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Consumers need better (not more) information to make healthcare decisions

Note: Starting Jan. 1, 2019, Medicare is requiring hospitals to post their standard charges (prices) on the internet for each item or service they provide.

Making medical decisions can be a stressful experience, and that’s before trying to figure out how to predict, understand and pay the medical expenses.

Increasingly, consumers are paying more out of pocket for their healthcare. Understanding what they might have to pay for treatment before they get it has become ever more important to patients as they make healthcare decisions.

Hospitals and health systems are eager to ensure patients have access to pricing information that is transparent, clear and useful.  

Unfortunately, newly updated Medicare price transparency rules that originated with the Affordable Care Act requiring hospitals to post to the internet their standard charges for each item or service they provide, will result in more information, not better information for consumers.  

There are three key reasons why the public availability of standard charge information for each item or service provided by hospitals is not helpful to consumers:

  1. Standard charges do not reflect discounts hospitals negotiate and agree to with insurers and consumers.  As a result, hospital charges are not reflective of true pricing and can be misleading and easily misinterpreted.
  2. Standard charges are not necessarily calculated the same way by hospitals.  While a hospital must establish and implement standard charges, there is no state- or nationally-accepted glossary for standard charges.  Hospital cost structures, staffing and level of services offered all vary, which may impact how their standard charges are defined.  It’s unlikely that any two hospitals will have the same definitions for the goods and services on a charge list.  That makes it impossible for consumers to make an “apples-to-apples” comparison.
  3. Every patient is different.  A patient’s treatment––and therefore, his or her eventual bill––may deviate from the “standard price” of a publicly-listed procedure for a number of reasons, including medical history, specialists required, complications encountered, the recovery process and health insurance coverage. Some of these factors cannot be predicted before the start of the procedure or treatment.

Simply put, patients need pricing information that incorporates their existing healthcare needs and helps them anticipate costs that may occur due to unpredictable circumstances. Medicare’s new rules requiring hospitals to make standard charge information available on the internet will not help, and worse, may mislead consumers.

So what is the answer?

First, it is important to note that New York State already has some of the most robust price transparency initiatives in the nation. For example:

  • New York State law protects consumers from surprise billing/out-of-network charges and requires transparency regarding which providers participate in health plan networks.
  • Spearheaded by HANYS and our hospital members, New York’s Hospital Financial Assistance Law requires hospitals to have sliding-scale financial assistance programs and includes other consumer protections.
  • New York’s new “NYS Health Connector,” a public-facing component of the state’s developing All-Payer Database, includes hospital-level average volume and cost data across planned cardiac, newborn and joint replacement procedures.
  • FAIR Health, an independent, national nonprofit organization, maintains a consumer-friendly website with detailed cost and quality information for New York State hospitals and other providers.

At HANYS, we believe the most effective price transparency initiatives are those that directly inform and protect consumers on their out-of-pocket liabilities. Given the variety of price transparency initiatives that already exist in New York and that 95% of New Yorkers have insurance coverage, HANYS believes that any new initiatives should be focused on directing healthcare consumers to their insurers for information on these potential liabilities. 

Collectively, providers, payers and policymakers need to keep working to boost consumer awareness of existing tools, policies, information and guidance that already inform decision making. We also need to be thoughtful and pragmatic about what next steps will truly help healthcare consumers understand their out-of-pocket exposure and, in turn, make better and more confident medical decisions.