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Hospitals must post ‘chargemaster’ prices online. How useful will that be?

Beginning Jan. 1, hospitals are required to post online their "chargemaster" prices for every procedure, service and medication they offer.

More data aren't always more useful data.
More data aren't always more useful data.Read moreSuchada Toemkraisri / Getty Images/iStockphoto

Beginning Jan. 1, hospitals will be required to post online prices for every procedure, service and medication they offer.

Anyone who’s ever tried to find out in advance the price of an upcoming medical procedure knows how hard it can be to get a cost estimate. The new rule, ordered by the Centers for Medicare and Medicaid Services, is intended to improve price transparency and help patients better understand how much they will pay for care.

“We are just beginning on price transparency,” CMS administrator Seema Verma said last spring, explaining the requirements as part of the Trump administration’s “efforts to encourage patients to become better-educated decision-makers,” according to a Modern Healthcare article.

But the new rule’s usefulness in helping estimate a bill is limited, at best: Hospitals are required to list “chargemaster” rates -- prices that are much higher than most patients pay. The format hospitals must use -- Excel spreadsheets with thousands of entries -- isn’t exactly user-friendly.

Consider the spreadsheet posted by the Hospital of the University of Pennsylvania: It contains more than 14,000 entries, in order by their eight-digit procedure code; the name of the procedure -- frequently abbreviated in a way many laypeople might not understand; and the charge.

Still, the measure brings the question of cost into the broader conversation about health care at a time when out-of-pocket costs are growing and medical bills are a top contributor to personal bankruptcies. That’s a change from the days when patients feared being accused of not taking their health seriously if they asked, “So, how much will this cost?”

“By asking questions about the cost of health care, consumers play an important role in advancing health-care pricing transparency,” Andy Carter, CEO of the Hospital Association of Pennsylvania wrote in a Dec. 13 blog post about the new rule.

Chargemaster rates are the starting point for private insurers to negotiate lower rates for their members. Medicare and Medicaid establish their own rates, and uninsured patients typically qualify for income-based discounts.

The price to patients with insurance -- even those covered by the same insurer -- can vary widely depending on which plan they have. How big your deductible is, how much of it you’ve paid already and your co-pays all factor into the amount you’ll owe for any given procedure.

The new requirement was part of an August update to the federal agency’s Inpatient Prospective Payment System rules, which detail how hospitals are paid. In addition to listing the chargemaster rates online, hospitals are required to make the information available upon request.

Philadelphia-area hospitals, as well as others around the country, have developed price transparency pages with context for the lists of numbers they are required to provide and to explain that looking at chargemaster prices alone won’t help most people estimate how much they’ll pay for care.

“While we fully support efforts to improve pricing transparency, the chargemaster is only a starting point in determining the costs associated with your health care. By itself, the chargemaster is not the most helpful tool for you to comparison-shop between hospitals or to estimate your financial obligation for the health-care services you receive,” Jefferson Health wrote on its price transparency page.

Jefferson includes a question and answer section, and a short video developed by the Hospital Association of Pennsylvania.

Penn Medicine’s price transparency page explains what goes into a chargemaster price, such as administrative and facility costs, equipment and technology upgrades. The charge for a service provided at a hospital will be different from the same service provided at an out-patient clinic.

“The new CMS requirement provides another opportunity for patients to obtain important information about their health care, including the potential costs of these services. However, standard hospital charges are only one factor which influences a patient’s out-of-pocket costs, particularly at acute care facilities that offer a full range of services,” said Patrick Norton, vice president for public affairs at Penn Medicine, in a statement.

Before linking to its Charge Description Master lists at the bottom of the page, Penn cautions, “The descriptions in the CDM may not be understandable to the layperson (people who are not health care professionals).”

Under the CMS rule, hospitals are required to keep their prices in “machine-readable” lists that will be updated at least once a year.

Both Penn and Jefferson link from their price transparency pages to downloadable Excel spreadsheets that list thousands of procedures and corresponding prices.

If you want a more personalized estimate of what a knee replacement or MRI will cost, Carter recommends talking to your provider and insurance plan.

“Achieving meaningful health-care pricing transparency will take time, effort, and collaboration on the part of government, hospitals, insurers, and consumers,” he wrote in his blog post.