In mid-December 2021, a study published in JAMA Open Network concluded that the CMS rule requiring hospitals in the United States to disclose negotiated prices for select services provides only a partial picture of the total cost of care. This limits the value of disclosure to patients who are trying to use the data to comparison shop.
While the rule has made progress in providing patients an idea of costs associated with their health care, because many hospital services are delivered and billed separately from the hospital by independent practitioners, those costs of care are not included in the listed hospital prices. The study found that providers who bill for their services independent of the hospital make up a significant chunk of the total cost of care for patients. “The additional cost of independent practitioner reimbursement may create an unexpected and considerable financial burden for patients,” the study authors wrote.
The study looked at seventy services in four categories: evaluation and management, laboratory and pathology, radiology, and medicine and surgery, and used a database of commercial claims for more than 4.5 million visits to U.S. hospitals in 2018.
For evaluation and management services, independent providers delivered between 7.6% and 42.4% of services, with median reimbursement ranging from $61 for a 45-minute psychotherapy session to $412 for a 60-minute consultation. Between 15.9% and 22.2% of laboratory and pathology services involved independent providers, with lower median reimbursement rates of between $5 and $7. Independent radiologists were involved in the majority of imaging services (between 64.9% to 87.2%) with those median reimbursement rates ranging from $26 for lower back radiography to $210 for brain MRIs.
CMS Delays Enforcement of Certain “Transparency in Coverage”…
CMS Announces Increased Fines for Transparency Violations
Most Hospitals Not Abiding by Transparency Rule
When it came to medicine and surgery services, independent providers were involved in the vast majority (more than 80%) of those services, excluding physical therapy, routine EKG, left heart catheterization, and sleep studies. The median reimbursement rates varied widely, from $47 for physical therapy to almost $10,000 for a major cardiothoracic procedure.
The number of entities involved in care generally increased with service package complexity. Among service packages that included independent entities, the highest median number of nonhospital billing entities involved in the encounter was 5.5 entities for a major cardiothoracic procedure and one entity for all evaluation and management, laboratory and pathology, and radiology services.
The findings of the study suggest that the disclosed hospital reimbursement amount was usually not correlated with total cost of care, thereby limiting the potential benefits of the hospital price transparency rule for improving consumer decision-making. The correlation between the two components of the total reimbursement was generally low, ranging from r = −0.11 for routine electrocardiogram to r = 0.53 for a major cardiothoracic procedure.
The authors of the study state that “as long as patient cost-sharing is a function of practitioner reimbursement (eg, coinsurance, deductibles), all health care entities involved in care delivery should be subject to price transparency requirements.” They also note that insurance companies have most of the necessary information needed to estimate individual patients’ out-of-pocket costs for nearly any service at their disposal, such as negotiated rates for individual health care services, lists of health care facilities and practitioners available in relevant health care markets, as well as information on patients’ plan benefit design. Therefore, they state that insurers should “take the lead” on creating packages of services across entities to provide beneficiaries with useful price information before receiving any care.