For years, patients have had a serious, very valid complaint about our health care system: It’s nearly impossible to know how much treatment actually costs. That’s why hospitals began posting their prices online in January, thanks to the Transparency in Coverage rule — a policy enacted by the Trump administration. Seema Verma, the then-administrator of the Centers for Medicare and Medicaid Services, proclaimed that the rule would “usher in a new era that upends the status quo to empower patients and put them first.”
But it’s been several months and not much has changed for patients. The rule was meant to give patients control over their bills, yet prices for procedures are just as unpredictable as they’ve always been — and hospital bills are as shocking as ever.
There are many reasons why. One of them is that you’ve probably not even heard of this rule. In fact, virtually no one seems to know that prices are being made public — everything has been kept rather mum. And it’s odd because you’d think insurance companies would shout it from the rooftops since, technically, insurers should want their beneficiaries to spend as little as possible. That way, the company can pocket the difference between premium revenue and charges owed to providers.
In practice, though, hospitals’ real customer isn’t the patient: it’s the insurance company. Hospitals and insurers strike deals, and patients are on the hook.
So at the end of the day, what insurers actually care most about is the difference between the inflated hospital charges and the negotiated rates they secure. An ibuprofen pill costs $.02 on Amazon, but hospitals sometimes charge as much as $60. Insurance companies then save the day, covering the bill at no cost to the patient. They use those made-up savings as a selling point when contracting with corporations. The larger the difference, the more impressive their negotiating skills look. And ultimately, premiums and deductibles keep climbing.
Another reason why people don’t know about the public price lists is that hospitals have been making them hard to find on their website and, most egregiously, keeping them off search engine result lists.
What’s more, not all providers are participating. The penalties for not complying are extremely low at just $300 a day, which is a mere drop in the bucket for many hospitals making loads of cash off the original scheme.
Even if patients do manage to find the charge lists, there’s no guarantee they can rely on those prices. In an ideal world, price shopping should look something like this: I select the service I need, the insurance I have and the hospitals in my area, and there it is — a menu of options. But we don’t live in such a world. Instead, hospitals are posting price ranges that aren’t even broken down by insurance plan. If I manage to find my local hospital’s price list, I still can’t know what will be the cost to me or whether I’ll be charged extra fees.
For instance, one journalist found a hospital that would charge between $318 and $2,064 for an MRI — an enormous range. In terms of a monthly budget, that’s like the cost of groceries compared to the cost of your mortgage. How is that possibly helpful to patients? There’s no way to know what the precise charge will be.
To make matters worse, the disclosure rule doesn’t apply to outpatient clinics or physician practices. It only applies to hospitals. That’s no good, seeing as how the moment a patient walks into a hospital, they can be certain their bill will list a variety of related services it’s impossible to foresee, let alone decipher, in the explanation of benefits their insurance will send them weeks later. Those charges invariably include the nebulous facility fees, which can reach thousands of dollars.
Unreliable prices aren’t really prices. So, for patients, the point of the rule is fairly moot.
Nevertheless, more rules are set to come into effect in the coming years, including one that will mandate that insurers give patients a good-faith estimate of their out-of-pocket costs. It sounds nice, but the odds are that all the good faith in the world won’t translate into reliable prices.
To be sure, transparent pricing mandates can help to oust the worst offenders of price gouging. But what we actually need is for patients to become customers again, with the ability to “know before they go,” and avenues for appropriate recourse if providers depart from the agreement.
The road away from third-party payment isn’t straightforward. It’ll require employers to finally depart from the status quo and tap into new arrangements. It will require doctors to set up cash-only practices. It will require relaxing rules around health savings accounts (HSAs). Then, and only then, will price transparency be meaningful to patients.
But for now, it looks like the status quo will just be sticking around.
Elise Amez-Droz is a health care policy manager in the Washington, D.C., area and a Young Voices associate contributor.