Last Thursday, the Trump administration came out with a new rule that requires hospitals to post online the prices they charge for medical procedures. This is good for Americans and moves the country closer to the administration’s vow to work towards “value-based care” or reduced costs and improved outcomes.
Previously, hospitals were only required to make the information about prices available to those who asked for it. Even with this requirement, some insurers had agreements that prevented their charges from being shared with patients sometimes resulting in higher co-pays for treatment “covered” by insurance than patients would have paid out of pocket if they had had no insurance.
With the new rule, information about prices must be available online and must be updated every year. The charges posted on the Internet will reflect the “charge master” price or the charge at that hospital. Although it won’t reflect what patients see on their bills because of private agreements between insurance companies and hospitals, and it won’t solve the issue of prices varying wildly within cities and within a single hospital, the new rule is a step in the right direction of improving healthcare transparency.
It will give both providers and patients a better idea of the charges for medical procedures.
A study published in June 2017 found that even most emergency medicine health professionals had no idea how much a visit to the ER for common treatments cost. This is a problem because research has also shown that when providers are aware of how much things cost — the cost of healthcare goes down. Just because cost is down, however, doesn’t mean that quality has to suffer. Often the difference in care can be as simple as deciding to order a medication to be administered as a costlier IV or as the cheaper pill version, with both options being equally effective.
Key to understanding this change is recognizing the difference between costs and charges. Cost is the elusive number of how much things actually cost — the equipment, keeping the lights on, paying doctors and nurses and administrators. Charges, on the other hand, are how much patients are charged for their healthcare costs. The charge is what shows up on bills although it may vary based on insurance providers, Medicare or Medicaid coverage, and a hospital’s negotiated rate.
For patients and providers alike, having the information about charges online makes healthcare more transparent and is a step in the right direction towards reigning in American healthcare costs. After all, you can’t fix a system unless you know how much it costs.
