Starting January 1, 2023, hospitals in the United States will be required to comply with new price transparency requirements mandated by the Centers for Medicare & Medicaid Services (CMS). These regulations aim to make medical costs clearer to patients, potentially enabling them to better shop for healthcare services. However, experts interviewed in the article express skepticism about whether these changes will significantly aid patients in their decision-making processes.
Key Changes in Price Transparency Requirements
Detailed Drug Cost Information
One of the major changes involves hospitals providing detailed information on the costing of drugs. This new mandate includes specifying the unit of measurement, such as milligram or milliliter, and the type of measurement, like tablet or injectable. By standardizing how medications are listed, the goal is to promote greater clarity for patients, enabling them to better understand and compare drug prices across different hospitals.
However, experts are raising flags about the practicality of this requirement. Joe Wisniewski, assistant vice president of channel sales at Turquoise Health, pointed out that the average patient may not understand complex medical codes or how to interpret detailed drug pricing information. These intricacies make it difficult for patients to use the new price transparency data in a meaningful way and could potentially lead to more confusion rather than clarity. Wisniewski’s comments highlight that while the intent behind such transparency is noble, the execution may leave much to be desired in terms of layman accessibility.
Addition of Modifiers to Medical Codes
Hospitals are also required to add modifiers to their codes, a change intended to offer more precise information about the services rendered. These two-character alphanumeric codes provide additional details about the medical service provided, such as the specific nature or location of the procedure. For example, the modifiers “LT” and “RT” are used to indicate the left or right side of the body, respectively, thereby giving more specific information about the medical service a patient received.
Although such specific details can potentially benefit patients by making the nature of services clearer, the complexity of medical codes remains a significant barrier. Wisniewski likened shopping for healthcare to an overly complicated process compared to other industries, such as automotive sales. The intricate nature of medical billing codes makes it challenging for patients to fully understand the costs involved. This issue raises concerns about how truly effective these new modifiers will be in achieving the broader goal of price transparency in healthcare.
Posting the Estimated Allowed Amount
Another significant change is the requirement for hospitals to post the “estimated allowed amount.” This term refers to the expected reimbursement from health plans for particular services, providing patients with a clearer idea of what their insurance will cover and what they might need to pay out-of-pocket. The intention is to give patients an understanding of potential costs before they receive care, theoretically enabling them to make more informed decisions.
However, Hal Andrews, CEO of Trilliant Health, highlighted a substantial limitation to this requirement. He pointed out that a significant percentage of hospital admissions arise from emergency department visits, where patients are generally in no position to shop around based on price. In such urgent scenarios, patients and their families often focus on immediate medical care rather than cost considerations. This reality limits the applicability of price transparency to only a fraction of the total healthcare encounters in the country, suggesting that the new regulations may not provide immediate benefits to patients in all situations.
Challenges and Skepticism
Complexity and Patient Understanding
Despite these steps towards greater transparency, industry experts are skeptical about their effectiveness in aiding consumers. The average patient may not understand complex medical codes or how to interpret detailed drug pricing information. This complexity makes it difficult for patients to use the new price transparency data in a meaningful way.
Further complicating the issue is that these regulations apply strictly to hospitals, excluding other healthcare settings like physician offices, urgent care centers, and ambulatory surgical centers. This limitation reduces the overall impact of the new requirements on patient decision-making.
Emergency Department Visits
A significant percentage of hospital admissions arise from emergency department visits, where patients are generally in no position to shop around based on price. This limits the applicability of price transparency to only a fraction of the total healthcare encounters in the country. As a result, the new regulations may not provide immediate benefits to patients in urgent situations.
Compliance and Technological Innovations
Improved Compliance Among Hospitals
Compliance with these requirements has improved among hospitals, which had struggled to meet previous CMS mandates. A JAMA study noted that as of June 2022, fewer than 6% of U.S. hospitals were fully compliant with the earlier CMS price transparency rule. However, more hospitals are now meeting these requirements, particularly after the introduction of a CMS-mandated template for machine-readable files.
Opportunities for Technology Companies
This shift towards better compliance creates opportunities for technology companies to develop tools that simplify and make pricing data more accessible to patients. Charlie Byrge, senior vice president of revenue at Tendo, urged hospitals to adopt a more consumer-centric approach to pricing. Byrge envisions a future where healthcare providers could adopt demand-driven pricing models, facilitating direct contracts with employers or patients, thus bypassing traditional insurance middlemen.
Future Prospects
Demand-Driven Pricing Models
Byrge envisions a future where healthcare providers could adopt demand-driven pricing models, facilitating direct contracts with employers or patients, thus bypassing traditional insurance middlemen. Such a marketplace would allow for different prices for different types of payers and bulk purchasing by employers, potentially lowering costs.
Technological Innovations
Starting January 1, 2023, hospitals across the United States will need to adhere to new price transparency rules set forth by the Centers for Medicare & Medicaid Services (CMS). These regulations are designed to make the costs of medical procedures and services more transparent for patients, which could, in theory, allow them to more effectively compare prices and shop around for their healthcare needs.
The goal behind these transparency requirements is to provide patients with a clearer understanding of what they might expect to pay out-of-pocket for various medical treatments and procedures. This could be particularly beneficial for those who are uninsured or who have high-deductible health plans, as it may help them avoid unexpected medical bills. Ideally, these regulations should also foster a more competitive market, potentially driving down prices as hospitals vie for patients’ business.
Nevertheless, experts interviewed in the article express doubts about whether these new transparency measures will have a meaningful impact on patients’ ability to make informed decisions about their healthcare. They argue that the complexity of medical billing and the variability in individual insurance plans complicate the issue. Even with transparent pricing, understanding what costs will be covered by insurance, what will apply to deductibles, and what will be out-of-pocket can be daunting for patients. Therefore, while the new rules are a step in the right direction, significant challenges remain in achieving true price transparency in healthcare.
