Hospitals make it notoriously difficult to know the price prior to a service. Prices are hard to obtain and often meaningless when disclosed. Indeed, there isn’t one price but many prices depending upon who the payer is. There is a different price for BlueCross, Aetna, Cigna and most other health plans. There is the chargemaster list price few people pay and then there are cash prices. In fact, there is more than one cash price. There is the cash price if you obtain a service and pay after-the-fact and then there is the negotiated cash price if agreeing to pay in advance. Sometimes there is even a different cash price depending on the customer.
Hospitals and insurers consider the prices they have negotiated with each other to be proprietary. The reason prices are not transparent is because hospitals are not competing on price. Price transparency is the result of price competition, rather than price transparency mandates. Your local grocer posts prices next to items not because they’re forced to, but because they wouldn’t have many customers if they refused.
In January 2021 a federal law went into effect requiring hospitals to post the prices of 300 clinically shoppable procedures. There are a variety of ways for hospitals to meet this requirement, including an online price estimator. Hospitals have been dragging their feet. Hospitals do not consider their patients to be the customer. Rather, hospitals negotiate prices with payers, such as insurance companies. At a Washington DC health conference years ago Charles Kahn, the president and chief executive officer of the Federation of American Hospitals, was asked why hospitals do not provide transparent prices. His response was that hospitals are a wholesale business, not a retail business. His logic was that hospitals sell their services to health plans, who resell their services to patients. For example, Home Depot doesn’t disclose how much it pays Georgia Pacific for a stick of lumber.
The following is from a JAMA:
The rapid increase in out-of-pocket medical costs has motivated the implementation of policies that provide consumer-friendly and actionable cost information. The aims of price transparency regulations include a more engaged health care consumer and enhanced competition among clinicians, ultimately leading to improved patient-centered outcomes and increased efficiency in medical spending.
A study in JAMA compared hospital prices posted online with the prices provided when patients call to inquire about prices. This is from the abstract:
How well do US hospitals’ online prices posted for shoppable services correlate with their prices for the same service obtained via the telephone?
US hospitals are required to publicly post their prices for specified shoppable services online. However, the extent to which a hospital’s prices posted online correlate with the prices they give to a telephone caller is unknown.
The object is to see if transparency is consistency and therefore useful to patients. In theory prices obtained both online and through phone calls should match. If online and phone prices don’t match it is difficult to trust either price. For the study researchers surveyed 60 hospitals, including 20 top ranked, 20 safety net hospitals and 20 that were neither safety net nor top ranking. The results were not good:
In this cross-sectional study of 60 US hospitals, online and phone cash prices were poorly correlated within a given hospital for vaginal childbirth (Pearson correlation coefficient [r] = 0.118) and brain magnetic resonance imaging (Pearson r = −0.169).
Online prices and telephone prices for both procedures varied widely. For example, online prices for vaginal childbirth posted by top-ranked hospitals ranged from $0 to $55 221 (mean, $23 040), from $4361 to $14 377 (mean $10 925) for safety-net hospitals, and from $1183 to $30 299 (mean $15 861) for non–top-ranked, non–safety-net hospitals. Among the 22 hospitals providing prices both online and by telephone for vaginal childbirth, prices were within 25% of each other for 45% (10) of hospitals, while 41% (9) of hospitals had differences of 50% or more (Pearson r = 0.118). Among the 47 hospitals providing both online and phone prices for brain MRI, prices were within 25% of each other for 66% (31) of hospitals), while 26% (n = 12) had differences of 50% or more (Pearson r = −0.169). Among hospitals that provided prices both online and via telephone, there was a complete match between the online and telephone prices for vaginal childbirth in 14% (3 of 22) of hospitals and for brain MRI in 19% (9 of 47) of hospitals.
Why would online and phone prices vary? It’s hard to say except that hospitals do not take price transparency very seriously, or the business office people are incompetent. It also begs the question which price was correct, if either one was.