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Want to comparison-shop for health services? New federal plan aims to help
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Want to comparison-shop for health services? New federal plan aims to help

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You can lead health care consumers to comparative pricing, but can you get them to shop?

That's the question that has resurfaced recently with the Jan. 1 implementation of a hospital price transparency initiative by the federal Centers for Medicare and Medicaid Services.

Every hospital "will be required to provide clear, accessible pricing information online about the items and services they provide," CMS said.

Melonie O’Connell, vice president of pricing strategy for Novant Health Inc., said the initiative requires hospitals to provide a cost estimator and a public list of prices for all procedures. O'Connell said they are new offerings by Novant.

The initiative, supported by the Trump administration, is the latest attempt at aiding consumers who want to comparison shop for health care, whether a hip replacement, annual physical or colonoscopy.

It's also meant to address concerns about "surprise medical bills," typically patients being billed at an out-of-network rate without being notified of the higher out-of-pockets costs associated with that level of care.

"Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it," CMS said.

CMS said it will audit "a sample of hospitals for compliance." Hospitals may face civil monetary penalties for noncompliance.

CMS said that "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; and in a display of shoppable services in a consumer-friendly format."

A local example is the Wake Forest Baptist Medical Center "your health care costs" webpage that has those details available through links for its five affiliated Triad and Northwest N.C. hospitals.

Just below those links is a disclaimer, that Wake Forest Baptist "makes no guarantees regarding the accuracy of the pricing information provided herein. Any pricing information provided by this website is strictly an estimate of prices, and Wake Forest Baptist cannot guarantee the accuracy of any estimates."

"Any prospective patient should understand that a final bill for services rendered at Wake Forest Baptist may differ substantially from the information provided by this website, and Wake Forest Baptist shall not be liable for any inaccuracies."

Survey says

Many analysts say they believe most consumers aren’t willing to travel longer distances for cheaper procedures the way they do for lower airfares. They believe consumers conducting online cost comparisons are a growing, but still small percentage.

Analysts say one key to getting consumers to visit those websites is the growth in employers offering, and employees choosing, high-deductible health insurance plans.

The goal is having lower premium costs coming out of their paychecks, but at the risk of having to pay more for individual medical procedures.

"Money talks," said David Meyer, a senior partner with Keystone Planning Group of Durham.

"When people have to pay more out of pocket, they change behavior. That is what the employers and insurers are counting on."

One example of consumer indifference is a survey of 500 adults in Massachusetts in June 2019 by DAPA Research at Suffolk University. The survey was sponsored by Pioneer Institute.

Only 20% of those surveyed "have tried to find price information before obtaining a health care service."

Respondents said the sources they would trust the most for price information were, in order, their insurance company, their doctor and their state health department.

"It’s not that they aren’t interested; rather, it appears that consumers don’t know they have a right to such information under state law and they don’t know how to access it," according to the report.

"About 70% said they would like to know prices, but about the same percentage didn’t know insurance carriers have price estimator tools they could use to find them.

"A majority said they had never thought of trying to obtain health care price information."

About 70% said they would be encouraged by physician or hospital websites that show out-of-pocket costs, while 67% cited cash-back rewards form their insurer for choosing less expensive providers.

The researchers said physician practices and hospital administrators "should be trained to help patients navigate cost estimator tools and insurers should more aggressively market the tools while continuing to make them more customer friendly."

Background

There have been clamoring for health care price transparency for decades, foremost since the 2009 negotiations in Congress of the federal Affordable Care Act, or Obamacare.

Although pricing is based on procedures for Medicare beneficiaries, Obama administration health officials said the numbers are relevant as a price-setting point for people with private insurance and no insurance.

The Trump administration’s price-transparency policy was announced in June 2019.

Soon after, the policy was challenged by the American Hospital Association (AHA), which argued the rule violated the First Amendment and went beyond the statutory provisions of the ACA.

A federal judge in the District of Columbia ruled in favor of the Trump administration in June, as did the U.S. Court of Appeals in D.C. on Dec. 29.

The AHA said in response to the appellate court ruling that it supports "increasing price transparency by making patient out-of-pocket cost estimates easier to access and understand."

Yet, the AHA stressed that it "continues to believe that the disclosure of privately negotiated rates does nothing to help patients understand what they will actually pay for treatment and will create widespread confusion for them.

"We also believe it will accelerate anticompetitive behavior among commercial health insurers and hinder innovations in value-based care delivery."

The AHA said it will approach the Biden administration to reconsider the price-transparency rule.

Local hospital reaction

When it became apparent that the Trump administration price-transparency initiative would pass legal muster, hospitals began creating cost-estimator links or websites.

Cone, Novant and Wake Forest Baptist pitched the mandatory requirement as pro-consumer as they gingerly accepted their new reality.

When it comes to comparison shopping, Wake Forest Baptist's website was not overly encouraging.

