The price of health care: New law requires hospitals to post service costs online

Prices sometimes hard to understand

DETROIT – When you buy almost anything, you want to know how much it will cost before you agree to buy it.  

But far more often than not, people have no idea how much their hospital care will cost when they go in for treatment.

Since the beginning of 2019, hospitals have been required to post their standard charges online. This was an effort to bring some transparency to hospital pricing and help consumers estimate costs.

According to Marianne Udow-Phillips, the director of the Center for Health and Research Transformation at the University of Michigan, it hasn’t had the desired effect.

“I don’t really think consumers are using the information," she said.   

The initial idea behind the law was well-intentioned.  

“The hope is that patients, who increasingly have deductibles and copays, and have to pay part of the cost of medical care in the hospital, would become smarter shoppers,” Udow-Phillips said.  

The rule requires “hospitals to make public standard charges via the internet in a machine readable format.”  

This basically means hospitals are making downloadable spreadsheets available that contain something known as charge master prices. Charge master prices are the inflated prices hospitals use as a negotiating start point with insurance companies. They usually bear no resemblance to what anyone actually pays.

“I don’t think the charge masters are particularly helpful for either decision-making by patients or for really addressing the problems we have with health care costs,” Udow-Phillips said. 

Finding the hospital webpage that contains the link to the spreadsheet wasn’t an intuitive process when I looked.  

Once you download the correct file, you still have to interpret the medical jargon in order to search for your particular procedure. If your particular procedure isn’t listed, you are simply faced with thousands of entries for individual items that the hospital can include in its charges.  

“For most patients, the charges don’t really mean that much," Udow-Phillips said.  

Worse yet, the charges can be misleading. If a person uses these prices to estimate their cost, they could be frightened into avoiding necessary care.  

“If you made a decision based on the charge, not related to what you pay, you might make the wrong choice,” Udow-Phillips said. 

Generally, your actual cost will be much less, depending on your individual insurance. Even if you are uninsured, hospitals will frequently provide a discounted price that isn’t on the spreadsheet if you call and ask. Still, Udow-Phillips thinks this is at least a first step.

“The silver lining is, this is the start of a conversation, a new approach to transparency of information that could become useful for consumers," she said.

The bottom line is that the prices listed in these online databases aren’t of much use to the average consumer. The best thing to do is to contact your insurance provider before any elective procedure to get a closer estimate of your cost. A hospital’s financial assistance experts can also help you better estimate your costs. 

If you are interested in downloading the standard charges for several of the area’s major hospital systems the links are below:

Beaumont (Click on the highlighted word “download” in the center of the page)
Henry Ford Health System
University of Michigan

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