Hospitals Must Now Post Prices. But It May Take a Brain Surgeon to Decipher Them.

The New York Times
1/13/19

WASHINGTON — Vanderbilt University Medical Center, responding to a new Trump administration order to begin posting all hospital prices, listed a charge of $42,569 for a cardiology procedure described as “HC PTC CLOS PAT DUCT ART.”

Baptist Health in Miami helpfully told consumers that an “Embolza Protect 5.5” would cost them $9,818 while a “Visceral selective angio rad” runs a mere $5,538.

On Jan. 1, hospitals began complying with a Trump administration order to post list prices for all their services, theoretically offering consumers transparency and choice and forcing health care providers into price competition.

It’s turning into a fiasco.

“This policy is a tiny step forward, but falls far short of what’s needed,” said Jeanne Pinder, the founder and chief executive of Clear Health Costs, a consumer health research organization. “The posted prices are fanciful, inflated, difficult to decode and inconsistent, so it’s hard to see how an average person would find them useful.”

The data, posted online in spreadsheets for thousands of procedures, is incomprehensible and unusable by patients — a hodgepodge of numbers and technical medical terms, displayed in formats that vary from hospital to hospital. It is nearly impossible for consumers to compare prices for the same service at different hospitals because no two hospitals seem to describe services in the same way. Nor can consumers divine how much they will have to pay out of pocket.

“To 99 percent of the consuming public, these data will be of limited utility — meaningless,” said Kenneth E. Raske, the president of the Greater New York Hospital Association.

The list price for a hospital service is like the sticker price for a car. But as it is playing out, it is as if the car dealers were disclosing the price for each auto part, without revealing the charge for the vehicle as a whole.

The result has baffled consumers.

“This is gibberish, totally meaningless, a foreign language to me,” said Sara Stovall, 41, of Charlottesville, Va., after looking at price lists for hospitals in her area.

She reviewed the price lists for Sentara Martha Jefferson Hospital and for University Hospital, each of which has more than 16,000 items.

“I can’t imagine how I would go about making this useful,” Ms. Stovall said on Sunday. “I wouldn’t know how to find my procedure. I wouldn’t know what services might be rolled up with my procedure. And I would not know the price to me after health insurance.”

By most accounts, the Trump administration is pursuing a worthy goal, but the execution of its plans leaves much to be desired.

After the administration proposed the price-disclosure requirement in April 2018, many hospitals warned of the shortcomings that are now evident.

But federal health officials, accustomed to debating issues inside the Washington policy bubble, have still been surprised at the reaction around the country as consumers and local news media try to decipher the data. The administration says it is open to suggestions for 2020 and beyond.

The price-disclosure requirement, issued by the Department of Health and Human Services, grows out of one sentence in the Affordable Care Act, which says, “Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the secretary) a list of the hospital’s standard charges for items and services provided by the hospital.”

The idea languished for eight years. Under prior guidance from the government, hospitals could meet their obligations by providing charges to patients on request. But the Trump administration wanted to go further.

“We’ve updated our guidelines to specifically require hospitals to post price information on the internet in a machine-readable format,” Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said last week. “This is a historic change from what’s been required in the past.”

“This is about empowering patients,” Ms. Verma said.

It has not worked out that way, at least so far. Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University in Pittsburgh, described list prices as “somewhat fictitious.”

“If this is an initial step leading to real transparency with actionable, usable information, that would be fantastic,” Mr. Gaynor said.

But in its current form, he added, the price information is “not very useful and could even be misleading” because a hospital with high list prices could be the cheaper alternative for some consumers, depending on their insurance.

“For patients to know up front how much their care will cost, that’s incredibly valuable,” said Brenda L. Reetz, the chief executive of Greene County General Hospital in rural southwest Indiana. “We’ve posted our prices, as required. But I really don’t think the information is what the consumer is actually wanting to see.”

Spending on hospital care last year totaled $1.1 trillion, or nearly one-third of all health spending, according to the Department of Health and Human Services. So even small improvements in the market could yield big savings.

The Trump administration adopted the new requirement as part of its agenda to promote “transparency” in health care, in the belief that health markets would work better if consumers had more information. In another example, federal officials want to require pharmaceutical companies to disclose the list price of prescription drugs in television advertisements.

“Providers and insurers have to become more transparent about their pricing,” Alex M. Azar II, the secretary of health and human services, said last year. “There is no more powerful force than an informed consumer.”

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