Blog Post

Online chargemasters mean little to patients—and Congress is noticing

January 30, 2019

    CMS' 2019 price transparency requirement spurred a lot of questions from our members, who were concerned about both compliance and whether or not public chargemasters would actually help patients, or just confuse the already muddy health care cost waters. RCAC continues to monitor the impact of the requirement and how it evolves.

    We recently attended The Price of Good Health: Health Policies & Politics in the 116th Congress, a panel event hosted by the Council for Affordable Health Coverage. Portions of the panel focused on the CMS requirement, and several policymakers expressed frustration with the proliferation of electronic chargemasters in lieu of true hospital price transparency. Here are our key takeaways after listening to their conversation:

    Chargemasters are the easy way out

    Posted chargemasters don't help the consumer, noted Rep. Larry Bucshon, M.D. (R-Ind.). In his view, hospitals are intentionally protecting their prices to avoid sharing the information with market competitors.

    Doug Badger of the Galen Institute and Heritage Foundation suggested policymakers add an additional mandate that requires hospitals to provide individualized price estimates at the patient's request. True price transparency shouldn't require patients to enter their CPT code into an online tool, he argued. Price estimates should be calculated by the hospital and readily accessible to any patient who asks. Further, Badger noted the hospital's estimate should be comprehensive—encompassing both physician and facility fees.

    Ideally, Bucshon would like patients to have risk-stratified price and quality data for their care. Without quality data, there's a consumer tendency to conflate higher costs with higher quality care, Bucshon explained. As he's outlined in previous public statements, "The only way we are ultimately going to address the high cost of health care … is to promote greater market competition by empowering patients to shop around to find quality care at a price they can afford."

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    We saw this coming

    As previous Advisory Board experts noted, nobody believed CMS' standard charges rule would achieve true price transparency for patients. The prices on a hospital's chargemaster usually are not reflective of actual costs or reimbursement. Indeed, chargemaster list prices serve as a starting point for hospital negotiations with private insurers and for determining costs for patients who are uninsured or out-of-network. For most patients, chargemaster prices mean very little.

    Get ahead of the curve

    Hospitals would do well to provide additional price transparency for their patients. As this panel indicates, policymakers may continue to push for hospitals to offer patients more personalized price information. In addition, CMS may also broaden the transparency requirement to ambulatory settings. (The agency has requested comment on similar proposals for hospital outpatient prices in the HOPPS final rule and for physician payments in the MPFS final rule.)

    Regardless of a government mandate, RCAC's most recent consumer survey illustrated there's a clear financial benefit to price transparency. Indeed, patients who receive a pre-care price estimate are more likely to pay their medical bill in full within one month. Price transparency is no longer a nice-to-have for consumer experience. The modern revenue cycle depends on patients understanding their financial responsibility, and that begins with allowing patients the opportunity to budget via a pre-care price estimate.

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