Even with more transparency, hospitals still charge wildly different amounts for the same procedure
For years, patients have complained they often do not know how much hospitals charge for healthcare services until they are billed, unlike other commercial products such as gasoline, clothes or housing.
But published hospital prices show wide variations in prices — up to eight times — for the same care, demonstrating to advocates that price transparency can help consumers shop for the best prices.
For example, the cash price for a hip or knee replacement is $17,448 at Henry Ford Hospital in Detroit and $12,035 at Beaumont Hospital in Royal Oak. That same procedure is priced at $48,911 at St. Joseph Mercy Hospital Oakland in Pontiac and $49,265 at DMC’s Harper-Hutzel Hospital in Detroit, according to Turquoise Health, a San Diego-based health technology company.
An MRI chest scan could cost $212 at Garden City Hospital and $312 at multiple Henry Ford Health System hospitals. Go to Michigan Medicine in Ann Arbor and that MRI could cost $1,300 or at DMC Sinai-Grace Hospital you might pay $3,019.
Colonoscopies, another common procedure, can range from $1,700 to more than $5,000 for negotiated insurer prices, according to a study published Aug. 11 in Health Affairs. Michigan State University in East Lansing and Johns Hopkins University in Baltimore used the database compiled by Turquoise Health.
Researchers in July found only 1,225 hospitals, 25 percent of general acute care hospitals, disclosed negotiated prices for colonoscopies.
In metro Detroit, colonoscopies ranged from a cash price of $493 at any Beaumont Health hospital to $13,071 at DMC Receiving Hospital, according to Turquoise. The average Medicare reimbursement rate is $793. And cash prices are often far lower than negotiated insurer rates, according to an October New York Times investigation.
“High service prices result in high out-of-pocket expenditure for commercially insured patients, especially those enrolled in high-deductible health plans, and raise health plan premiums for the beneficiaries,” the researchers wrote.
When the Patient Protection and Affordable Care Act was passed in 2010, hospital price transparency regulations were included in the package. But it took an executive order from former President Donald Trump to get the ball rolling.
Cynthia Fisher, founder and chairman of Boston-based Patient Rights Advocate, who lobbied Trump at a golf course to resurrect the Obamacare provision, said healthcare costs have been growing at an unsustainable rate for several decades.
“It’s because there’s a total imbalance in information. Patients have been blind about prices and are oftentimes outrageously overcharged on their medical bills,” Fisher said. “On top of it, then they have to pay with a blank check. Because when they sign in, they have to assure that no matter what coverage they have, or don’t have, that they are responsible for the payment.”
Fisher said price transparency will encourage competition on prices between hospitals and could also lead to better patient outcomes.
“That’s how every other market economy works,” she said. “Who benefits is not health insurers. They are merely middle players. The real payer is the consumer, it’s the American worker, it’s the American patient, and it’s the employer that helps contribute to health coverage.”
After hospitals unsuccessfully sued to block the rules, the federal rules went into effect Jan. 1.
The rules require hospitals to display files on their websites that include gross charges, payer-specific negotiated charges and discounted cash prices. All hospitals also must display at least 300 shoppable services that a patient could schedule in advance.
From May to July, Patient Rights Advocate conducted a compliance survey of 500 hospitals nationally, including eight in Michigan.
The survey found only 28 hospitals, or 5.6 percent, including only two of eight hospitals in Michigan, that were fully compliant with all seven required charge categories. Hospitals were found noncompliant if they failed to comply with at least one category.
Jim Jusko, president of Firelight Health LLC, a healthcare data company based in Santa Monica, Calif., said he could validate the Patient Rights Advocate report.
“The majority of hospitals were not compliant,” Jusko said. “Consumers can make differences (in how hospitals charge), but it will take longer for them to understand how to use the data and make an impact with healthcare costs. Most people don’t think about price or value unless they have no insurance and must pay cash or if they have a high-deductible plan.”
Another study found a similar result as Patient Rights. The June issue of the Journal of the American Medical Association found 83 percent of hospitals were noncompliant with at least one charge criterion.
Fisher said while many hospitals are still noncompliant, many are in the process of building their healthcare price lists or improving them for consumers.
Some hospitals, however, require people to request price estimates by calling or sending emails. For example, St. Joseph Mercy Health System promises to respond within two business days.
Despite few hospitals fully complying with the rule, Fisher said hospitals that provide a price estimator tool are giving consumers real tools to make decisions.
“We’ve had many different hospitals come to us and asked us” how to improve their website on prices, she said. “Many of them thanked us and said they would rebuild their site and look forward to our next semi-annual report (early January).”
Diane Michalek, a spokesperson with Munson Medical Center in Traverse City, said Munson’s most difficult task in presenting prices had to do with third-party partners such as physicians.
“Our hospital system is made up of a mix of employed and non-employed physicians and service providers, it has sometimes been challenging to collect data from our third-party partners,” she said. “This is not due to the unwillingness of those partners, but more so due to the challenges that the COVID-19 pandemic has brought and the time and resources it takes to package that information up.”
