The Opaqueness of Price Transparency

The Hospital Price Transparency rule became effective on January 1, 2021, with the intent of allowing consumers to shop and compare prices across hospitals. The rule requires hospitals to publicly display their standard charges for at least 300 procedures including their negotiated rates with health plans and the discounted price the hospital is willing to accept from a patient if paid directly.

The idea is noble. The execution is complicated.

Much has been written about how hospitals have employed techniques preventing consumers from effectively locating pricing information such as intentionally preventing search engines from showing pages with price lists, burying the pages so deep into their websites that consumers simply give up trying to locate the information, and even misdirecting consumers to other irrelevant pricing data.

Our existing medical culture neither endorses nor supports price shopping. As much as patients are (rightly) concerned about the cost of their healthcare, especially their out-of-pocket expenses, there are other compelling factors that affect their treatment choices. When a doctor recommends a specific procedure and facility, most people will follow that advice. In addition, a lower cost facility may not be in the network of the patient’s health plan, or the recommended physician may not have privileges at that facility.

Seeking healthcare is unlike shopping for other consumer goods and services. That said, one similarity is the shifting nature of published prices. Auto dealerships notoriously advertise they will sell you a car at their invoice price. But car invoices are often massaged. The same can be said for prices published to comply with the transparency rule. The published prices may not truly reflect the total costs associated with a given procedure. To be fair medical services, especially hospital-based procedures, can have many variables and therefore be difficult to price ahead of the services being performed.

That’s not to say price transparency can’t be an important tool for consumers. Pricing of healthcare services has long been a black box consisting of negotiated rates, hospital specific charges for health plans and patients, and various other fees. A typical hospital bill is undecipherable to most consumers. With the prevalence of high-deductible health plans, consumers desire to be more cost savvy. Any cost basis can at least help consumers understand what they could expect to pay and provide guidance should they wish to have a financial discussion with their hospital. As pricing discrepancies amongst hospitals become exposed, increased competition may become a reality.

Author Information

Jay Eisenstock is a seasoned consultant, speaker, contract negotiator and management professional with more than 30 years of recognized experience in healthcare and technology.