Hospital pricing transparency: More information, more confusion?

As of the first of this year, a new rule is in effect that requires hospitals to list the price for all the services they provide and medications they prescribe for patients while they’re in the hospital. In theory, this should give patients more information that can help them decide where it makes the most economic sense to receive hospital care. In actuality, while there’s a wealth of new data available, it can be difficult to find — and nearly impossible for people outside the healthcare industry to understand.

The document that aggregates the price information is called a chargemaster, and it can contain tens of thousands of entries. The new rule doesn’t require that the information be written in plain language, only that it be machine readable, so much of the data reads like it’s in a yet-to-be-discovered language. For example, if you download Memorial Sloan Kettering’s chargemaster, you’ll find an Excel spreadsheet that contains 13,088 entries such as “CAP MALE/FEMALE RAIL, $765” and “BX SUBCUT SKIN/INC, $1,771.” Even if a patient puzzles out the meaning of these abbreviations, the prices listed are different from the lower fees that insurers negotiate, so estimating how much you would pay for care is complicated at best and impossible at worst.

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The goal of the hospital pricing transparency rule is to help patients understand the cost of their care and choose more wisely when deciding where to receive that care. Unfortunately, the information that is now available adds to the confusion and doesn’t help patients make one-to-one price comparisons when choosing where to receive care. In addition, the rule only covers care delivered by a hospital, so patients don’t have the information they need to make price comparisons for services performed in doctor’s offices, urgent care facilities, diagnostic test sites and outpatient surgical centers.

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A member of medical staff secures his face mask inside a operating theater at a hospital in Birmingham, U.K. Photographer: Matthew Lloyd/Bloomberg

Even if price transparency doesn’t help workers better understand the cost of care and choose where to receive that care, there are strategies and resources that employers can provide to help their employees make more informed decisions about healthcare. Here are some of them.

Second opinions. Wrong diagnoses, inappropriate treatments (treatments that don’t meet the evidenced based standard of care) and medical errors all drive up healthcare costs for both employers and employees and can lead to poorer health outcomes. One strategy to lower the risk of these types of problems is providing employees with streamlined access to second opinions from experienced physicians.

A second opinion can confirm or change an employee’s diagnosis, suggest other treatment options and pinpoint misdiagnoses, especially in the case of serious and complex conditions like cancer, autoimmune disease and back and joint problems. In fact, a Mayo Clinic study found that 88% of people who sought a second opinion from the hospital’s physicians for a complex medical condition received a new or refined diagnosis. Employers can make second opinions available to employees through several channels, including a health insurance plan or as a standalone benefit.

Care coordination. Duplicate testing and medical care is another source of wasted healthcare dollars. When communication between healthcare providers is inconsistent or medical records aren’t updated and shared among all treating physicians, employees may undergo repeat testing — for example, when a primary care physician and a cardiologist both order a cardiac stress test for a patient with shortness of breath. Employers can offer care coordination through a case manager for employees who are living with multiple health conditions.

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This support can lower the risk of duplicative testing as well as duplicate prescriptions or medications that can result in interactions, which can put an employee’s health needlessly at risk. Another piece of this equation is the review and coordination of medical records, which is especially important when employees see multiple physicians. A medical records management service should include review of the employee’s records by an RN or physician, consolidation of a comprehensive medical record, and the creation of a secure electronic medical record that can be shared with the employee’s permission with all treating physicians.

Guidance on where to receive care. While you can undergo a colonoscopy, medication infusion or a range of common surgical procedures at a hospital, that may not always be the most appropriate or cost effective place to receive care. By offering employees the ability to talk with a care manager or adviser about the procedure they need and the options for where they can receive that care (a hospital, outpatient surgery center or doctor’s office), employers can help them receive the care they need and lower both claims costs and employee out-of-pocket costs.

Medical bill review. Another resource employers can offer to make sure healthcare costs are carefully managed is a medical bill review. Experts estimate that between 30% and 80% of medical bills contain errors that increase costs. There are many different causes of these errors, including the use of the incorrect billing codes and use of out-of-network healthcare providers. In addition to offering employees the services of a medical billing review and negotiation firm, they can provide education that lets employees know what types of errors are commonly made and how to spot them on their own bills.

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