Hospital Price Transparency: The Next Frontier

The Centers for Medicare & Medicaid Services (CMS) took an important first step toward increasing the  transparency of hospital finances when it required hospitals to post their charge information, effective January 2019. But, these charges are not prices paid — they are typically the starting point against which commercial payers negotiate discounts.

States with all-payer claims databases (APCDs) have an important tool that allows them to go a step further – they can analyze the differential between “charges” and “prices paid.” This is an increasingly important distinction, particularly as 90 percent of hospital marketplaces are highly concentrated. Research shows that such concentration diminishes the capacity of health plans to negotiate rates and has increased hospital costs from 20 to 40 percent without gaining improvements in efficiency or quality .

New Hampshire Comprehensive Health Care Information System’s APCD releases data that allows the comparison of the difference between what is charged by hospitals and what health plans and consumers pay. The statewide report of charges and allowed amounts for common hospital services in New Hampshire, available at the NH HealthCost website, shows how charges compare to allowed amounts. Analysis of this data, shown in the table, illustrates that the actual amount paid for a service can vary greatly from what is charged, sometimes by more than 100 percent.

Service Category Median Price Charged Median Price
Allowed or Paid
Percentage Difference between Median Price Charged and Amount Paid
Biopsy skin lesion $          189.00 $             69.12 -173%
Total hip arthroplasty $     37,195.00 $     20,193.17  – 84%
Total knee arthroplasty $     14,543.50 $        5,824.55 -150%
Nasal endoscopy dx $        1,119.16 $           437.85 -156%
Diagnostic colonoscopy $        2,553.00 $        1,800.61  -42%
Fetal non-stress test $          369.00 $          261.34  -41%
Low back disk surgery $     10,615.75 $       6,559.99  -62%
CT head/brain w/o dye $       2,030.56 $          685.86 -196%
Chest x-ray $          366.00 $          146.95 -149%
X-ray exam of knee 3 $          399.00 $          189.53 -111%
MRI joint of lower extremity $       2,598.00 $       1,392.21  -87%
Comprehensive metabolic panel $             86.92 $             56.15  -55%
Lipid panel $          106.00 $             68.44  -55%
Glucose blood test $             43.00 $             12.44 -246%
Eye exam new patient $          264.65 $          140.25  -89%
Speech/hearing therapy $         313.45 $          157.70  -99%
Comprehensive hearing test $          235.00 $          188.85  -24%
Cardiovascular stress test $       1,154.00 $          662.88  -74%
Office/outpatient visit new $          288.50 $          188.27  -53%
Emergency dept. visit $       2,300.00 $       1,374.67  -67%

Importantly, the charges and prices paid vary by procedure, hospital, and payer and the data that shows these price differences  is available through APCDs. NH HealthCost and similar websites in Maine, Colorado, Massachusetts, and Washington all are valuable resources to enhance transparency by identifying the price for services and the variation of those prices within each state.

Working together, CMS and state APCDs can provide important data to fuel conversations about hospital charges and payments, and the policy issues that the data  raises.

Notes

The Affordable Care Act’s amendment to section 2718(e) of the Public Health Service Act requires each hospital operating within the United States to make public a list of standard charges for items and service provided by the hospital including for diagnostic-related groups. CMS published proposed rules for FY 2015 reminding hospitals of their obligation to comply, and again for FY 2019, ultimately finalizing the rules to improve the public accessibility of charge information in a machine-readable format effective January 2019. https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-16766.pdf.


Josephine Porter is director of the University of New Hampshire’s Institute for Health Policy and Price and co-chairs the All-Payer Claims Database Council (APCD Council).

Trish Riley is executive director of the National Academy for State Health Policy.