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CMS Requires "Chargemasters" to be Made Public: Charges Aren't Too Usable, At Least For Now

Posted By Louise Probst, Wednesday, January 9, 2019
Updated: Wednesday, January 9, 2019

For a competitive health care service market to exist, price transparency is essential. As of January 1, the Centers for Medicare and Medicaid Services now requires that every hospital operating within the U.S. (including specialized facilities) place a list, or “chargemaster,” online of its standard charges for all drugs, items, and services provided. Hospitals may also direct consumers to an alternate means for determining cost.

 

By shining a light on charges, CMS hopes to make health systems more financially accountable to the public. Ideally, this regulation will dampen cost inflation and heighten hospitals’ consumer-friendly communications, as patients navigate charges across facilities, determining their potential financial liability. While not required, hospitals may post quality ratings or other additional information, and some local hospitals have included the average length of stay and charge by diagnosis-related group. The format for reporting is left up to the hospital, as long as the information represents current standard charges and is updated annually in a machine-readable format.

 

A common criticism of the regulation, particularly from hospital executives, is “Nobody pays charges.” While most patients do not pay charges, it would be naive to think that higher charges are unrelated to future revenue increases, albeit not in a 1:1 ratio. Click here to see the trend in St. Louis hospital aggregate charges and revenues from the BHC’s most recent St. Louis Health Care Industry Overview Report (page 10). Patients finding themselves at an out-of-network facility are billed charges, and some insurers still contract on a percent of billed charges for certain services - commonly outpatient services. To get a better sense of how charges might be affecting your plan cost, you may want to ask your insurer for a breakdown of the percent of your total facility claim dollars paid under a per diem, a flat rate per case, or a percent of billed charges contract.

 

St. Louis hospitals are in compliance with this new law, but you may want to wait before making comparisons. Chargemasters frequently contain tens of thousands of items, with numerical codes representing technical names. Sometimes, multiple prices are listed across seemingly identical services with the charge code as the only distinguishing factor, and patients often do not know which code will cover their services. If you want to take a look, you can click on Mercy, SSM, BJC or St. Luke’s for links to their online chargemasters.

 

As time goes on, things will improve. Transparency vendors, researchers, and groups like the BHC will organize and interpret the data for easily-consumed, direct comparisons and encourage hospitals to standardize report formats. While we still have far to go, this is an important step toward tackling the complex issue of transparency in health care.

Warm regards,

Louise Probst
BHC Executive Director


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