On the 24th of June 2020, the President signed an Executive Order (EO) which seeks to Improve Price Transparency in American Healthcare to prioritize patients.
The executive order, among other things, is a rule that implements Section 2718(e) of the Public Health Service Act and updates the agency’s mandate upon hospitals. This mandate requires hospitals to publish a yearly list of standard charges for items and services provided by the hospital, including for diagnosis-related groups established under 1886(d)(4) of the Social Security Act. This list must be available on the hospitals’ website and machine-readable.
This not-so-new development has stirred some controversy. From the corners of Medicaid and Medicare, the CMS charge master rule is not exactly a welcome initiative. They seem to perceive it as the government’s subtle way of yanking skeletons right out of healthcare cupboards.
Is it then the case that the government has chosen to bully health care facilities?
Thankfully not. The aim of this initiative is to offer transparency to the consumers of health care services. The government aims to do this with the assumption that there will be increased competition and innovation through transparency. With general access to all hospital standard charge data, health care facilities are being put on notice – knowing fully well that the world is watching.
Michael Abrams, co-founder and managing partner at Numerof & Associates, couched it better in his chat with FierceHealthcare. According to him, this price stipulation enables skilled third parties to create potent comparison tools for price shopping. These tools would be more helpful to patients than scanning through a price list online.
“I think it will prompt conversations about why prices are so high,” he stated. “Quite frankly, it’s going to put providers on the back foot. I think it will force the industry to behave more like other market-based players—and I think that’s a good thing.”
Abrams concluded that the increased price transparency could also be a boon for providers that offer high-quality care at the best value, and it will put the spotlight on the outliers who are charging significantly more than their peers.
Seeing as their charges will now be public and accessible, health care providers will be left with two choices. They must either offer value worth their services or reduce their prices to match the quality of their services. This would mean that patients get more value for their substantial healthcare dollars – estimated to be over 17% of GDP, or almost $11,000/year for every man, woman, and child in the US.
Soon, people will find it convenient to compare the pricing and services of health institutions right from the comfort of their homes. This clarity will also help patients to determine their out-of-pocket costs and understand their financial obligations in healthcare beforehand. And, healthcare providers will now need to work harder to earn customers with their prices and services. While this is not an all-encompassing move towards a valued based system, it is definitely a step in the right direction.
As Micheal Abrams rightly puts it, “The transparency measure is not magic. It’s not able to solve the cost and quality problem by itself, but it is a critical step in moving toward a market-based model that does reflect price and quality.”
Healthcare Data Analytics, Inc (www.hcpricing.com) is bringing transparency to US healthcare costs. Its platform provides comprehensive reported hospital pricing, allowing insurance companies, hospitals, corporations, research/universities, attorneys, financial services firms, government and others to finally analyze and track hospital pricing.