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22 Feb 2019

Health-Care Cost Confusion: Hospitals Are Now Required to Post Their Prices Online—but the Info They're Posting Is Worthless

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Jan Emerson-Shea, the vice president for external affairs at the California Hospital Association: “If you’re faced with having a procedure done at a hospital, you’ll be going to the hospital where your doctor practices, or you’re being taken to one by an ambulance. … Are you really going to shop around for prices in that situation?” Jan Emerson-Shea, the vice president for external affairs at the California Hospital Association: “If you’re faced with having a procedure done at a hospital, you’ll be going to the hospital where your doctor practices, or you’re being taken to one by an ambulance. … Are you really going to shop around for prices in that situation?”

The federal government now requires hospitals to publish online its “charge description master”—a list of what the hospital charges for various services and items.

When this new policy, which took effect Jan. 1, was announced last year, it was heralded as an overdue move to promote fairness and transparency within our country’s expensive and often-confusing health-care system.

Unfortunately … that’s not how things have turned out.

The Independent decided to see how this new policy is working at the three Coachella Valley hospitals. I dove into my research enthusiastically, easily locating and downloading the charge masters, as these lists are called, from the Eisenhower Medical Center (EMC) and Desert Care Network (DCN) websites.

Then … well, I opened the charge masters. Just as I thought I was gaining useful information, I discovered the downloaded documents, practically speaking, are useless to any layperson who lacks a knowledge of oft-unintelligible medical terminology. It’s also nearly impossible to compare between hospitals, since each uses its own terms and formats.

Download the Eisenhower Medical Center Chargemaster here.

Download the Desert Regional Medical Center Chargemaster here.

Download the JFK Memorial Chargemaster here.

Oh, one more thing: If you have insurance, you and your insurance company aren’t paying the amounts listed on the chargemaster, anyway.

According to the Association of American Medical Colleges: “The hospital charge description master … represents 100 percent of services used by patients in a hospital setting. The use of charge masters began in the early 1950s with the advent of indemnity insurance products; in this environment, hospital rates were set based on billed charges for individual services. As the health insurance industry matured, hospitals moved to payments based on negotiated rates, and the billed charges expressed in the charge master remained largely as a rate schedule for those patients who were private pay or uninsured. … The process for updating the charge master is not intended to ensure that it is a comprehensive document for tracking relative prices. Instead, hospitals focus on adding new services and calibrating highly competitive services rather than updating rates for older services.”

Still … I wanted to ask why the charge masters from our local hospitals were so unwieldly, poorly organized and confusing.

I received no reply from Eisenhower, but I did speak briefly with Todd Burke, California director of communications for Tenet Healthcare, which runs the two valley hospitals within the Desert Care Network: Desert Regional Medical Center in Palm Springs, and JFK Memorial Hospital in Indio. He provided a corporate statement which read: “The hospitals of the Desert Care Network focus on providing high-quality, cost-effective care to all patients we serve. We understand that the costs of health care can be confusing. When looking at the charges posted to our website, it is important to know that the charges posted are a reference price and not the amount that patients or insurers actually pay. When inquiring about actual costs of care, we strongly encourage patients to speak with their insurance provider, or if uninsured or those patients who have Medicare or Medicaid, to speak with the hospital’s financial services department.”

Burke also suggested that I reach out to Jan Emerson-Shea, the vice president for external affairs at the California Hospital Association. So I did.

“You know, people often like to say, ‘Well, I shop for shoes, and I shop for cars, so why shouldn’t I be able to shop for health care, and look at prices ahead of time?’” Emerson-Shea said. “We understand the desire for that level of price transparency, and hospitals are always willing to do the best they can to provide that information. But it’s important for people to understand that these things are different, because you’re talking about a person’s individual health-care needs. So if I happen to have diabetes, and you don’t, we might be having the same health-care procedure, but mine might be more complicated and more expensive due to my pre-existing health condition. People have to understand that everything with health-care pricing is dependent on what your actual needs are as a person, and then it’s also dictated by what your insurance coverage is—and if you are uninsured, California has a decade-old law that limits how much you can be liable for in terms of your hospital care. Depending on your income level, this state law says that hospitals are required to give you either free or discounted care based on a sliding scale. So, really, no patient ever winds up paying the dollar-cost amounts that are shown on any charge master list.”

In other words … all the hospitals in the United States are complying with this requirement to post their charge masters because they’re required to do so, yet everybody involved knows that the charge masters are of no use to anyone in the patient population?

“Yes. That’s exactly right,” she replied.

Where does this leave the discussion about cost transparency within the health-care industry?

“Legally, we are complying with what the laws and regulations require,” Emerson-Shea said. “Is it fair to say that hospitals understand that this information is not very useful, and that we’re looking for ways to make it more useful? Yes. This is not an easy discussion, but I can certainly say that our association is working with our member hospitals to figure out what other options there may be. There are some hospitals in the state that have looked at new technologies to see if there’s a way to put a price estimator on their website that allows patients to go in pre-surgery and enter their information. I think it’s certainly fair to say that there’s a live conversation going on.”

She them summed up the puzzle facing all parties involved.

“If you’re faced with having a procedure done at a hospital, you’ll be going to the hospital where your doctor practices, or you’re being taken to one by an ambulance. … Are you really going to shop around for prices in that situation? I know the California Health Care Foundation has done some research on this question, and they found that, for the most part, consumers are not shopping for health care in that way. … It is not similar to shopping for any other type of a consumer product. Still, I think it’s fair to say that hospitals are looking at how to make this information more useful for patients.”

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