On June 23rd, 2020, the U.S. Department of Health and Human Services (HHS) won the first battle in the war for transparent pricing in healthcare against the American Hospital Association (AHA). Today, showing the cost of care to patients is not a standard practice among all hospitals in our country. The ruling would mean that hospitals would have to clearly show the cost of all care to all patients before they administer care or have prices listed for consumers to access. However, the war is not over and the AHA has already said they will appeal.
It seems irrational that some hospitals would litigate against showing us the cost of care. It’s not like hidden pricing is a standard across all other industries, but it is for Americans practically every time we interact with the healthcare system. Imagine living in a world where anytime you make a purchase for a service or an item, there is no conversation or information readily available about prices and quality before you sign on the dotted line.
Sure, comparing buying a fridge or car to getting a spinal fusion isn’t exactly “apples to apples”, but should it be so different? Here is the biggest difference. Americans have become sophisticated consumers when purchasing non-healthcare related items or services. Before you purchase a new car or appliance, you have access to read customer reviews, you can see the price, and you can generally get information on the quality of the product. But, good luck finding such information in the healthcare world.
As a healthcare consumer, we are left in the dark, unless you’re fortunate enough to work for an employer that purchases a program like Healthcare Bluebook or similar. Healthcare Bluebook is a transparency tool that aggregates price and quality information so members can make an informed decision on where to seek care. Looking at the variance report below from by Healthcare Bluebook in Austin, TX it is easy to assume that prices for the same procedure at two different in-network facilities can be very drastic from each other.
Some insurers have pricing estimate tools for their members, but how accurate is it? Have you ever searched for a provider using your network search tool only to find out when you call to make an appointment that provider wasn’t actually in “your network” any longer? If you can’t receive accurate information on the fundamentals of your network, how can you trust the pricing information? Is your insurer pushing you to other facilities with which they have the “best deal”, without regards to quality? Who really knows?
According to the Kaiser Family Foundation, the average deductible for an individual in 2019 was $1,655 and 20 percent of workers have an out-of-pocket maximum greater than $6,000. If you’re enrolled as an individual, and assuming you haven’t met any portion of your deductible, you would be responsible for up to $6,000 of the charges between a combination of deductible and coinsurance to the out-of-pocket maximum when your doctor orders any type of test or procedure that would hit your deductible.
For example, when looking at an appendectomy cost between two in-network facilities in Austin, TX below, what facility would you have picked assuming the pricing was available upfront?
- Facility A: $7,600
- Facility B: $25,000
You’d probably go with the $7,600 appendectomy because it would have saved you from hitting your out-of-pocket max for the same procedure. Therefore, the recent ruling is very important to us as consumers. The curtain can be lifted. We can see what the exact price will be for a service at a hospital. We can then use supplemental tools to find out quality information on each facility.
For decades, the system hasn’t been working properly for people in the U.S.A. and it has led to government intervention. HHS took the first step by implementing a pricing transparency mandate. However, we as consumers and citizens of this country have an obligation to demand even more transparency. Change in healthcare must come from individuals applying pressure to the system and demanding better. Before entering a medical facility, and individual should be able to easily see all the available services, quality information and listed prices for each insurance carrier on their website. That is the epitome of transparency, and that’s exactly what we need to help consumers make educated decisions before seeking care.
Healthcare Variance Report Slide