Hospitals required to create new 'price menus'

Law now requires hospitals make their costs public
Posted at 6:26 PM, Dec 30, 2020
and last updated 2020-12-30 18:32:06-05

GRAND RAPIDS, Mich. — When the calendar flips to 2021, a new set of federal laws will make it easier for patients to plan their medical care.

The laws, a mandate from federal health departments like DHHS and CMS, require hospitals and health systems to publish the costs of many of their services online in a format easily accessible to patients. Hospitals must list at least 300 required services, and many will list the prices of far more.

“This includes care for doctors as well as drugs, supplies and facility fees,” says Dr. Mark Fendrick, director of U Michigan’s Center for Value Based Insurance Design. “More price transparency would inject greater competition into the healthcare market and ultimately improve quality at lower costs.”

Dr. Fendrick has been studying the effects of cost on medical care for three decades, and says people are usually either in the dark about what procedures and drugs actually cost or are deterred from getting either because of the expense.

“If you make people pay more for healthcare, they’ll buy less of it,” he said.

Now, on the first of the year, those services will be listed menu-style on each hospital’s website. But Dr. Fendrick worries about the way people will interpret the data. For one, the prices listed online aren’t the actual cost to you, it’s the amount your insurance will cover as agreed upon with a given hospital.

“The rates that are going to be posted do not provide out of pocket costs,” said Dr. Fendrick. “Americans with insurance typically don’t care about rates negotiated between hospitals and insurance plans but they care what it costs them.”

Dr. Fendrick says it’ll be another two years – the first of 2023 – before we know that publicly. If this first set of laws holds up, there’s a sort of part two in the works for 2023, that would require insurance companies to list their own menus with put-of-pocket costs.

“I’m just hopeful that we’ll be able to keep this rule around long enough to incorporate what I think is more important, which is the consumer cost sharing element,” said Dr. Fendrick. “Because without that I’m somewhat minimalist about how impactful this new rule will be on actual patient behavior.”

And already, hospitals have challenged the new rules. Just Tuesday, the U.S. Court of Appeals rejected a challenge to the laws filed by a group that included the American Hospital Association, the Association of American Medical Colleges, and the Children’s Hospital Association.

“Hospitals have argued against this rule primarily on the basis that they feel it would be very costly to them to prepare useful information that’s required,” said Dr. Fendrick. “This has been baby steps.”

Fendrick also said people shouldn’t confuse low cost with high quality care, and vice-versa. It’s still on patients to do the work of finding the right fit for their medical care needs.

“You don’t want to go to the lowest cost place if it doesn’t perform well in terms of the clinical outcomes and satisfaction you’re looking for,” he said. “The combination of quality-transparency and price-transparency is ultimately what we’re looking for.”

Spectrum Health sent a statement to FOX17, indicating they have fully complied with the new federal regulations on price transparency:

Spectrum Health is fully committed to price transparency and understands it is imperative that people have the necessary information to make informed choices about their health care. As of January 1, 2021, prices for more than 450 services across Spectrum Health will be available through the price estimate tool on MyChart and our website. The tool will calculate a price for the procedure that patients need along with their deductible, co-pay, and co-insurance, providing an accurate estimate of the price they will pay Spectrum Health. This is a step toward achieving our vision of making health care affordable.
If a procedure is not found among the approximately 450 services listed, we encourage people to call our Patient Financial Services department at 1.844.838.3115 to obtain a more accurate estimate based on their specific insurance plan and expected out-of-pocket costs for upcoming appointments/procedures. It is our goal to be partners with our patients in providing personal care that is simple and affordable.

Mercy Health/Trinity Health also sent a statement saying they too will comply with the federal laws:

Mercy Health and all Trinity Health hospitals have published data files in compliance with the new rule. Every Trinity Health hospital website includes a link to the standard charges and shoppable services. Patients can find this information on the Mercy Health website here. The link can also be found in the footer navigation on the Mercy Health homepage.

To learn more about the University of Michigan Center for Value-Based Insurance Design, click here.