Hospital Price Transparency
January 5, 2021

Table of Contents  
Why is This Important for Employers
Limitations to the New Rule
Implementing into Benefits Strategy

Effective 1/1/2021, hospitals are required to post and make "shop-able" charges publicly available for items and services to allow patients to become consumers. The goal of this new rule is to create transparency of cost/pricing for patients to shop services. Hospitals are required to post information on their website of service cost in 2 forms: (1) Machine readable files; and, (2) Shop-able, consumer-friendly formatting that allows the patient to search and find prices.

Why is this important for employers:

     - New or improved price comparison tools for employees to shop for healthcare services.
     - Well-informed employees tend to choose more conservative, and lower cost options.
     - Employees as consumers helps manage employer-sponsored benefits spending.

Information presented (depending on individual codes and/or any negotiated bundles):
     - Gross Charge, billed amount
     - Discounted cash price
     - Payer negotiated rates
     - Minimum negotiated rate
     - Maximum negotiated rate

Limitations the the new rule:
  •      Hospitals are required to post top 300 items and services, so may have missing procedures or items.
  •      Hospitals that post more of an itemized (rather than bundle) chargemaster could create a challenge for patients to know each item or service in their course of care/treatment. For example, total knee replacement data may include the device, where others may not include it and requires additional searching.
  •      This is only of hospital charges and employed physician services. So if there are independent practitioners using the hospital, their technical fees aren’t included in the rule. For example, an independent surgeon uses operating room at hospital with independent anesthesiologist. Posted hospital charges may, but are not required, to include the surgeon or anesthesiologist fees.
  •      Transparent pricing is required of only hospitals. So price comparison across different locations/facility types will continue to be a challenge (eg ambulatory centers, like surgery, diagnostic, dialysis and infusion).
  •      Hospitals are encouraged to embrace a competitive and consumerism model to allow patients to usefully access the information. I’d assume some will embrace and others will make it intentionally complex.
  •      Enforcement doesn’t have much teeth.

    1. Implementing into benefits strategy:
    2.    1.   Provide tools that allow employees to shop for healthcare services.

       2.   Create a finance plan design that rewards the employee and employer for better consumer behavior.

    This certainly doesn’t solve the healthcare transparency problem. The optimist in me says, "it's a start". I hope hospitals embrace the rule to start lifting the veil of pricing in good faith. I'm confident employers and patients will adapt and embrace.


More information on the final rule can be found here:
 https://www.cms.gov/hospital-price-transparency

Topics: Health Finance Health Literacy Healthcare Navigation
Eric Hannah

Written by Eric Hannah

Eric is an employee benefits advisor at Olivier VanDyk Insurance and a catalyst for change. Through a multi-faceted, two-decade healthcare career, he developed a unique perspective on personal well-being, healthcare navigation and insurance systems. This experience inspired Eric to introduce an innovative approach to employee benefits – putting employers and employees in charge of their own care and spend. Eric believes that employee benefits should be a tool to achieve the optimal employee experience. Today, he helps forward-thinking business leaders develop strategies that create value.

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