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That’s because the final bill a patient receives is almost never the same as the sticker price for the services they received. Insurance companies negotiate discounts on the sticker prices. Co-pays, co-insurance, deductibles also add other layers of complexity that bring discounts or increased costs before a final charge is determined.
“The list prices are so high that the vast majority of hospitals don’t even try to collect list prices from uninsured patients,” said Benedic Ippolito, with the American Enterprise Institute, who has researched hospital list prices.
The federal rule is being brought out as a measure to improve competition and help educate consumers.
"We are just beginning on price transparency," Seema Verma, head of U.S. Centers for Medicare & Medicaid told the Associated Press. "We know that hospitals have this information and we're asking them to post what they have online."
But real transparency comes when consumers can easily see what they will pay to a provider based on their insurance benefits, said Thomas Campanella, Baldwin Wallace University health care MBA program director. He said some insurance companies are providing that information through price comparison tools.
“I almost see it being more of a political ‘look at what we did,’” Campanella said of the requirement to post list prices.
Kettering Health Network, which has eight hospitals in the Dayton, Ohio area, said the chargemaster will be posted on its patient pricing webpage after Jan. 1. Premier Health, which has three hospitals in the same region, said the information will be on its hospitals’ websites by Jan. 1. and consumers will find the list of charges where they currently find other pricing, insurance and billing information.
List prices can show what is at stake when hospitals and insurance companies are out of network, or do not have contract agreements between them.
A benefit of having health insurance is that the insurance companies negotiate with hospitals on a discount from what is listed on the chargemaster. If a hospital is “in network” it means the insurer and hospital have an agreement on discounted rates and the insurance company typically covers a higher portion of those prices.
If a patient goes to a medical provider that is out-of-network, they could be billed the difference between what the chargemaster lists as the price and what their insurance writes a check for. The practice is called balance billing or sometimes called “surprise billing.”
“Where list prices matter more nowadays is in the case of “surprise bills” or balance bills,” Ippolito said.
Ippolito said some people will argue that hospitals actually use list prices and the threat of balance billing as a way to get insurers to negotiate with them or otherwise face irate policyholders stuck with high bills.
“The idea is that you maintain a very high list price and you tell and insurer ‘Either you put me in your network or when one of your poor patients shows up in my hospital, I’m going to have no choice but to balance bill them for this huge amount and then you’re going to have to figure it out,” he said.
A hospital official said insurers could do more to promote price transparency.
“Ultimately, I think some of that unpredictability rests with the insurers and the fact that they establish what they will and won’t pay for,” said Sarah Hackenbracht, interim president and CEO of the Greater Dayton Area Hospital Association.
“The health care providers are simply focused on making sure that they provide the highest quality and lowest cost services in our local communities,” she said.
Cost is also only one factor to consider when shopping for care, with factors such as quality, safety and location affecting where a patient chooses to go, she said. In addition, it is difficult for someone to know ahead of time exactly what their final cost might be because physicians might discover after starting a procedure that they need additional tests, medications or other types of care, she said.
Miranda Creviston Motter, president and CEO of Ohio Association of Health Plans, which represents insurance companies, said as health care costs continue to rise, provider cost information is important and the association supports federal policies requiring providers to provide easy to understand cost information directly to health care consumers.
“This information supplements the cost information health plans currently offer their members. ,” she said in a statement.
Price comparison tools are becoming increasingly available through insurance companies, but they have limits in usefulness. Not all health care costs can be shopped for ahead of time, such as emergency visits, and consumers can prioritize other things besides cost, such as a doctor they trust or a hospital close to home. Only a small number of employees at two large companies with a price transparency tool used the tool and it was not associated with lower health care spending, according to 2016 study in the Journal of the American Medical Association.
Scott McGohan, CEO of McGohan Brabender, a benefits broker, said while many of the major insurance carriers have price shopping tools, it’s not always easy to know enough about medicine to know how to price shop.
“For an MRI for example, if it asks with contrast or without contrast, then I have to know what is contrast and why is that important?” McGohan said.