• Harry N. Stout

222- Comparing Medical Costs Just Got A Little Easier


Have you experienced the high cost of medical procedures? Now that the pandemic is getting under control are you considering looking after your personal health? Are you going to have that elective surgery on your knee? How about repairing that shoulder you hurt in the fall? If you are, you are like thousands of people who are going to tend to health matters that they have postponed for fear of contracting the virus. If you are one of these people there is some financial good news.


The Disparity in Prices for Health Procedures

To make a very long story short, comparing what hospitals charge for a procedure can be a difficult but very rewarding experience. For example the Philadelphia Inquirer recently reported that it compared the price for a simple knee MRI with two hospitals using the same insurance coverage and found prices that ranged from $330 to $1,500. This simple example proves the point of this post. Comparison shopping for a medical procedure can save you large amounts of money. The difficult part of obtaining the savings is to commit to do the shopping. I have read that less than 50% of people comparison shop for medical procedures. A recent law change can help. Let me explain.


The New Price Transparency Law

On October 29, 2020, the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury issued a final rule on medical procedure price transparency, helping to ensure Americans know how much care will cost in advance and allowing them to make fully informed and value-conscious decisions. The rule, which became effective January 1, 2021, requires that almost all health insurance companies and self-insured plans disclose pricing and cost-sharing information.


According to the press release on the Centers for Medicare and Medicaid Services website announcing the final rule:

  • More than 200 million Americans with private-sector insurance (both individual-market and employer-based) will have access to a list of real-time price information, including cost-sharing, enabling them to know how much care will cost them before going in for treatment. “This final rule opens the way to greater openness and transparency in our healthcare system,” said U.S. Secretary of Labor Eugene Scalia. “American workers in employer-sponsored health plans will now have access to real-time, personalized cost-sharing information that empowers them to shop and compare costs between specific providers before receiving care.”

  • Through a shopping tool available through their plan or insurance company, consumers will be able to see the negotiated rate between their doctor and their plan or insurer, as well as the most accurate out-of-pocket cost estimate possible based on their health plan for procedures, drugs, durable medical equipment and any other item or service they may need.

  • Consumers will also have access to accurate price and plan information that allows them to shop and compare costs between individual doctors before receiving care, so they can choose a healthcare provider that offers the most value and best suits their medical needs.

What Do Hospitals Have to Disclose?

Please understand that the new law is the first in what will likely be a series of actions to enable consumers to know the price of a procedure, considering the insurance coverage they have, before having the procedure. Here is what hospitals are now required to disclose:

  • Hospitals must list the price they charge for at least 300 “shoppable services,” and explain them in understandable language, according to the CMS website. The list will show the discounted cash price for people paying on their own without insurance coverage. It will also show the negotiated price a hospital has reached with payers, like an insurance company — but keep in mind that’s not the ultimate, out-of-pocket cost, which matter to consumers who still have co-pays and deductibles to reach depending on their individual insurance plan.

  • Hospitals will also show their highest and lowest negotiated rate for service.

  • Health experts are saying that even with hospital services described in plain language, it will still be tough for cost-conscious patients to first game out all the treatments they’ll need once admitted and then calculate the extent of insurance costs. They are saying this will evolve over the next few years.

  • Consumers should be able to find the price list on the hospital’s website itself, or on another website that the hospital provides a clear link to. If people can’t find the hospital’s list, they should first contact the hospital, according to CMS.

What is Missing from the New System?

We are in the early days of implementing the new system and there are problems being noted. These include hospital’s hiding the information on their websites, incomplete disclosures and not fully complying with the law. The quality and prominence of the information should improve as time goes on.


Summary

Medical costs make up a large portion of our regular cash expenses. Not enough consumers comparison shop their medical procedures to save money. Be it the cost of health insurance premiums or coinsurance amounts and deductibles — medical cost outlays can become significant. One way that you can reduce your out of pocket costs for medical procedures is to shop around much as you would for a new appliance or car repair.


I know that sounds rather cold, but it can really pay-off for you. The new price disclosures that went into effect January 1, 2021 are designed to help you save money. While the disclosures are new and not perfect, they will likely be improved over time. In the meantime, we should take advantage of them. Saving money on medical costs is essential.

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