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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Though federal law requires hospitals to publicly display their prices, including their medical laboratory test prices, the information can be confusing, hard to find, and overwhelmingly complex

Hospital chargemaster prices can vary dramatically among hospitals that share the same healthcare markets. That’s what California Healthline found in a recent survey of hospitals in Los Angeles and Oakland, Calif. The price differences were huge and could keep patients located in certain areas within those health systems from accessing critical healthcare services.

Price transparency for healthcare services is an important trend and this survey demonstrates the wide disparity in prices charged by different hospitals for the same clinical service. This is also true with clinical laboratory testing services, where the most expensive price for a routine, highly-automated lab test can be up to 20 times more than the cheapest price.

California Healthline (CHL) is a news service of the California Health Care Foundation (CHCF). CHL recently compared the chargemasters of four hospitals in the Oakland area and four hospitals in the Los Angeles area. It found huge variances in the hospitals’ price lists.

A hospital’s chargemaster lists the full prices of specific products and services billable to patients or their health plans following provider care. Although chargemaster rates differ from the lower negotiated rates insurers pay, they are a guideline for what patients without insurance, or those seeking out-of-network treatment, could pay for services.

“List prices, chargemaster prices—like a hotel room rate that you might see posted on the door of a hotel room—hardly anybody ever pays that list price,” Barbara Feder Ostrov, Senior Correspondent for California Healthline, Kaiser Health News (KHN), told NBC Los Angeles. “Usually, it’s negotiated,” she added.

Nevertheless, the price differences are considerable. A historical list of the state’s hospital chargemasters, with downloadable spreadsheets, is available on California’s Office of Statewide Health Planning and Development website.

Huge Price Differences

CHL found that the price of a liter of IV fluid ranged from $56 at Kaiser Permanente Oakland Medical Center to $383 at Cedars-Sinai Medical Center in Los Angeles. The price of a brain MRI with contrast ranged from $3,211 at Highland Hospital in Oakland, part of the Alameda Health System, to $8,793.80 at Cedars-Sinai. The cost of a complete blood count with differential ranged from $59.86 at Keck Medicine of University of Southern California (USC) to $525.46 at Cedars-Sinai. 

Even more perplexing were the ranges among hospitals located in the same cities:

Other price differences were equally confounding:

The graphics above are from California Healthline’s article, “Transparent Hospital Pricing Exposes Wild Fluctuation, Even Within Miles.” (Copyright: California Healthline/ Harriet Blair Rowan.)

Pricing Transparency Impacts Clinical Laboratories

On January 1, 2019, the Centers for Medicare and Medicaid Services (CMS) enacted a Final Rule that modifies Medicare’s payment policies and rates under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital Prospective Payment System (LTCHPPS). The final rule requires all hospitals to list their prices for all procedures online in an area accessible to the public.

CMS also requires that the data be machine-readable, downloadable to a spreadsheet, and updated at least annually.

These lists can be lengthy, with some hospitals providing pricing for tens of thousands of procedures, services, drugs, medical devices, medical laboratory tests, and other miscellaneous items. 

The final rule has implications for clinical laboratories and anatomic pathology groups doing business with their local healthcare networks, as Dark Daily reported in “New CMS Final Rule Makes Clinical Laboratory Test/Procedure Pricing Listed on Hospital Chargemasters Available to Public.”

CMS implemented the law to ensure price transparency for healthcare consumers and to enable patients to compare prices before selecting which hospitals to use for medical treatments. The final rule, which CMS says also benefits policymakers and insurance providers, can assist patients with the budgeting of any out-of-pocket costs for care. 

“[Transparency] allows policymakers to review the prices that are out there,” Barbara Feder Ostrov (above), Senior Correspondent for California Healthline, Kaiser Health News, told NBC Los Angeles. “It lets them say, ‘These are starting prices for negotiations with government and with insurers, and maybe you’re starting a little too high. Can you really justify this price?’” (Photo copyright: Kaiser Health News.)

Transparency Can Confuse Healthcare Consumers

While listing chargemaster prices may serve a valuable purpose in price transparency, the plethora of billing data and medical codes can be confusing to healthcare consumers. Usable insight may be lacking in the multiple screens of data patients encounter.

To determine the exact cost for a healthcare encounter, a patient would need to know, locate, and calculate all the components of the visit. That could include which tests will be required, which medicines will be dispensed, and the facility fee and physician’s charges. Few people would know where to begin hunting down such information.

Thus, though chargemaster price comparisons can help patients select a facility for medical tests and services, it is important to note that chargemasters merely serve as a guideline for what hospitals intend to charge for their services. People generally do not pay those published rates.

Dark Daily previously published an e-briefing regarding the opportunities and risks for clinical laboratories and pathology groups surrounding chargemasters. It’s important to note that serious enforcement and compliance issues can impact hospitals not prepared to comply with CMS’ transparency guidelines. And medical laboratories are part of that equation.

—JP Schlingman

Related Information:

How Hospital Pricing Fluctuates

Transparent Hospital Pricing Exposes Wild Fluctuation, Even Within Miles

New Law Requires All U.S. Hospitals Post Complete Price Lists Online

Available Hospital Chargemaster Submissions

As Hospitals Post Sticker Prices Online, Most Patients Will Remain Befuddled

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)

New CMS Final Rule Makes Clinical Laboratory Test/Procedure Pricing Listed on Hospital Chargemasters Available to Public

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