"It is difficult to independently compare charges for a procedure at one facility versus another because the descriptions for a particular service may vary from hospital to hospital, and descriptions may not be comprehensive," Wake Forest Baptist said.

"An entire procedure includes components from multiple departments — room and board, laboratory, other diagnostics, pharmaceuticals, therapies, etc.

The three systems were careful to express cautionary notes that their estimates cannot guarantee the total costs of what their patient may be charged.

"While these estimates cover a range of services and fees, they may not include all costs," Cone said in its Dec. 31 statement addressing its cost-estimator tool.

"Radiologists, anesthesiologists, pathologists, emergency room physicians and others who are not employed by Cone Health charge 'professional fees.' These are charged separately and not included in the Cone Health estimate."

Mike Simms, Cone's vice president of revenue cycle, said "self-service estimates are only as accurate as the information the person provides. That information includes not only the operation, procedure or test a person is pricing, but their insurance plan as well."

The cost-estimator message from Novant's O’Connell was representative of hospitals' efforts at embracing the requirement while pointing out caveats.

"We want to insure our patients fully understand every aspect of their care, and that includes cost planning and counseling," O'Connell said on a Zoom call that Novant set up with media outlets.

"We want to provide them with easy access to the price that really matters, which is their out-of-pocket costs for hundreds of common procedures and services."

However, O'Connell stressed that Novant will continue to provide financial navigators "to get the actual amount they will be expected to pay."

Charge-masters

The U.S. Department of Health and Human Services and CMS say hospitals determine what they will charge for items and services.

Medicare guidelines set in 2018 already require about 3,300 acute-care hospitals nationwide to make their price lists public.

These charges, known as charge-masters, were brought into the national spotlight recently by a 2013 high-profile feature in Time magazine.

A 2018 American Journal of Managed Care report determined that the charge-master rate “frequently is more than actual health care costs because (hospital) executives use the rate as a starting point for payer contract negotiations. ... They are not based on market forces.”

Hospital charge-master rates were typically 2½ times higher than what most payers received and more than three times actual hospital costs, a cited Health Affairs study revealed. The rate is mostly paid by individuals without health insurance or high-deductible plans.

“Limited health care price transparency across the industry also prevents hospitals from setting competitive prices,” according to the American Journal of Managed Care report.

Spurred on by requests for price transparency, cost-estimator websites were developed and promoted by nonprofits, federal and state government agencies, health insurers and health care systems.

Those included Blue Cross Blue Shield of N.C., the N.C. Department of Health and Human Services, Novant, Cone Health and UNC Healthcare.

Consumers with private insurance, federal health exchange insurance, Medicare and Medicaid rarely pay full price because of negotiations between health-care providers and insurers.

However, those people who are uninsured, covered by high-deductible plans or go out of network for care may pay full price. 

NCHA reaction

The N.C. Healthcare Association said "health systems and hospitals want consumers to have easy access to meaningful information about their options for medical treatment and what their out-of-pocket cost will be."

The NCHA website has links to 20 health care systems in the state on its price-transparency webpage.

The caveat for the NCHA was "prices for 'shoppable' services may not give a complete picture, however, so we urge people to contact their health care provider or use available out-of-pocket cost estimator tools for a more accurate estimate of what they may need to pay for their care."

"The rate of payment between the health plan and the hospital generally does not provide reliable information about what a patient should expect to pay."

The NCHA stated the requirement of "compiling and displaying negotiated rates for each health plan ... is burdensome to hospitals, especially to rural and safety-net hospitals and especially during the COVID-19 pandemic."

"Instead, it would be more efficient for patients to directly contact hospitals to get the information they need to make informed decisions about their care."

However, Trump administration officials said consumers' struggles to obtain viable and timely pricing information from hospitals was a major impetus behind its initiative.

Folwell response

The latest CMS initiative is welcomed news to state Treasurer Dale Folwell and his own controversial price-transparency mission — the Clear Pricing Project — of the past three years.

The SHP has more than 727,000 participants that include current and retired state employees, teachers and legislators. It is North Carolina’s largest purchaser of medical and pharmaceutical services.

Under the CPP, individual SHP members in the network pay a $0 co-pay for a primary care provider and as little as $40 for a visit to an in-network specialist, according to the treasurer's office.

"Ultimately, getting rid of secret pricing and contracts will be the only medicine to reduce those costs."

The NCHA opposed Folwell's CPP initiative in 2019 and 2020.

"Treasurer Folwell failed to include vital health care providers in his network last year and sadly, nothing has changed," said Cody Hand, the association's senior vice president for government relations.

Folwell said that the court order "gives us a real path forward to getting rid of secret contracts and pushing the power down to the consumer to make informed decisions when purchasing health care."

Folwell has expressed numerous concerns as treasurer that "health care is the only thing in your life that you purchase that you really don’t know its cost or value."

"Having clear pricing will go a long way toward decreasing the cost of medical services in this country.”

336-727-7376

@rcraverWSJ

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