In June 2020, Travis Warner received a diagnostic PCR COVID-19 test at SignatureCare Emergency Center in Lewisville, Texas. In August, he received a $54,000 bill. While his insurer’s negotiated rate for the test and included fees totaled at $16,915 and was paid in full by the insurer, the outrageous and unexpected charge distressed him. After months of waiting and playing phone tag with the ER and its billing firm, Warner’s insurer informed him that it had audited the claim and that the bill was an error. As of September 2021, SignatureCare now lists the price of a COVID-19 test on its website at $175.
A surprise bill of this amount, whether it is a mistake or not, should never be allowed to happen. If Warner would have known the cost of his COVID-19 test beforehand, the error and months of stress and waiting for it to be resolved could have been avoided. Patients like Travis Warner deserve to know what their bill will say before they open it.
Price transparency is the first of many essential steps in an effort to facilitate reform in the U.S. health care system. The Center for Medicare and Medicaid Services (CMS) is trying to take this step to protect consumers by implementing and enforcing a price transparency rule. However, as of July 2021, just 5.6% of hospitals are fully compliant with the price transparency rule.
It’s time that hospitals start doing their part to protect consumers too.
Now, the CMS and many others are proposing increasing penalties on noncompliant hospitals up to $5,500 per day for larger hospitals. Still, compliance is low and the health care industry is resisting the regulation. In this continued fight for price transparency, consumers remain vigilant to protect themselves from false claims and excessive bills.
Despite hospital groups’ claims opposing the practicality, effectiveness, and importance of price transparency in health care, compliance with the CMS price transparency rule will provide irrefutable benefits for patients and facilitate long-term health care reform. When hospitals comply with this regulation, patients will be able to economize in the care decision-making process and make better informed decisions that protect their health and alleviate financial burdens. Making hospital pricing information public knowledge also promotes competitive practices, empowering hospitals and providers to operate in a market where their prices reflect the value of the services they provide.
The CMS hospital price transparency rule states that “each hospital operating in the US is required to provide clear, accessible pricing information about the items and services they provide.” Hospitals must post standard charges for at least 3000 shoppable services that can be planned in advance, along with a description and any other services that the hospital customarily provides. Moreover, and perhaps most importantly, compliance with this rule strengthens trust in a patient-provider and patient-payer relationship, therefore, promoting patient-centered care and providing autonomy and information to patients in their care-making decisions.
Still, hospitals claim consumers won’t comparison-shop when it comes to health care services. This claim isn’t based in basic economic principles. When given the opportunity to economize when making any decision, consumers will do so. With readily accessible and clear pricing information for health care services that can be planned in advance, consumers will utilize this information to make choices that support their best interests. Moreover, even if a consumer doesn’t comparison-shop using this information, it will still facilitate financial planning and enable patients to make better informed care decisions.
Hospitals also claim that the rule is an overreach by the CMS. Organizations, including the AHA, AAMC, and FAH, argued that the rule violates the First Amendment, causing the disclosure of confidential information to third-party payers. Hospitals make this claim in part because they do not wish to disclose pricing information to competitors, but, this disclosure is necessary to combat detrimental anti-competitive practices. Moreover, the challenges to the rule put forth by these organizations were overruled in a federal court in 2020 – a victory for consumers.
We’re sure to hear other similar claims as the CMS moves forward in their plan to enforce the price transparency rule: claims that consumer-driven products will lead consumers to delay necessary care, that prices will increase for emergent services to bridge the revenue gap, or that new dynamics of negotiation will accelerate consolidation in the health care industry.
These claims neglect the fundamental principles of price transparency and how it will affect the care-decision making process. Making informed decisions does not necessarily result in delaying the outcome of those decisions. Patients should have the autonomy and information they need; it cannot be sacrificed for expedience in discretionary services. An increase in prices for other hospital services cannot be presented as a direct result of price transparency, which in reality gives providers the opportunity to leverage information in contractual negotiations and save money. Compliance with the price transparency rule also enables providers to engage in more competitive practices, rather than accelerating unwanted consolidation. Compliance with the price transparency rule will foster trust and strengthen the patient-provider relationship.
Most importantly, it puts patients first.