintelligible.

By Marlene Satter | January 14, 2019 at 12:53 PM

On January 1, a new Centers for Medicare and Medicaid rule requiring hospitals to post their prices online went into effect, but it hasn’t been the price transparency silver bullet they hoped for. As many consumers are finding–and news outlets, including the New York Times, are reporting–having the prices posted doesn’t mean that the data is intelligible.

The requirement calls for all hospitals to post their chargemaster prices for services online in a machine-readable format, despite concern from hospital execs that providing chargemaster prices will “confuse” consumers.

Even the CMS has admitted things aren’t going according to plan. “While many hospital CEOs have released statements of support, some have voiced concerns that making chargemaster information available to the public could be confusing for consumers,” CMS administrator Seema Verma said in a recent media call. “We are heartened by the acknowledgement that this is an important first step and I’m excited to see the additional work that hospitals will do to make this information even useful and actionable for patients.”

Back in May, according to Revcycle Intelligence, the Healthcare Finance Management Association cautioned, “Information on charges or on average charges is of limited value to consumers, as it will likely be significantly different from the amount they will be expected to pay.” HFMA added, “Chargemaster prices serve only as a starting point; adjustments to these prices are routinely made for contractual discounts that are negotiated with or set by third-party payers. Few patients actually pay the chargemaster price.”

And therein lies the rub. According to the Times, execution of the new policy is “turning into a fiasco.”

Jeanne Pinder, the founder and chief executive of Clear Health Costs, a consumer health research organization, told the Times, “This policy is a tiny step forward, but falls far short of what’s needed. The posted prices are fanciful, inflated, difficult to decode and inconsistent, so it’s hard to see how an average person would find them useful.”

In fact, the Times writes, “The data, posted online in spreadsheets for thousands of procedures, is incomprehensible and unusable by patients—a hodgepodge of numbers and technical medical terms, displayed in formats that vary from hospital to hospital. It is nearly impossible for consumers to compare prices for the same service at different hospitals because no two hospitals seem to describe services in the same way.”

The Times compares the data disclosure to looking at the sticker price for a car, but with the stickers revealing only the prices for individual components and never the price for the car itself. And among the difficulties under the current situation is the fact that the consumer will have no idea from the posted prices how his or her insurance will affect the final total, because insurers often negotiate lower prices for procedures, and patients who have no insurance at all often qualify for major discounts in price.

“Providing such information is simply not feasible for providers, the Federation of American Hospitals told Revcycle. ”Providers deal with an overwhelming number of insurance companies, and even more plans offered by those insurers, each with specific coverage requirements and out-of-pocket cost requirements for enrollees.”

Despite the criticism, the CMS is pushing forward, noting that this is just the first step of a bigger reform process. “We are just getting started as we work to increase price and quality transparency throughout the entire health care system,” Verma said. “We have to do more. We have to not only increase price transparency, but also recognize the solution is not as simple as just revealing prices. We also need to make sure patients have the right information at the right time to make a decision.”