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New Price Transparency Rule Underscores Key Healthcare System Challenges
New Price Transparency Rule Underscores Key Healthcare System Challenges

In January, a new Hospital Price Transparency Final Rule from the Centers for Medicare & Medicaid Services (CMS) went into effect requiring all hospitals to make public a list of their standard charges for items and services. Overwhelmed with the pandemic, and faced with financial penalties for each day of non-compliance, many hospitals simply posted their entire charge description master (CDM), leading to some interesting entries going public.

Here are some actual examples, along with the reactions we imagine many had:

Turkey meat $72.00, Tomato $72.00, Bun $63.50

Over $200 for a turkey sandwich? Hold the mayo!

Part hand no fingers $1,664.63

How am I going to eat my $200 sandwich?

Set dolphin collection $36

Is this in the gift shop?

Pain room services level 2 $1,329.48

It seems I’ve taken a wrong turn. I’ll show myself out.

Bone marrow mayo $667.00

There’s the mayo! For this price, shouldn’t they call it bone marrow aioli?

Of course, there’s an explanation for all of this. What appears to be a sandwich recipe is actually a list of allergen tests. “Part hand no fingers” describes an x-ray.

You get the picture. But how many consumers of healthcare services will not?

Outside of the obvious humor, we think there are two major takeaways here.

Timing and execution are crucial for new healthcare policies

US hospitals have not faced a tougher year than 2020 in our lifetimes. For many hospitals, canceling elective surgeries resulted in sharp declines in revenue, while pandemic-related costs such as staffing and PPE increased significantly. To remain fiscally viable, many facilities had to cut back on non-essential services and furlough administrative staff.

On top of the challenges, the price transparency rule went into effect January 1, 2021. As part of the new rule, hospitals have to provide prices for a list of 300 shoppable services that must be made publicly available in a searchable, consumer-friendly format. Of the 300 required, 70 are defined by CMS and the hospital may choose an additional 230. Many hospitals spent significant time trying to determine which “items and services” require price disclosure under the rule, and some found the rule does not provide sufficient guidance in all situations. This led to hospitals simply posting their entire CDM, $200 turkey sandwiches and all.

The intent of the rule was to enable healthcare consumers to make more informed decisions based on cost, increase market competition, and ultimately drive down the cost of healthcare services, making them more affordable for all patients. These are all extremely important goals. But the timing just could not have been worse. Had this Rule been implemented prior to COVID-19 or delayed until hospitals recovered, it would have been so much more effective, and less humorous. Instead, the objectives have been undermined, at least to some extent by the hastiness with which this had to be done under extremely adverse conditions. It’s part hand, no fingers at best.

Complexity currently hinders progress

One reason why healthcare initiatives from the Federal Government can have poor results despite the best intentions is that the American healthcare system is extremely complex and inscrutable to outsiders. We essentially have our own language. 

At Goodroot, we know that the general public and most policy makers are not prepared to decipher whole unedited CDMs. That’s why we’re dedicated to leveraging experts with deep knowledge of the healthcare system to cut complexity. Before a CMS policy can drive price comparisons, we need greater transparency so that all stakeholders can see beyond their corner of the healthcare industry and consumers and employers can begin to be empowered. A massive, unintelligible data dump doesn’t accomplish that. It’s not quite pain room level 2, but it certainly adds to the noise.

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