Hospital Billing Transparency
is Coming Soon
Health and Gender Policy Brief # 118
By: S. Bhimji | July 22, 2021
Header photo taken from: Healthcare Law Insights
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Walk into any car dealership and the base price of the car is posted in large numbers on the windshield. Go to a hairdresser and before you even sit down you will be told the price of a haircut. But get your gallbladder taken out and you have no idea what the price is until you are ready to be discharged from the hospital.
If you go to a hospital in Maine, the cost of gallbladder removal maybe $5,000 but go to a hospital in New York and the price is three to four times that amount. For decades hospitals have refused to be transparent about the cost of their services. Even though insurers and Medicare do have a set reimbursement rate for every medical service and surgery, hospitals do tag on bills ad hoc.
If you have a headache and are given one Tylenol, most patients are usually charged for the whole bottle. Use one tissue to blow your nose and you will have to pay for the entire box. Everything from the mattress, linen usage, the room cleaning and if you request a wheelchair to the front door, rest assured, you will be paying for it. Hospital’s nickel and dime patients for everything.
No patient is ever told ahead of time what the cost of the medical care or the surgery will be, and rest assured the final bill at the time of discharge is usually eye-popping. All that is coming to an end. President Biden has now stated that this lack of transparency is going to stop soon.
When President Biden was elected he urged hospitals to become transparent about their pricing but 7 months later, most hospitals have ignored the Government.
Just last week, Biden signed an Executive Order that has instructed the Secretary of Health and Human Services to “support” price transparency regulations issued by the Trump administration.
On Jan 1, 2021, healthcare facilities were required to post the prices they were charging patients and the rates they had negotiated with insurers- figures that have for the most part been hidden from the public. But the hospitals just ignored the threat.
Photo taken from: NPR
Now proponents of greater transparency in the healthcare system agree that transparency will help patients shop for better deals and this will hopefully drive down the cost of healthcare. Amid widespread non-compliance by hospitals, President Biden has now signed the Executive Order to enforce compliance because if not, there will be penalties.
Several studies have shown that most hospitals in the US have only partially listed their cash prices for medical services on their website but less than 5% have revealed the rates they have negotiated with insurers. Close to 83% of hospitals in the US have so far been non-compliant with transparency rules.
Some hospitals have a pricing tool for patients but this tool is difficult to use because most patients have no idea what the medical jargon means or what services they are being provided. For example, the pricing tool may give the patient the cost of an appendectomy, but it doesn’t reveal the price of antibiotics, medications to control pain, the cost of anesthesia, the cost of imaging studies, or other ancillary services like the use of a hospital bed or even the use of a hospital gown.
Plus, different insurers have different reimbursement rates for medical and surgical services.
Photo taken from: The Washington Post
While Biden’s Executive Order is short on details, the Dept of Health and Human Services has started to send letters to all non-compliant hospitals warning them of an audit.
Even though insured patients don’t pay the full amount charged by hospitals, they are usually stuck with large deductibles and copayments. And the higher the medical bill, the higher the copayments.
The current Executive Order will apply to all medical services provided by healthcare institutions. The prices must be displayed in an easy-to-read format and must be annually updated.
While the exact monetary penalties for non-compliance have not been revealed, hospitals with less than 30 beds can face a monetary fine of $300/day and larger hospitals can face penalties of $5,500 a day.
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New Hospital Price Transparency Law Makes Hospitals Display Pricing
Not all hospitals comply with the law on transparency of medical costs, advocacy groups say: