The Big Idea Updated: Healthcare Pricing Transparency in 2013 So Far

Shedding Some Light on Healthcare TransparencyLast December I wrote about what I thought would be the “Big Idea” for healthcare in 2013 as a part of the LinkedIn Influencer program. “Show me the fees!” I said. Well,  they have – in fact, much more than I would have ever imagined. 2013 has seen an explosion in pricing transparency in healthcare – or maybe better said,  charging transparency  in healthcare. More about that later, but for now, let’s take a look at what 2013 has held so far.

  • In March, Time Magazine printed Steven Brill’s article “Bitter Pill: Why Medical Bills Are Killing Us” (paywall), a lengthy and much talked-about expose on how hospital bills are calculated. The villain of the story is the “chargemaster”, an ethereal list of prices that hospitals are wary of discussing. The prices in the chargemaster are very high, and few people are  expected to pay them, but they are the basis for negotiations with insurance companies and other payers. Uninsured patients however, are left to pay full price – unless they ask for a discount. In effect then, the people with the least ability to pay are asked to pay the most for hospital services, and without health insurance, medical bankruptcy can be a side effect of catastrophic illness or injury.
  • In May, admittedly in part because of the Times story, the Centers for Medicare and Medicaid Services (CMS) released a massive data set of hospital charges for common inpatient procedures. It’s important to keep these “charges” in perspective – they are not the amount the government paid hospitals for services to Medicare patients, and they are not what patients with health insurance are expected to pay. They are the starting point – the opening in a negotiation with everyone from an insurance company to an uninsured individual. The only difference is that insurance companies know it and start negotiating right away – they have binding contracts for the amount they’ll actually pay (the “allowable”), and the chargemaster price never comes up. Steven Brill called the release “a great first step.” CMS has now also released the same figures for the most common outpatient procedures.
  • Two weeks ago, California’s new state health insurance exchange released the initial premiums that insurance companies have filed for plans on the state Health Insurance Exchange (HIX.) Individual premiums will vary based on location, but in general, uninsured Californians now have a sense of what their coverage will cost in 2014, not only in premiums, but in co-pays at visits. The exchanges will also be a single-stop for those seeking coverage to find out if they qualify for federal subsidies or Medicaid or CHIP benefits. To participate in the exchanges, insurance plans have to offer comparable levels of coverage, and compete against each other in front of the customer.

The common theme in all of these situations is a lack of information. Information is critical to a functioning economy of any kind. How could you shop for anything without knowing the features and price of the product? But healthcare is a very special case economically, and the market operates differently. If you have sudden chest pain, or receive a traumatic injury, you are going to the closest emergency room – period. You have no time to shop around for price or quality. You dial three numbers and you go with the paramedics. Some situations – elective, and non-urgent surgeries, primary care, obstetrics, etc… involve a great deal of choice, but the patient still lacks comprehensive, accessible price and quality information. We can’t make emergencies something to shop around for, but we can introduce the information and the tools to allow consumers to shop for services to improve their health AND financial outcomes.


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The Manage My Practice Blog keeps our readers up to date with the latest healthcare news, trends and analysis.

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