Online hospital prices not much of a help
Federally mandated cost disclosure well-intentioned but too complex
Imagine, just for a moment, that you need a knee surgery and you want to save a buck by shopping around.
There is good news and bad news: The good news is now you can try. The bad news is it probably won’t work.
Hospitals across the country began posting their prices online this month, pulling back the curtain on a deeply secret world of exorbitant American health care costs. While millions of prices are now finally public, there is little hope for turning this transparency into actual savings for patients.
Experts say the effort is well-intentioned but functionally useless: The pricing sheets are so complex, voluminous and misleading that no layperson could use them to decipher hospital prices, much less actually compare hospitals as intended.
“It’s fair to say it’s a noble intent,” said John Deane, a former hospital executivewho runs a health care nonprofit in Nashville. “The problem is, the way this is unfolding, it is virtually irrelevant.”
The hospital pricing sheets, known in the healthcare industry as “chargemasters,” are being unveiled as the result of a White House mandate that requires hospitals to make their prices public so potential customers could save money by comparing costs and finding deals. The idea originated in the Affordable Care Act but stagnated for years until it was expanded by President Donald Trump, who campaigned on lowering health care costs by increasing competition.
The mandate to publish online took effect Jan. 1. Since then, many hospitals have posted their chargemasters in the form of itemized spreadsheets listing prices by the thousands or even tens of thousands. The spreadsheets offer a price for every drug, procedure or medical device in each hospital, but don’t link them to specific surgeries,
diseases or conditions.
Therefore, to even begin to assess the cost of that knee surgery, you would need to research every device, procedure and drug involved, plus estimate the time required from operating room staff and anesthesiologists. Then you would have to consider complications and countless other factors that could potentially impact the overall complexity of the surgery, like allergies, your weight or medical history.
If you somehow managed to do that, then you have to do it all again with the price sheet from another hospital, which may or may not identify medical devices or procedures by the same name, and might use an different format for its chargemaster altogether.
And even all that research still wouldn’t produce a reliable estimate for the surgery cost because the prices posted online don’t reflect what patients – insured or uninsured – actually pay.
That’s because insured patients always pay a reduced cost based on negotiations between their insurance carrier and the hospital. And uninsured patients often receive heavy discounts, especially at nonprofit hospitals. None of these discounts are reflected in the prices posted online.
If you need further evidence of the uselessness of the hospital pricing sheets, look no further than the statements of Angela Simmons, the vice president of reimbursement and revenue at Vanderbilt University Medical Center, which is often ranked among the best hospitals in the nation.
Simmons is both a hospital administrator and an accountant, and yet she said the data released by her own hospital would not help her compare prices when planning even a common surgery.
“It would be absolutely impossible for me, and I know a fair amount about this,” Simmons said. “So, it would be impossible for the consumer.”
Experts: The feds could do better
But there is a better option. Experts say actual transparency could be accomplished if the federal government took a larger role in comparing costs.
Deane and Simmons said the Centers of Medicare and Medicare Services, which processes bills from thousands of hospitals nationwide on a daily basis, has both the data and the know-how to publish average costs for common procedures at hospitals in metropolitan areas.
Craig Becker, president of the Tennessee Hospital Association, added the agency could pressure private insurance companies to do the same, putting real prices – not chargemaster prices – in the hands of most patients.
Instead, the government punted the responsibility to hospitals, and by extension, the patients themselves.
After Vanderbilt’s prices were posted earlier this month, Simmons said she feared a “madhouse” of confused patients trying to make sense of the data. So far, that hasn’t arrived.
“It seems the only people who have actually noticed are reporters, and quite frankly, kind of thankfully so,” Simmons said. “I would be worried about my phone burning out if patients were trying to figure it out.”
Hospitals across the country have started posting prices online.