Price transparency lists for hospitals hard to navigate, fail to show full costs

Picture this: You are on your way to work when you suddenly fall down the stairs. You are able to move but feel a pain in your pelvis. When the ambulance arrives, you are advised to go to the hospital. Putting your trust in medical professionals, you obliged.

At the hospital, you have a pelvic MRI scan, which shows no major damage. You go home to start your recovery and don’t think about the hospital bill because you have medical insurance.

But later you learn that a pelvic MRI can cost $4,200 at Albany Medical Center. At nearby St. Peter’s Hospital, a similar scan costs $4,700, but that depends on your insurance. If you're uninsured the cash price is often less than what insurance plans pay. But, the type of insurance you have can also be the difference between paying $339 for the scan or more than $3,000.

The difference in prices is emblematic of the health care system’s convoluted financial and billing processes.

About a year ago, the Centers for Medicare and Medicaid Services obligated hospitals to publish specific price lists online to be more transparent with consumers.

Hospitals complied with the federal agency’s demand, but the lists — meant to help patients understand how much a hospital visit would cost — don’t spell out the full prices for those medical services as the law intended. More often than ever, pa

tients see steep charges but aren’t paying the thousands of dollars in fees they accumulate for procedures. Their insurers are paying.

Under the CMS mandate, hospitals were required to make accessible to patients a list of 300 of what the agency calls shoppables ervices outlining procedure and treatment charges, as well as what they receive from insurance companies as reimbursement.

Of the 300 services, 70 were required by CMS. Hospitals picked the other 230. CMS required that the lists include payment rates agreed upon between the hospital and insurers for the services.

Where lists fall short

Yet, the required lists don’t encompass the thousands of services hospitals render.

Navigating a hospital online price list can be a confusing process for prospective patients.

The lists are teeming with medical jargon, codes and differentiating prices for the same procedure based on insurance plans.

Ellis Hospital’s “chargemaster” list, for instance, includes thousands of prices for supplies, professional fees, emergency room or clinic costs. Many of the charges are nearly indecipherable, with descriptions such as “RepComp Face/Hnd” or “11770P Removal of pilonidal lesion.”

Someone searching St. Peter’s Hospital’s chargemaster list using the keyword “knee replacement” or “knee surgery” will yield zero results. But looking up the term “knee” turns up 92 results, including everything from “removal of one knee cartilage using an endoscope” to X-rays and “revision of hip or knee replacement with comorbidity.”

“The transparency rules are a bit like lipstick on a pig,” Elisabeth Benjamin, vice president of health initiatives at the Community Service Society of New York said. “It’s not reflective of what’s truly shoppable.”

Those diligent enough to find their procedure in the labyrinth of lists may discover that the price is only a portion of the overall cost.

Billing separately

Hospitals operate as sort of nonprofit shell institutions, Benjamin said, providing a place for third-party, for-profit entities to perform various services, such as anesthesiology or radiology.

Benjamin called the system “a sick joke.”

“If you go to a hospital, 70 percent of your costs or over 50 percent of your costs could actually be based on (charges from) other entities ... that are operating within the four walls of the hospital,” she said.

Take this scenario, for example.

You have knee replacement surgery at a hospital. Afterward, you receive a bill from the hospital and shortly thereafter another bill for anesthesiology or an orthopedic doctor and you wonder why you are receiving these other invoices.

Those bills are from third-party associates at the hospital, but are not employed by the hospital. They are not required to publish their prices and can charge separately for their role in the surgery.

Benjamin said a hospital price list often “kind of misrepresents what a patient can expect to pay.”

Marc Mesick, Ellis Hospital’s chief financial officer, concurred. Comparing hospital price lists to the sticker price on a car, he said the estimated prices may not include charges from external partners involved or a patient’s deductible or coinsurance.

“If you look on our website, you’ll see what our negotiated rate is with CDPHP or MVP (insurers), that’s the rate the insurance company pays us for that service,” he said. “That does not mean that the patient pays us that amount.” Insured patients may pay nothing or only a portion of the quoted prices.

Sticker shock

Mesick said Ellis Hospital doesn’t have access to the details of rate structures negotiated between external providers and insurance companies, which is why third-party rates are not accessible online. Third-party providers aren’t required to publicly post them either.

On a St. Peter’s price list, a search for “knee” resulted in numerous entries, some duplicated. A procedure labeled “repair of a knee joint” was listed four times with two medical codes and total charges ranging from $6,083.05 to $25,937.66.

Prospective patients find varying prices among insurers for the same procedure at the same hospital. For example, the cost listed by MVP Select Care for a hip and knee joint replacement at Albany Medical Center is $43,713.59 while the cost listed by Beech Street is $21,191.16.

Insurance companies will be subject to similar price transparency rules by CMS starting in July.

Mesick said the biggest factors driving listed costs are labor, facilities and supplies. Medicare and Medicaid payments often do not cover the listed costs of care provided, he said. Hospitals transfer or subsidize those losses while negotiating costs with insurance companies.

“Generally, we try to keep the rates as consistent as possible and work from that kind of base concept. But when you go through negotiations, you’re trying to maximize the opportunity for the hospital in terms of revenue to support the operation,” Mesick said.

Ricardo Azziz, a University at Albany research professor in health policy, said the majority of hospitals don’t accurately price procedures incorporating overhead costs because it would be too cumbersome. He’s found that hospitals ballpark the cost, taking into consideration what they think it would come out to and what the market will bear. Hospitals use this “relatively subjective information” to set prices and then go on to negotiate prices with insurers, he said.

Sticker shock is very real for the uninsured, but hospital prices are almost meaningless to those who fall under a health plan and are covered, Azziz said.

List deficiencies

To make its price list more useful, Ellis Hospital has a hotline that patients can call to receive a written cost estimate for a procedure based on their coverage.

St. Peter’s Health Partners and Albany Med have similar help lines available. A St. Peter’s spokesman said its price estimate webpage has had more than 12,000 page views since its launch in January 2021 with 112 requests for estimates.

St. Peter’s estimates do not assess insurance or out-of-pocket costs to patients, the spokesman said.

At Ellis Hospital, 98% of patients are insured in some capacity, according to Mesick. Uninsured patients are wholly responsible for their cost of care.

If a consumer finds themselves on the hook for charges insurance won’t cover, Benjamin said they’re left to appeal, which can be a long process.

New York hospitals are obligated to provide financial assistance, deemed “charity care,” to the underinsured and uninsured. Eligible individuals who meet the income requirements qualify for discounted rates for care.

Cristina Batt, vice president of federal relations for the Healthcare Association of New York State, said price lists were not meant to “capture the universe,” just “as much of it as possible.”

The association has had concerns over how meaningful the price list information is to consumers. Batt said the sheer amount of information available can be confusing and doesn’t give patients what they need to determine out-of-pocket costs or the financial assistance they qualify for.

Benjamin said this is why so many people are calling for a single-payer health care system regulated by the federal government.

“These charge masters just show the irrationality of a market-based health care system, a free-market health care system,” she said.

“The transparency rules are a bit like lipstick on a pig. It’s not reflective of what’s truly shoppable.

- Elisabeth Benjamin, vice president of health initiatives at the

Community Service Society of New York