The pricing for healthcare can vary widely and the reasons why are often mysterious and hard to understand. Healthcare pricing and transparency changes are headed towards the United States beginning in 2021.
New Transparency Rules for 2021
The Centers for Medicare & Medicaid Services say, “Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it. Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways:
- As a comprehensive machine-readable file with all items and services.
- In a display of shoppable services in a consumer-friendly format.
This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.”
Good New for Consumers
As consumers, healthcare is one of the very few things you don’t usually know the price you are going to pay before getting a procedure done. These new rules aim to change that. Chris Merrill, Senior Director of Strategy & Engagement with Diversified Insurance Group says, “The new requirement around the prices different insurance carriers pay for the same services inside a hospital are potentially one of the more impactful things to come to healthcare pricing in some time. What I think will be the most telling, those systems who choose to pay the fine rather than expose their contracts and pricing.”
CMS plans to audit a sample of hospitals for compliance starting in January, in addition to investigating complaints that are submitted to CMS and reviewing analyses of non-compliance, and hospitals may face civil monetary penalties for noncompliance.
As for those who are choosing to pay a fine rather than expose their contracts and pricing – the incentive is not high to comply because of measly fines associated with noncompliance. The Washington Post recently published an article that talked about why and how hospitals are dragging their feet. The fine for not complying with the new rules — $300 a day — is a drop in the bucket for many hospitals.
Many who work in the hospital world are defending their employees saying it is not an easy year to implement new systems and practices. With COVID-19 filling many hospitals to capacity, staffs are being stretched very thin. It is easier for many of them to put off implementing the new system by simply paying the fine.
The Disparity in Hospital Pricing
The Wallstreet Journal recently investigated healthcare costs in California. For example, they looked at how two people can get the exact same surgery done at the same hospital and one can pay $6,241 while the other person pays $60,584. New federally mandated disclosures by California’s Sutter Health illustrate the wide disparity in healthcare rates negotiated by insurers.
One of the main reasons to make it a requirement for hospitals to post pricing lists is so customers are aware of the prices before they get a procedure done. It gives patients a tool to help them decide where they would like to get a procedure done.
Average Cost of Healthcare
The Health Care Cost Institute releases a report every year about the average cost of healthcare. This year’s report found that average annual health care spending for people with employer-sponsored insurance increased to an all-time high of $5,892 in 2018. From 2014 to 2018, spending grew 18.4%, and about three-quarters of the increase was due to growth in service prices. In 2018, there was a 1.8% uptick in the use of services.
Diversified Benefits Team
All of this information can be confusing and somewhat frustrating. The experienced Diversified Benefits team can help you navigate all of these healthcare pricing and transparency changes. If you would like to get more information, go here.