Will Posting Prices Drive Down Costs of Hospital Services?

Starting this year, U.S. hospitals must comply with an executive order to post list prices of all their services “on the internet in a machine-readable format,” but there are concerns that the posted prices won’t be meaningful to patients.

The new mandate is an outgrowth of an Affordable Care Act price-disclosure requirement. Previously, hospitals could provide prices to patients upon request; this year, the Trump administration updated guidelines to make disclosure mandatory, with the goal of increasing transparency and competition among providers – and ultimately lowering prices.

Alex M. Azar, U.S. Secretary of Health and Human Services, expressed the rationale behind the government guidelines: “Providers and insurers have to become more transparent about their pricing. There is no more powerful force than an informed consumer.”

Others are unconvinced that the mandate will have a meaningful impact on pricing. “This policy is a tiny step forward, but falls far short of what’s needed,” Jeanne Pinder, CEO of a consumer health research organization, told The New York Times. “The posted prices are fanciful, inflated, difficult to decode, and inconsistent, so it’s hard to see how an average person would find them useful.”

The “machine-readable” spreadsheets of numbers and shorthand descriptions of procedures are mostly unusable. Every hospital describes services differently, making price comparison nearly impossible. The actual amount that a consumer pays for their health-care services also will likely differ from what is listed on these spreadsheets. Insured patients’ health plans negotiate for lower prices, while uninsured patients may qualify for discounts.

Source: The New York Times, January 13, 2019.

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