How does the new Hospital Chargemaster Rule Influence Life Care Planning?

As part of the Affordable Care Act, hospitals have been required to make public the prices they charge for their services. This provision of the ACA has not been enforced until a new rule by the Centers for Medicare and Medicaid Services took effect on January 1, 2019. The rule cited that hospitals would comply “as long as the information represents the hospital’s current standard charges as reflected on its chargemaster.” A hospital’s chargemaster is a summary of charges and services, which traditionally has been proprietary in nature. The “price” hospitals charge for treatment is many times a moving target. For example, the hospital’s published price is intended to appear competitively set but is neither the price eventually charged to consumers or to insurance companies. A recent Health Affairs study found that the average hospital with greater than 50 beds had a charge-to-cost ratio of 4.32, meaning that the hospital charged $432 when services actually cost $100. Furthermore, on average, hospitals charged 20 times more than their own costs for CT scans and anesthesiology, because it has been traditionally more difficult for patients to compare prices in these departments.
 
So, how does this new rule affect cost research for life care plans? Well, it's complicated. To comply with the letter of the law, hospitals must make their chargemasters public. The problem is, that most chargemasters are excel spreadsheets of largely unintelligible internal codes and cryptic abbreviations.  To see how local hospitals were handling the transition, we did a survey of facilities in the New Orleans area.
 
We researched 10 major hospitals in the New Orleans area and searched their websites for the mention of public pricing information. Nine of the 10 hospitals had price lists available for review. Of those nine, all had downloadable Excel or CSV files. Finding the appropriate links was similarly challenging with all nine websites, with text-based hyperlinks found buried on “Patient and Visitors” sub-pages. None of the links on the nine sites were made available in sitemaps or searches for “pricing,” “chargemaster,” or another similar language, and none were highlighted on the hospital’s homepage.
 
There was some variability within the nine websites regarding the way information was displayed. Four of the nine sites listed a Current Procedure Terminology (CPT) code. The CPT code is the key piece of information necessary in doing cost research for life care plans as it is a universal identifier for the exact type of service. Most of the websites included text descriptions of the services being priced with a corresponding dollar amount. One site included an easy to follow chart of typical prices displayed in a range, and searchable by inpatient and outpatient services. However, these searchable charts did not seem to represent an exhaustive list of treatments/supplies.
 
Overall, publishing hospital pricing online is a good step in the right direction toward true pricing transparency. Our basic survey of hospital websites was in no way a definitive or controlled experiment, but initial results suggest variability in the way hospitals are “complying” with CMS’s new rule. In their defense, the new policy has only been in effect for less than one month, and hopefully, large health care systems will recognize the benefit of transparent pricing and continue improving their cost reporting. For more information on hospital pricing or other cost research related to life care plans, contact Stokes & Associates today.

We offer complimentary consultations concerning "hypothetical matters." 

To strategize with one of our vocational experts or certified life care planners at Stokes & Associates please call David Barrett at 504-454-5009, visit our website, www.stokes-associates.com or email dbarrett@stokes-associates.com.

Larry S. Stokes, Ph.D.
Aaron Wolfson, Ph.D.
Lacy Sapp, MHS, CRC, LPC, LRC, CLCP 
Todd Capielano, M.Ed., LRC, CRC, LPC, CLCP

David Barrett