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A Handle on your Health: The 'Transparency' Law

Tuesday, February 12, 2019

This is a little different article for us this week. Instead of going over a specific health related topic, I want to go over what this new hospital requirement to post their pricing to the public means to us. 

In theory this should be a good thing. Hospitals are being forced to finally disclose to the public what they charge for specific procedures and diagnosis. We should be excited that we can now peer inside the world of hospital billing that for so many years has been secretive and closed off. 

The excitement, however, has quickly faded into frustration and disappointment. So who deserves the credit for the new transparency requirement in hospital charges? Obama?  Trump? The answer is they both do. When the affordable care act or Obamacare, as people like to call it, was passed it came with a provision that would require hospitals to disclose their charges to patients. “Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the secretary) a list of the hospital’s standard charges for items and services provided by the hospital.”  

Under the Obama administration this law was weakly interpreted to mean a hospital was in compliance if they just shared their pricing to patients upon request. The Trump administration interpreted it differently and made the requirement to post the charges publicly for all to see. Trump wanted more transparency in hospital billing. Did we get more transparency?  No.

What we got instead was a huge data dump in a language and format that is unusable by 99.9 percent of us. Hospitals are putting out their master charge sheets that are a never ending list of coded procedures with one or a range of pricing next them that are essentially meaningless to a public that wants to try price shopping their local hospitals.

There is no way to view a hospital charge sheet and find out what the whole cost is for being seen at that hospital for a particular diagnosis or procedure. If you have a leg infection (cellulitis), for example, and you want to see what hospitals will charge you to be seen in their ER or to be admitted, you can not tell from the posted charge sheets what that approximate cost will be. There are too many variables. One hospital may have a higher bed charge but lower drug charges. Another hospital may have higher ER charges but lower admission charges. The doctor fees are not included in these lists either, as they bill you separately. So a hospital charge for a CT scan doesn’t include what the radiologist will charge to read the scan. 

The hospital has a level code that has a charge associated with it – think of it as the base price for walking in their door and can go up depending on how sick you are – then on top of that, there may be a procedure that gets billed, then there are the medicines and supplies that get added, then all the different doctors involved in your care will be sending you their bills too. 

Then to make it even more confusing, the charges sent to your insurance company for billing never get paid in full. The prices are inflated on purpose. The insurance pays some amount of the bill that they say is the "allowable amount." No one knows how the insurance companies arrive at the "allowable amount." The new requirement for hospitals to be transparent with their prices failed to require insurance companies to be transparent with what they pay. 

So we now know several things about the new transparency law. We know hospitals are complying by posting their charges to the public, but their lists are incomprehensible for most of us. We know what the hospital charges us isn’t what insurance is going to pay. We know there is no requirement in the law to force transparency in the insurance companies. Wonder why that is? We are also left wondering what happens to the difference between what a hospital charges and what insurance pays? This is often called the "balance" and the practice of "balance billing" means whatever is leftover after insurance pays is billed to the patient. Hospitals are always willing to negotiate your portion of the bill and that is not represented anywhere.

If the law really wanted to give the public some negotiating power then it would require 1. Hospital charges made public, 2. Average global charge for common diagnosis or procedures, 3. Average payments made by each insurance company to specific hospitals for specific procedures and diagnosis, 4. Average hospital collections from patients for specific diagnosis or procedures and lastly 5. Average physician fees for specific diagnosis or procedures. 

Unfortunately this well-intended piece of legislation was poorly crafted and in its current form doesn’t go far enough to be of any real use to us. 

Transparency in the insurance industry is needed too if we want any chance at forcing competition that might someday result in better pricing. If you want to help effect change, contact your local representative and voice your opinion. 

If you’ve been ill I hope you all feel better soon,


Dr. John Turner is a family medicine and emergency medicine doctor with 25 years of experience. He is also the owner of My Primary Care Clinic and My Emergency Room 24/7 here in Hays County. Dr. Turner may be reached at 512-667-6087.

San Marcos Record

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P.O. Box 1109, San Marcos, TX 78666