How to make comparing prices for an MRI or colonoscopy as easy as buying a new laptop

(The Conversation is an independent, nonprofit source of information, analysis, and commentary from academic experts.)

Morgan Henderson, University of Maryland, County of Baltimore and Morgane Mouslim, University of Maryland, County of Baltimore

(THE CONVERSATION) Health researchers have long argued that the key to containing skyrocketing health care costs is to tackle the high prices of services, and one potential way to do this is to provide patients with transparency of healthcare. price.

That is, if people know how much a procedure such as a colonoscopy or MRI will cost, they are more likely to seek a better price, just as they are with a wide variety of consumer products. This could, in theory, increase competition among healthcare providers and lead to lower overall prices for everyone.

A new federal regulation that came into effect in January 2021 is supposed to do just that by requiring hospitals to post prices for all their services and procedures. But researchers, including us, have found that the vast majority of hospitals are not complying with the rule.


This prompted the Biden administration to crack down in July by increasing fines for non-compliance.

As health policy analysts, we agree that hospitals need to do more for the new regulations to be successful. But the regulations themselves need to be corrected if comparing the price of an appendectomy will ever be as easy as buying a computer.

Hospital prices are obscure

The Centers for Disease Control and Prevention estimates that nearly 33 cents of every dollar spent on health care in the United States goes to hospitals – and that excludes what your doctor charges you separately.

But hospital rates aren’t just expensive. It’s also cloudy.

Typically, patients do not pay their hospital bills themselves. Rather, health insurance companies pay most bills for patient care at agreed amounts that are the result of hospital-insurer negotiations. Different insurers negotiate different rates with different hospitals, which can cause the price of a single procedure to vary significantly.

For example, Beaumont Hospital-Royal Oak in Royal Oak, Michigan, charges Blue Cross $ 728 for a colonoscopy, but charges Humana $ 1,801. The Jackson, Mississippi-based University of Mississippi Medical Center charges Cigna $ 1,463 for the same procedure, while Aetna pays $ 2,144.

Figures like these led lawmakers to demand more price transparency when they drafted the Affordable Care Law in 2009. But it took a long time for regulators to craft the rule and resolve the legal issues. . And finally, on January 1, 2021, the Centers for Medicare & Medicaid Services Price Transparency Policy came into effect.

Simply put, regulations require nearly all hospitals in the United States – around 6,000 – to disclose the prices they charge insurers for each item and service they provide in machine-readable data files.

Instead of a profusion of confidential, negotiated tariffs determining the cost of care behind the scenes, patients are now expected to have information at hand to determine, in advance, the cost of their care at a given hospital.

This should, in theory, allow them to choose the cheapest location for their care. And self-insured businesses and insurers themselves could use the same information to negotiate more aggressively with hospitals.

While the jury is still out on whether transparency alone can significantly slow the skyrocketing health care costs in the United States, there is some evidence that it can work.

New Hampshire created a hospital pricing transparency tool in 2005 that resulted in modest cost savings, according to a 2019 study.

But any potential political effect depends on whether hospitals actually post their prices – which, for the most part, are not.

Hospitals are breaking the rule

Several hospital associations sued the government in 2019, calling the new rule unconstitutional.

But even after losing their last call in December 2020, most hospitals simply ignored the rule or released very limited data.

We found that some hospitals do not publish any data files. Others have uploaded a data file, but without all the required elements – such as discounts and prices negotiated with specific insurers. Others have released data files with the correct elements, but only for a handful of items and services. Finally, still others publish data files that contain discrepancies, are not downloadable, or are very difficult to find on their websites.

The number of hospitals that fully comply with all aspects of the regulations is very low: less than 6%, according to a recent study.

After the White House said it would strengthen enforcement of the rule, the Centers for Medicare & Medicaid Services began sending warning letters to non-compliant hospitals, and are currently performing a compliance audit. In addition, the maximum penalty for non-compliance was recently increased from $ 300 per day to $ 5,500 per day for large hospitals.

Patients need an app for this

But even if the hospitals were in full compliance, it wouldn’t matter without a way for consumers to actually compare prices.

The regulations in force do not require the standardization of the files that hospitals display. Therefore, the files we reviewed use a wide variety of incompatible formats, names, and terms.

For price transparency to work, the data must be clean, standardized and easy to use so that one can easily compare prices between procedures, payers and hospitals – and even over time. A good example is how the Affordable Care Act created insurance markets, which standardized and simplified health insurance plans.

But even if the data were standardized and comparable, it wouldn’t be of much use to patients unless there was a website or app they could use to see how much two neighboring hospitals are charging for a specific procedure.

The jury is still out on whether price transparency will lead to lower hospital prices, but it will never work unless there is greater compliance and an easy way for patients and others to use. data efficiently.

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This article is republished from The Conversation under a Creative Commons license. Read the original article here: https://theconversation.com/how-to-make-comparing-prices-of-an-mri-or-colonoscopy-as-easy-as-shopping-for-a-new-laptop – 165296.

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