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Hospital Pricing Transparency Attempts to Make Healthcare More Affordable

When you’re making a decision about which service or product to buy, it helps to have as much information as you can. Before buying a car, for example, you might look up what other people have paid online or compare prices between different dealers in your area. The level of available information may vary depending on the product or service. One service that’s historically had very little transparency about its pricing is hospitals, but a new federal government rule is set to change that.

Starting in 2019, the Department of Health & Human Services is requiring hospitals to post pricing information in a format that’s accessible to consumers. The goal is to allow consumers to make an apples-to-apples comparison of the cost of services offered at different hospitals. The federal government hopes this will encourage people to shop around for hospital services, similar to car shopping online, and that this transparency will increase competition and help decrease the cost of health care in America.

This isn’t the first time the federal government has tried to make hospital prices easier for consumers to access. Section 2718(e) of the Public Health Act, as enacted by the Affordable Care Act (ACA), required U.S. hospitals to establish and make public a list of standard charges for items and services provided by the hospital. Hospitals had the option to either make public a list of their standard charges or allow the public to view a list of charges upon request. Given the choice, many hospitals opted to share information only on request. Since most people aren’t used to shopping for health care using pricing information, it’s safe to say requests to hospitals were quite low.

To address this issue, the Department of Health and Human Services issued a rule that requires hospitals, effective January 1, 2019, to make a list of their current standard charges available via the Internet in a machine-readable format and to update this information at least annually. More people are shopping online and doing so from mobile devices like smartphones and tablets. This new rule is designed to create a more consumer-friendly shopping experience by offering hospital pricing information on a familiar platform.

How LIUNA Members Can Use Hospital Pricing Information

According to the U.S. Census Bureau, 82 percent of union construction workers have health insurance. At the LHSFNA, we recognize that union members can intermittently lose eligibility due to insufficient work hours or other factors. Since online hospital pricing data shows the cost that a non-insured person would pay, LIUNA members with health insurance can review these prices to gain a better understanding of the value of their health care benefits. For members who are temporarily out of health care eligibility, reviewing online costs can help determine whether the out-of-pocket cost for services is something they can reasonably afford without acquiring additional health coverage.

As health care becomes more expensive, LIUNA and the LHSFNA continue to explore innovative ways to reduce costs. LIUNA members can play their part by becoming informed consumers about health care services and products and making purchases that take price and value into account.

The federal government has acknowledged that current hospital pricing transparency efforts are not a perfect system. There will be a learning curve as patients decipher medical and coding terminology and the potentially overwhelming size of a hospital’s price index (one Kentucky hospital’s index has 1,560 pages). However, the federal government believes the requirements are a good first step toward creating pricing competition among hospitals. Hopefully, the result will be lower costs for all health care consumers.

[Matthew Brown is the LHSFNA’s Health & Welfare Specialist.]

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