Groups Trying to Make Hospital Prices Clear

by Mark Friedman  on Monday, Sep. 16, 2013 12:00 am  

Baptist Health’s CFO Bob Roberts said Baptist helps patients estimate costs.  St. Vincent and other hospitals now use net revenue as their top-line figure.

In order to help patients comparison shop for health care procedures, hospitals are being pushed to be clearer about pricing.

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” U.S. Health & Human Services Secretary Kathleen Sebelius said in a May news release.

HHS and other health care organizations are working on releasing hospital prices and charges in an attempt to inform patients of the cost of medical procedures at hospitals.

And recent accounting changes also are trying to make it easier to determine how much revenue a hospital receives. The accounting changes require hospitals to use net revenue as their main revenue figure rather than the much higher gross revenue figure that can include inflated patient charges — “sticker prices” that a hospital never expects to receive from private or public insurance payers.

The impact of the accounting change is “a clearer picture of what the receivables are and what the net patient services revenue are,” said Sandra Wolfskill, director of health care finance policy at the Healthcare Financial Management Association in Westchester, Ill.

The biggest splash in price transparency came in May when HHS released a spreadsheet on the Centers of Medicare & Medicaid Services website that compared the average charges and average total payments made to thousands of hospitals for the 100 most common Medicare inpatient procedures in 2011.

“Transformation of the health care delivery system cannot occur without greater price transparency,” Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, said in the May news release. “While more work lies ahead, the release of these hospital price data will allow us to shine a light on the often vast variations in hospital charges.”

Still, it’s unclear whether the information is actually being used by the patients to shop around. Edward Anderson, chief financial officer of Johnson Regional Medical Center in Clarksville, said some patients have been quizzing the hospital on the price of procedures.

“With the higher deductible plans coming out, people have to pay more of their own care,” Anderson said. “They are starting to pay attention to those things, and they are starting to shop a little bit. We’re seeing them calling and doing some shopping.”

Other hospitals in Arkansas, though, haven’t had patients call looking for price quotes as a result of HHS’s spreadsheet.

“I don’t think we’ve seen anything different as a result of the [HHS] reporting,” said Bob Roberts, chief financial officer at Baptist Health of Little Rock. “Patients with insurance or Medicare, … they’re much more concerned with what their out-of-pocket cost is going to be than the contract amount that the insurance is going to pay for the service.”

And Roberts said it’s difficult for a hospital to release a one-size-fits all price for a procedure because each patient is different.

 

 

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