Monday, April 30, 2018

Hospital Sticker Shock

The days of unknown pricing when it comes hospitals may soon be a thing of the past if the Trump administration and CMS have their way.

CMS Proposed Rule 1694-P reveals the following.

requires hospitals to post their pricing lists online, accessible to patients in a "consumer-friendly" way, so that "patients understand what their potential financial liability might be for the services they obtain at the hospital, and to enable patients to compare charges for similar services across hospitals." - HKLaw

Hooray! Price transparency may soon become law. No longer will patients wonder about how much a procedure costs. One day soon, patients may be able to go online and see a price list like this.

Let's hope they don't have a weak heart!

Couple of observations.

  • Price estimates for many medical procedures are already posted online, but few people bother to check. Why? Because in most cases, patients have very little skin in the game. Insurance carriers pay the lions share of medical bills, typically around 85% of the cost.
  • Retail pricing is meaningless because no one pays list price. If you have insurance, and use par providers, your net (discounted) out of pocket is a fraction of list price. Those who have no insurance and no money pay almost nothing for their care.
  • The proposed law assumes patients are looking for the cheapest care. In 40+ years in the health insurance business I have never had anyone ask where they can find the cheapest cancer treatment or the best deal on a used heart or kidney.
Rule 1694, if implemented, will initiall apply to Medicare and Medicaid patients only. This population is typically less computer savvy than younger people and those with more disposable income.

In much the same way that Obamacare was destined to bend the cost curve, increase access to health care and bring down health insurance premiums, it appears to me Rule 1694 could be dubbed Son of Obamacare.

#HealthCarePriceTransparency #Obamacare
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