By Anne Blythe and Rose Hoban

As 2020 turns into 2021, and health care is on the minds of many looking forward to brighter days and backward at a year like no other, all hospitals within this country will have a new task.

A new rule from the Centers for Medicare and Medicaid Services mandating hospital price transparency takes effect Jan. 1, despite legal challenges from the hospital industry over the past year that fell short of persuading the courts to overturn the change by the Trump administration.

All hospitals in the United States will be required to provide the public with a list of standard charges for health care services and do so in an easily accessible, easily searchable format for consumers. They also will be required to include the costs of supplies, as well as any room, board and facility fees.

Not doing so could result in civil monetary penalties if corrective action is not taken. That could result in the fines being posted on the CMS website.

UNC Health, North Carolina’s largest academic health system, did a soft rollout of its new cost transparency tool last week, an app and website that officials there say are works in progress.

The tool currently makes it possible for consumers, those with insurance and without it, to estimate how much an office visit, simple procedure or some inpatient services will cost at UNC Health Triangle providers such as UNC Rex Healthcare and the UNC Medical Center.

You can look up your out-of-pocket expense for a CT scan of the abdomen and pelvis, for example. Or you can get an idea of the bill you’ll get for more than 50 services at the cardiologist, for a broken bone or other orthopedic visit, even sleep studies.

This comes at a time when many with insurance are seeing high deductibles, many in the thousands of dollars, at a time when COVID-19 has reminded people of the importance of health care access.

Averting surprises

“Especially during this pandemic when so many people are seeking medical care for the virus and any other reasons, I think it’s important for hospitals to be as transparent as possible,” Alan Wolf, a UNC Health spokesman, said in a telephone interview late Wednesday afternoon.

Along with the price transparency rule, CMS also will require insurance companies and providers to disclose to patients in an as easily accessible format negotiated and cash contract prices.

You can take a peek at the UNC Health estimator through the My UNC Chart mobile app or on the website. The plan is to add more hospitals affiliated with UNC Health and more services over time.

“We understand the importance of price transparency in health care,” Wesley Burks, CEO of UNC Health, said in a statement issued last week. “This estimator is about improving our patients’ experience and giving them more control in managing their health.”

In recent years, reports of so-called “surprise medical bills” have been on the rise. Huge costs are tacked on to bills when people with insurance get socked with out-of-network charges they were not expecting if they go to a facility not covered by their insurance.

Though such scenarios often occur in emergency situations, when the patients have little ability or time to access cost tools, they could be helpful in trying to negotiate with an insurer.

Efforts ongoing

The federal government has been pushing for more transparency in the costs of health care for about a decade. In 2013, CMS released data on physician payments for the first time and the Affordable Care Act mandated that hospitals publish prices of their services.

Insurance companies have long encouraged their members to use price transparency tools, too, urging patients to shop around ahead of having elective procedures such as CT scans and blood tests.

All of these initiatives have had mixed success in getting patients to use them, in no small part because of the complexity of health care pricing and the complexity of the tools themselves.

In 2007, the state of New Hampshire created a website that would provide negotiated out-of-pocket costs and the negotiated payment prices for several dozen common procedures and services. An analysis published in 2014 found that only about one percent of patients in that state actually used the service over the course of three years, despite nearly one-in-five state residents being in a high deductible health insurance plan.

In the same year, New Hampshire revamped the site to make it easier to use, nonetheless, it took time to get people to use it. A later study, done in 2019 found that consumers saved five percent and insurers saved four percent when people used the website. After five years,  out-of-pocket costs for consumers had dropped by 11 percent, saving $7.9 million for consumers over the course of that five year period.

Cracking the nut

In a commentary published in Health Affairs in March 2020 after the rule was finalized Cindy Ehnes, an attorney who led California’s Medicaid managed care program for Gov. Arnold Schwarzenegger argued that the biggest advantage would go to large institutional payers, rather than individual consumers.

“This requirement creates a competitive advantage for large purchasers of health care services—such as insurance companies, large self-insured companies, and labor unions—by providing a low floor from which to negotiate,” the authors wrote. “With the help of in-house analytics experts, large health care purchasers will be able to use data provided through price transparency to reduce their medical spending to the lowest common denominator.”

They noted that about three-quarters of hospital care is unplanned, reducing the ability for patients to comparison shop for care. And they predicted that in the short run, prices for some services, such as X-rays and MRIs would drop, while other hospital services would be increased to make up hospitals’ losses in those more discretionary services.

“There might be more disruption than there is benefit at the end of the day,” said Markus Saba, a professor of marketing and the business of health at UNC Chapel Hill’s Kenan-Flagler School of Business. He argued that in the past, consumers didn’t comparison shop because their health insurance plans insulated them from the true costs of care. Between Medicaid, Medicare and employer-sponsored plans, most consumers haven’t been exposed to the high costs of care. So there’s been little incentive to use a tool like UNC’s.

“I think it’s a big burden. I don’t think it’s going to solve the problem. It’s not going to crack the nut,” Saba said. He argued that waste, fraud and abuse in the health care system are much bigger problems than consumers paying too much for an individual procedure.

Nonethelss, more people are exposed to the costs of care. Fewer than half of all North Carolinians get their insurance from an employer and more people are in high deductible health plans. According to the Kaiser Family Foundation, the average deductible for an employer plan with family coverage is upwards of $4,000. So, such price transparency initiatives may finally get more attention from consumers.

But Saba was unconvinced.

“It’s nice, it looks good. It doesn’t hurt. I don’t mind it, go ahead, but it’s not going to fix the problem,” he said. “I don’t know how we get out of treatment and into prevention, because all we’re doing is trying to fix things once they’re broken.”

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Anne Blythe, a reporter in North Carolina for more than three decades, writes about oral health care, children's health and other topics for North Carolina Health News.