Many consumers are frustrated with the high cost of healthcare in the United States, from procedures to prescription drugs. Hospitals, especially, carry high fees. The average outpatient visit costs $500, and most inpatient stays run more than $22,000. Compared to other developed countries, the U.S. consistently has the highest healthcare costs for both types of services. However, it’s not easy for consumers to research healthcare prices to find the highest quality of care at the lowest cost.
Two consumers can receive the exact same healthcare services but end up paying drastically different prices. Part of this problem emanates from healthcare providers’ contracts with different insurance providers. Other facets like deductibles and copayments also cause cost variations. Even hospitals having published list prices rarely results in patients paying those exact amounts.
A key effort to address the high cost of healthcare in the U.S. has been promoting price transparency, the goal of which is to reduce healthcare costs and spur competition among providers by enabling consumers to shop for healthcare services. According to Public Agenda, more than 50 percent of Americans report trying to find out the price of healthcare before receiving it.
Although the idea of price transparency in healthcare sounds favorable, achieving it isn’t easy. Rules implemented under the Affordable Care Act require hospitals to publish the standard prices for the services they provide, otherwise known as chargemaster rates. These prices have to be listed on hospitals' websites in a machine-readable or computer-friendly format. The problem with this rule is that much of the data is still too complex for many consumers to understand, and most of the prices don’t take into consideration insurer-negotiated rates.
In June 2019, President Trump issued an executive order aimed at further stimulating healthcare price and quality transparency. About five months later, on November 15, 2019, the Centers for Medicare & Medicaid Services (CMS) issued two rules designed to “increase price transparency to empower patients and increase competition among all hospitals, group health plans and health insurance issuers in the individual and group markets.”
This final rule is slated to go into effect on January 1, 2021 but has faced opposition from some health systems and payers. For example, The American Hospital Association (AHA), the Federation of American Hospitals (FAH), the Association of American Medical Colleges (AAMC) and the Children's Hospital Association (CHA) announced that they will challenge the final rule in court.
According to the Department of Health & Human Services, the final rule will require hospitals to make their standard charges public in two ways beginning in 2021
In addition to reducing the cost of healthcare, price transparency has the potential to provide numerous benefits to both consumers and providers, such as real-time online access to estimated out-of-pocket (OOP) costs, enhanced patient engagement and reduced market prices for various procedures. Other benefits include:
For healthcare providers, the American Medical Association has outlined eight ways to increase price transparency in healthcare to prompt value-based decisions.
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