Hospital Chargemasters Could Do More Harm Than Good

By Ronnie Cohen

April 28, 2021

(Reuters Health) - Federally mandated hospital price lists yield limited, if any, benefits and tend to be so inflated and misleading they could serve to deter U.S. cancer patients from getting necessary surgeries, new research finds.

"Patients may have sticker shock" after seeing the prices on so-called chargemasters, said Dr. Roy Xiao, lead author of the research reported in JAMA Surgery. "More useful pricing information could help inform patients as they decide where to seek care," he told Reuters Health in an email.

Since 2019, a law enacted by the Trump Administration has required that hospitals post their prices online in what is called a chargemaster. The rule aimed to facilitate comparison shopping and to foster competition. (https://reut.rs/3eQkyrp)

But the posted chargemaster prices rarely reflect the true cost of care. Instead, they tend to reflect just a starting point for negotiations between hospitals and insurance companies, and negotiated prices continue to be hidden from patients.

The only patients who might be charged the chargemaster prices are those without health insurance who are not eligible for Medicaid.

Personalized cost estimates for patients would better arm patients with facts to determine their true out-of-pocket costs, said Xiao, a surgical resident at Harvard Medical School.

He and his colleagues examined chargemaster prices for inpatient cancer surgeries at National Cancer Institute-designated cancer centers in March 2020. They found wide-ranging differences from hospital to hospital for the same procedure.

The differences highlight the need for true transparency and the information's uselessness, said Dr. Trevor Royce, assistant professor of radiation oncology at the University of North Carolina at Chapel Hill. He was not involved in the research.

The study found, for example, that prices for pelvic exenteration with comorbidities or complications were as low as $18,100 and as high as $448,000, and posted prices for rectal surgery with major comorbidities or complications ranged from $24,000 to $976,000.

In a phone interview, Royce asked, Could the care at one cancer center really be worth 20 to 40 times more than at another?

"It's hard to know what to do with this data because it's almost nonsense," he said. "It's just a total disconnect from reality. It shows the limited usefulness of this chargemaster data."

New requirements that took effect in January require hospitals to make public gross charges, discounted cash charges and negotiated charges. But a study reported last month in Health Affairs found that 65 of the largest 100 U.S. hospitals failed to comply with the regulation. The maximum penalty for failure to comply is $300 a day. (https://bit.ly/3aJz6aU)

The regulation has faced significant industry opposition, and the American Hospital Association sued the federal government in an effort to stop it.

If allowed to take effect, additional rules would require health insurers to provide patients with self-service tools for real-time cost estimates for all items and services by January 2024, Xiao said.

He believes the upcoming rules would provide better information to guide patients in deciding where to obtain their healthcare.

In the meantime, however, many cost-conscious patients facing cancer surgery are left with chargemaster prices when trying to determine where to get care. And the chargemaster prices do nothing more than further confuse people with cancer, according to the new study and Royce.

"We have to ask the question: are these numbers meaningful at all? Are they going to discourage patients from pursuing care if they think the cost of care is higher than it actually is?" Royce asked.

"This kind of thing forces fundamental questions about health care in this country," he said. "Do we want to treat it like buying a car?"

SOURCE: https://bit.ly/3at2sKt JAMA Surgery, online April 14, 2021.

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