Michigan’s hospitals are not too different from hospitals across the nation, Fisher said.
The PRA survey found only two of eight hospitals in Michigan were fully compliant: Munson Medical Center and Michigan Medicine, the University of Michigan’s health system.
The six noncompliant Michigan hospital operators were Ascension Providence Hospital Southfield, Beaumont Hospital-Royal Oak, Beaumont Hospital Troy, Henry Ford Hospital in Detroit, Spectrum Health Butterworth Hospital, and St. Joseph Mercy Ann Arbor.
Crain’s contacted the hospitals and most said they are now compliant with the rules.
Fisher said some of the hospitals had only minor omissions. “They are primarily not presenting all of the data fields. Most of them might not have shown the discounted cash prices as well as the negotiated rate by every payer,” she said.
Kevin O’Neill, vice president of contracting for Henry Ford Health System, confirmed Henry Ford was one of six hospitals cited by Patient Rights for not fully complying with the price rules. He said the system inadvertently left out several data points from the charge information. Click here for the price estimator.
“There’s hundreds of thousands of data fields. We were required to publish the minimum, maximum and median of (charge information by payer). We were missing the minimum. It was an oversight and we fixed it,” he said.
Mark Geary, spokesperson for Beaumont Health, said Beaumont believes “it meets and even exceeds the 2020 CMS standards.” Click here for the price estimator.
“Based on the (Patient Rights Advocate) report provided, being marked as noncompliant due to the zeros in the files does not mean information is missing and/or incomplete,” Geary said, adding: “We do use the price estimation tool which CMS clearly approved in lieu of posting 300 shoppable services.”
Ascension said it is fully compliant with the price transparency rules and has expanded its hospital websites beyond what is required by the law, said spokesperson Chris Gleason. She said the system’s price estimator tool includes more than the required 300 shoppable services.
“Ascension takes the information shared by the Patient Rights Advocate organization seriously and our price transparency team is working diligently to confirm that we meet all standards outlined by the Affordable Care Act,” Gleason said in an email.
Trinity Health Michigan, which operates eight hospitals in Michigan, said it believes it is fully compliant with the rule with regard to patients as it has more than 300 shoppable services available with its self-pay price estimator tool, said David Bittner, the system’s chief revenue officer.
Bittner said Trinity is in the process of completing discounted cash price service for its machine readable database. He said there has been a slight increase in people accessing the database.
“The complete standard charge file is there,” said Bittner, adding: “Our goal is to have all services available with the estimation tool … across all 55 hospitals in 22 states.”
Spectrum said it believes it is full compliance with the rule and has been posting prices on its website since 2006, said spokesperson Ellen Bristol.
“Spectrum Health is a strong proponent of transparency and sharing hospital prices,” Bristol said in an email. “Transparency in healthcare is important. We feel employers and consumers need to be aware of healthcare charges and should not hesitate to ask hospitals and physicians for pricing information.”
The Michigan Health and Hospital Association said its member hospitals are helping patients understand their healthcare costs. The COVID-19 pandemic slowed implementation, the MHA said.
“In addition, there is ambiguity within the final rule that has left hospitals to interpret the level and detail of pricing information that should be provided to consumers,” MHA said. “Hospitals and health systems are working diligently to comply with federal policies in their release of information.”
The penalty for noncompliance or failure to respond to a corrective action plan is currently $300 per hospital per day. Those penalties could increase next year to a maximum of $5,500 per day for larger hospitals. Hospitals could face annual fines of $110,000 to more than $2 million, depending on their size.
The Centers for Medicare and Medicaid Services has been auditing hospitals since July. By mid-October, CMS has issued 316 warning notices to hospitals, notifying them they were noncompliant with the rule, a spokesperson said. Of those 316, 32 were issued requests for corrective action plans. Six hospitals were cleared after they complied.
CMS has declined to name noncompliant hospitals in Michigan or elsewhere. Hospitals have 90 days to respond before additional actions, including fines, could be taken and those hospital names made public.
“Releasing information prematurely could identify hospitals that have already taken corrective actions and come into compliance after issuance of a warning letter, given the relationship in timing of our reviews and the hospitals being at various stages addressing compliance requests,” CMS said in an email response.
Fisher wants to stiffen the price transparency rule and force hospitals to guarantee prices to patients.
“Implementing clear pricing standards will shift the power to consumers and businesses facing the continuing squeeze of soaring healthcare costs by unleashing actual price information,” Fisher said.
But some hospitals are purposely not posting prices and instead willing to pay fines, according to an Oct. 8 story in Modern Healthcare, a Crain’s sister publication.
“Clearly from the data we know a large majority of hospitals are not compliant with the rule, at least to its fullest intent,” said Marianne Udow-Phillips, the former executive director of the Center for Health and Research Transformation in Ann Arbor.
“Some of them are basically playing the game, saying, ‘I’d rather pay the penalty. I don’t really want to go through this hassle. And I don’t think it’s going to produce anything,'” said Udow-Phillips, now a healthcare consultant.