Starting the New Year with Hospital Price Transparency

As of January 1, hospitals are now required to post charges for their standard items and procedures online in an effort to increase price transparency. Section 2718(e) of the Public Health Service Act, part of the Affordable Care Act, requires each hospital in the U.S. “for each year [to] establish (and update) and make public . . . a list of the hospital’s standard charges for items and services provided by the hospital.”

As the FAQs released by the Centers for Medicare & Medicaid Services (CMS) explain, a hospital can choose the format of the information, though it must be in machine-readable form, easily imported or read into a computer system (which excludes PDFs). The price transparency may lead to more shopping by patients and to development of price-comparison tools.

In posting charges online, hospitals should consider how to make the information as consumer-friendly as possible. Some patients will not understand how to use the new data to their benefit. Posted charges will not take into account coverage by patients’ health insurance plans or agreements between hospitals and third-party payors to discount charges, and not all patients will understand that the posted price is not the patient’s out-of-pocket cost for the item or service.  CMS has encouraged hospitals to consider posting more details regarding their charges and to offer assistance to consumers in understanding them.