North Carolina hospital price transparency rule makes costs public for patients

Many things have a clear price.

Before someone buys a coffee or gets a haircut, they are usually aware of the cost – or at least they can be with a simple question. But hospitals didn’t work that way.

Patients provide their health insurance (if they have it), receive medical care, and then prepare to pay the bill. With rising deductibles and out-of-pocket expenses, the amount can be high: nearly one in five Americans have medical debt, and half say they’ve postponed or forgone health care because of the cost.

Last year, the federal government established a new rule to demystify hospital rates.

As of January 1, 2021, every hospital is required to disclose estimated prices for at least 300 medical services (or as many as they provide if fewer) on a user-friendly website. Hospitals have also had to publish technical pricing data for third-party companies to convert into online cost comparison tools.

In addition to hospitals, the rule requires health insurance companies to post their payment rates from July 1.

The hospital price transparency rule originated in the Affordable Care Act and was later passed by the Trump administration. By arming the public with more information, the government hopes customers will use their economic power to pressure suppliers to lower prices.

But implementing the rule, in North Carolina and across the country, has been difficult.

Sue to end the price transparency rule

In 2020, the American Hospital Association unsuccessfully sued to prevent the transparency rule from taking effect.

The North Carolina Healthcare Association, which represents most hospitals in the state, also objected, fearing the policy would force facilities to reveal “trade secrets” that give insurance companies leverage to reduce their refunds, said Cody Hand, the association’s senior vice president of government relations.

Well into the past year, many hospitals were still not fully complying with the rule. In March, the Wall Street Journal found that many vendors, including Novant Health in North Carolina, had used special coding to prevent web search engines from detecting their price data.

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The following month, the federal Centers for Medicare and Medicaid Services (CMS) banned the coding. Then, in July, the Biden administration increased penalties for hospitals for non-compliance to a maximum of $5,500 per day and a total of $2 million per year.

In early January, CMS confirmed it had issued 342 non-compliance warnings to hospitals, but no fines. CMS declined to share how many of those warnings went to North Carolina facilities.

On Jan. 13, North Carolina Attorney General Josh Stein released a report that found 122 hospitals in the state had met underwriting requirements, while about one in six facilities still had not.

Residents near Fayetteville can now more easily view Cape Fear Valley Medical Center price estimates before their visit.

The North Carolina Healthcare Association says its member hospitals are working to comply amid the difficulties of the pandemic.

“Everyone is trying hard, but we had two surges, they’re understaffed, and the hospitals that have (compliance) issues are usually your little hospitals where their staff are doing multiple jobs,” Hand said.

Yet others have accused North Carolina hospitals of deliberately dragging their feet in an attempt to keep the prices hidden.

In an August interview with the USA Today Network, North Carolina State Treasurer Dale Folwell said hospital and insurance executives engage in “cartel-like activity” when they conceal their price.

Where the public can find hospital price estimates in North Carolina

There are currently two places the public can search to find hospital prices.

Under the transparency rule, most North Carolina hospitals offer online portals where patients can enter their insurance information and receive cost estimates for a long list of services. According to the rule, estimates must include discount rates as well as minimum and maximum charges for insured patients.

Hospital estimating tools can be hard to find. Entering a facility name and a term like “price estimator” into Google often works, although for some hospitals it is necessary to navigate through internal links on their websites to locate their portals.

Another way to research prices is to look at start-up cost comparison platforms like Turquoise Health, which allow searches by postcode. Turquoise’s database, aggregated from information published by hospitals, shows that costs for the same services at one facility can vary by several hundred dollars depending on the patient’s insurance.

And none of these prizes are guaranteed. For example, Mission Health’s pricing portal in western North Carolina states that “the costs provided in this tool are cost estimates for informational purposes only and do not guarantee what you will actually be charged. “.

Online cost estimating portal at Mission Health in Western North Carolina.

The unpredictability of medical care can make it difficult for providers to give concrete prices up front. A procedure can usually cost a certain amount, but the process of care can be plagued with unexpected complications, new discoveries, extra nights, and disputes with insurance companies, all of which can change the price.

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Cody Hand said the NCHA opposes the price transparency rule in part because the numbers shown could give the public an incomplete picture. But others argue that hospitals could do more to give people a more complete idea of ​​prices before administering care.

“I mean, look, medicine is complicated,” said Barak Richman, a Duke law professor who studies health care economics. “But there are a lot of complicated things, and there are a lot of things that involve variable costs. There are many (non-medical) companies that have found ways to pre-determine average costs and come up with a good pricing system, and I think for most drugs this would be possible.

Disclosure of insurance rates on the horizon

It remains to be seen whether price transparency will drive prices down.

The new data could encourage expensive facilities to charge less, Richman explained, but it could actually cause some lower-cost hospitals to raise prices if they can now see that their competitors are charging more.

More than a lack of transparency, Richman attributes high health care costs to hospital mergers. Over the past decade, hospital consolidation has increased both nationally and in North Carolina. Several studies have established a link between these mergers and rising prices.

“Price disclosure won’t necessarily increase any kind of structural competition,” Richman said.

New Hanover Regional Medical Center in Wilmington is one of 122 North Carolina hospitals that comply with the federal price transparency rule.  The hospital also merged with Novant Health last year.

Although price data has limitations, the public is about to have access to much more.

On July 1, insurance companies will be required to publish machine-readable files with all their in-network and out-of-network rates. Then next year, insurance companies will have to create online cost comparison portals for customers.

Health care experts say this wealth of insurer data, compared to hospital data, could benefit consumers more.

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Many anticipate that these rate disclosures will allow employers and managed care organizations to make more informed decisions about which plans cover their workers and members.

In terms of market pressure, such larger-scale decisions could move the needle. And the pressure, the government hopes, will push insurance companies to make their plans more attractive.

Brian Gordon is a statewide reporter for the USA Today Network in North Carolina. Feel free to email him at [email protected] or follow him on Twitter @skyoutbriout

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