CMS: Hospitals must post rates; hospitals not interested in doing so
| September 05, 2019
In healthcare, it seems that nothing is easy — technology, regulation, privacy, and security. And now, pricing. Efforts are underway to make prices more transparent; this is a tentpole issue for the Trump administration, which wants hospitals to begin posting "shoppable" prices online in 2020.
According to reports, some hospitals are facing some challenges for doing so and are trying to figure out how they'll be able to meet the requirement.
The Centers for Medicare & Medicaid Services (CMS) offered the proposed rule, which mandates that hospitals publish their payer-negotiated rates for "shoppable services" starting on the first of the year. This is part of CMS' outpatient payment rule. The proposed rule is expected to be finalized by November 2019.
For context, the nation spent 17.8% of its GDP on healthcare in 2016 compared to 11.5% of the spending of 11 high-income countries, the Journal of the American Medical Association reports.
Per capita, the U.S. spent $9,403, nearly double what others paid. That said, Americans go to the doctor less often and spend fewer days in the hospital after being admitted.
Some hospital leaders say that they do not have contracts automated to post such rates. Other hospital officials complain that the rule will create significant problems as they release payer rates with little context for the patients who are supposed to benefit from such transparency.
In other words, some hospital leaders don't think their patients will understand why some prices are so high, for example, or why associated fees for care are unexplainable.
The U.S. healthcare economy — $3 trillion — is the size of the world's fifth-largest economy, according to Consumer Reports. The cost of this financial burden for every household because of lost wages, higher premiums, taxes, and additional out-of-pocket expenses is more than $8,000.
Even with all this money spent on healthcare, the World Health Organization ranked the U.S. 37th in healthcare systems quality.
Why such high rates in hospitals, generally? Administrative costs, drug prices, defensive medicine, expensive treatments, and wages of hospital employees. And marketing — every recognizable brand has to spend money to be easily recognized. "There is no such thing as a legitimate price for anything in healthcare," said George Halvorson, former chairman of Kaiser Permanente. "Prices are made up depending on who the payer is."
The real difference between the American healthcare system and systems abroad is pricing.
U.S. specialists, nurses, and primary care doctors earn more compared to other countries. For example, general physicians make an average of $218,173 in 2016, double the average of generalists in the different countries, where pay ranged from $86,607 in Sweden to $154,126 in Germany.
Administrative costs, too, account for nearly 10% of total national health expenditures in the U.S. For the other countries, administrative costs ranged from 1% to 3%.
The U.S. spent $1,443 per capita on pharmaceuticals; the average pharmaceutical spending of all 11 countries is about $750 per capita. Switzerland followed closest to the U.S. at $939.
Starting in January 2019, hospitals were required to reveal the contents of their master price lists online publicly.
Some observers believe making pricing information public will have the desired designed effect: Bringing prices more in line with what is paid by an insurer, a far better measure of value — in other words, lowering costs.
Elisabeth Rosenthal, editor-in-chief of Kaiser Health News, argues that regulators should insist that these prices be easily accessible on hospitals’ home pages — perhaps in the place of "PAY YOUR BILL NOW" — and translated into plain English.
Under the current proposed rule, the rates must be available in a consumer-friendly format online and be searchable. CMS projects that the cost of implementing the new transparency requirement will be about $1,000 per hospital. However, some hospital leaders are balking at the amount because their contract rates with insurers are not automated or online.
Hospital officials, and payers, too, say their contracts include too many nuances; for example, why an insurer pays a specific rate at a hospital.
The topic remains a sticky wicket for hospitals and regulators alike. Each side has a distinctive approach, and each seems to want the impossible. Given the push for transparency, there will likely be winners on both sides of the debate.
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