The following is an edited version of an editorial that originally appeared in The Seattle Times:
Shining a spotlight on opaque hospital billing structures may not be a miracle cure for the rising cost of health care. But medical cost transparency is worth pursuing on principle, alone.
No one would buy a car without knowing the sticker price. Few would hire a house painter without getting an estimate — or several — first. Yet, hospital patients usually don’t learn the cost of their medical care until after they’ve been treated and receive a bill.
A new Centers for Medicare & Medicaid Services, or CMS, rule could change all that by demanding price transparency of every U.S. hospital. By January 2021, the federal agency will require hospitals to disclose charges for every service they provide, including cash discounts and rates negotiated with third-party payers, such as insurance companies. Additionally, they’ll be required to publish plain-language estimated costs for all associated charges for 300 “shoppable” services, such as joint replacements and other common treatments.
The intent is to enable patients to make informed decisions and to promote competition between providers. However, some hospital groups are objecting, saying the new rule will confuse patients rather than clarify potential out-of-pocket expenses.
Four major provider associations — the American Hospital Association, Association of American Medical Colleges, Children’s Hospital Association and the Federation of American Hospitals — announced they will sue CMS to stop implementation of the new rule.
User-friendly tools
The Washington State Hospital Association shares many of those concerns, encouraging CMS instead to encourage care providers to voluntarily adopt user-friendly cost-estimator tools.
Certainly, pricing information should be user-friendly, says the leader of the Washington Health Alliance, a nonprofit organization that shares the data on health care quality and value. “That said, it’s tricky to talk about price in a way that’s approachable for people,” executive director Nancy Giunto said in an interview.
As two Washington peer-claims databases have shown, it is possible. The nonprofit Washington Health Alliance compiles and reports on health care costs and spending. Launched last year, WAHealthCareCompare.com aggregates hospital, clinic, dental and prescription claims and eligibility data from the state’s All-Payer Claims Database.
The CMS rule appears to dramatically expand the transparency already available in Washington, both in amount of data to be published and by expanding it to other states. The change won’t be a panacea, but it will be an important step. Whether a critical mass of health care consumers will “shop around” for a hospital the way they do a car or contractor — many more factors go into medical decision-making — understanding the drivers of health care costs is a necessary first step toward reining in runaway costs.
