News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Experts are skeptical of the value of public price lists based on hospital chargemasters due to complexity and poor reflection of actual costs

In another big step toward helping consumers view prices of medical procedures when selecting providers, the Centers for Medicare and Medicaid Services (CMS) passed the IPPS/LTCH PPS final rule, which requires hospitals to post a full list of hospital pricing information on their websites starting January 1, 2019.

Clinical laboratories, anatomic pathologists, and other diagnosticians doing business with their local health networks will now find their prices for tests and procedures listed on the hospitals’ chargemasters available to the public.

To meet rule requirements, pricing information posted by hospitals must be:

• Published online in a publicly accessible place;

• Machine-readable;

• Downloadable to a spreadsheet; and,

• Updated at least once per year.

Outside of these requirements, the guidelines are vague. However, based on coverage of initial pricing lists, additional revisions are expected.

A fact sheet discussing the major provisions of the final rule (CMS-1694-F), can be downloaded from the Federal Register.

Are the Price Lists Accurate?

One of the biggest issues cited by the media relates to the accuracy of pricing information. As most hospitals are posting data directly from their chargemaster listings, the numbers listed for the public are likely to differ from the actual prices billed. Final charges depend on each patient’s insurance plan and the network status of the healthcare facility rendering the services.

Dark Daily previously reported on the possible need for chargemaster changes within the laboratory market, citing information from the Healthcare Financial Management Association (HFMA). (See, “Excessive $48,329 Charge for California Patient’s Outpatient Clinical Laboratory Testing Calls Attention to Chargemaster Rates and New CMS Price Transparency Rule,” November 30, 2018.)

While hospitals are now required to post their price lists in a machine-readable format, MedCity Newsreports that many facilities use medical codes and terminology in price lists that the average consumer might not understand.

To further compound the issue, many items are listed individually. This requires consumers to go through thousands of price listings and combine the listed prices one by one to get an estimate of total costs for a procedure.

“To 99% of the consuming public, these data will be of limited utility—meaningless,” Kenneth E. Raske, President of the Greater New York Hospital Association told The New York Times (NYT).

Brenda L. Reetz, CEO of Green County General Hospital in Indiana also spoke with the NYT, saying, “We’ve posted our prices, as required. But I really don’t think the information is what the consumer is actually wanting to see.”

“While many hospitals have said chargemaster information can be confusing for consumers, let me be clear, hospitals don’t have to wait for us to go further in helping their patients understand what care will cost. We look forward to more facilities exceeding our requirements,” Seema Verma (above right), Administrator, Center for Medicare and Medicaid Services (CMS), told Modern Healthcare. (Photo copyright: Fox Business.)

Concerns of Increased Risk for Both Hospitals and Consumers

“There is no more powerful force than an informed consumer,” said Alex Azar II, Secretary of the US Department of Health and Human Services (HHS) during a speech to the Federation of American Hospitals (FAH). “There is no turning back to an unsustainable system that pays for procedures rather than value. In fact, the only option is to charge forward—for HHS to take bolder action, and for providers and payers to join with us,” he concluded.

But with the higher rates found on most hospital chargemasters, and the difficulty in finding true costs using the new public pricing lists, some experts are concerned the lists might cause an adverse reaction.

“We do not want patients to forgo needed care,” Tom Nickels, Executive Vice President for Government Affairs and Public Policy at the American Hospital Association (AHA), told Newsweek. “Especially if the quoted price is for the total cost of the service and not what the patient will be expected to pay out-of-pocket.”

This is a real risk. Hospitals and other healthcare providers already are experiencing reduced volumes due to patients opting out of important procedures because of cost worries. Chargemaster lists that do not reflect the true impact of insurance, charity programs, and other variables could exacerbate that problem.

And there is specific risk for clinical laboratories, as they rarely have a public-facing element within hospitals. Physicians order medical laboratory tests and patients either do or do not comply. There is no opportunity for laboratories to explain that prices listed on the hospital site might not reflect actual out-of-pocket costs. Could this be an opportunity for enterprising clinical laboratory managers?

Future Transparency Trends

“I think putting those prices out there—even with the acknowledgment that these aren’t the prices anyone pays unless they’re uninsured—may indeed still provoke conversations with hospital administrators,” Michael Abrams, Managing Partner of Healthcare Consultancy at Numerof and Associates, a strategic management consultant for the global healthcare sector, told MedCity News.

While experts might not find much value in the current iteration of price lists, and the latest attempt to improve pricing transparency by CMS, it offers medical laboratories and hospitals an opportunity to assess current pricing models and decide how to best communicate value to consumers as pricing transparency continues to mature and the US shifts to value-based healthcare.

—Jon Stone

Related Information:

Fiscal Year (FY) 2019 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Prospective Payment System Final Rule (CMS-1694-F)

HHS Takes New Steps in Secretary Azar’s Value-Based Agenda

Hospital Prices: Full Cost Lists Must Be Published from January 1, New Federal Rule Says

Hospitals Now Publicly List the Cost of Services, But It’s Not as Simple as It Seems

All U.S. Hospitals Will Now Be Required to List Their Prices Online

Hospitals Must Now Post Prices. But It May Take a Brain Surgeon to Decipher Them

Verma: Chargemaster Rule Is ‘First Step’ to Price Transparency

CMS Looking to Define Enforcement for Its Hospital Price Transparency Rule

Blowback on CMS Price Transparency Rule

What’s Next after the CMS Price Transparency “First Step”

Remarks on Value-Based Transformation to the Federation of American Hospitals

Excessive $48,329 Charge for California Patient’s Outpatient Clinical Laboratory Testing Calls Attention to Chargemaster Rates and New CMS Price Transparency Rule

Latest Push by CMS for Increased Price Transparency Highlights Opportunities and Risks for Clinical Laboratories, Pathology Groups