Medical Transparency Laws and Position Statements

A. The Affordable Care Act. The Affordable Care Act, also referred to as Obamacare, requires hospitals to disclose its charges for medical services. The following is noted:

Standard Hospital Charges. Each hospital operating within the United States shall for each year establish (and update) and make public (in accordance with guidelines developed by the Health and Human Services Secretary) a list of the hospital’s standard charges for items and services provided by the hospital, including for diagnosis-related groups (DRGs) established under section 1886 (d) (4) of the Social Security Act.

There has been no national standard reporting method for medical costs made available to the public until Pratter.

B. AHA Position

According to the American Hospital Association (AHA) website, “consumers deserve helpful information about the price of their hospital care, and the AHA is committed to providing it.” In fact, the AHA has a position statement on this topic noted as follows:

Hospitals are a critical component to the fabric and future of our communities. We agree that consumers need useful information when making health care-related decisions for themselves and their families. Providing understandable and useful information about health care costs is just one way America’s hospitals are working to improve the health of their communities.

The AHA and its members stand ready to work with policymakers on innovative ways to build on efforts already occurring at the state level, and share information that helps consumers make better choices about their health care.

AHA Principles for Price Transparency. In 2006, the AHA Board of Trustees approved a policy regarding hospital pricing transparency. That policy calls for information to be presented in a way that:

  • Is easy to access, understand and use;
  • Creates common definitions and language describing hospital pricing information for consumers;
  • Explains how and why the price of patient care can vary;
  • Encourages patients to include price information as just one factor to consider when making decisions about hospitals and health plans; and
  • Directs patients to more information about financial assistance with their hospital care.

Here at Pratter, we challenge the AHA to honor its position of medical cost transparency by actively encouraging its hospitals to post its charges for all routine outpatient care listed by medical procedure name and CPT billing code. In fact, it’s the federal law.

C. State laws about medical cost transparency.35 states require hospitals to report information on hospital charges or payment rates and make the data available to the public. There are many shortcomings with these legal requirements, including the following:

1. Many state laws do not require that the medical costs made public be formatted in an easy-to-understand way for the average health care consumer.

2. Those states with medical transparency laws that require the medical costs to be easy-to-understand do not enforce the “easy-to-understand” clause.

3. Hospitals in states that are required to submit their charge masters with their line item costs simply do not submit line item costs for all they do.

4. There is no standard submission requirement in any state. Pratter is the first-to-market in the United States with standard medical cost formatting based on standard medical billing Current Procedural Terminology (CPT) coding. Pratter places medical charges into a user-friendly database for medical cost comparison purposes. This is where Pratter has become your advocate. Pratter is set up to facilitate any and all state and federal medical transparency laws.

An example of a state with a medical transparency law, Massachusetts, is set forth below. The bottom line is that the hospital and/or insurance carrier has two days to provide cost information after a patient has requested it. It would be much better customer service to post price tags for medical care online. They can do so but refuse to do so for one reason. It is easy to do so. They have something to hide – high prices.

Advance disclosure of allowed amount or charge for admission, procedure or service as per Massachusetts’ state law:

§228(a): Prior to an admission, procedure or service and upon request by a patient or prospective patient, a health care provider shall, within 2 working days, disclose the allowed amount or charge of the admission, procedure or service, including the amount for any facility fees required; provided, however, that if a health care provider is unable to quote a specific amount in advance due to the health care provider’s inability to predict the specific treatment or diagnostic code, the health care provider shall disclose the estimated maximum allowed amount or charge for a proposed admission, procedure or service, including the amount for any facility fees required.

(b) If a patient or prospective patient is covered by a health plan, a health care provider who participates as a network provider shall, upon request of a patient or prospective patient, provide, based on the information available to the provider at the time of the request, sufficient information regarding the proposed admission, procedure or service for the patient or prospective patient to use the applicable toll-free telephone number and website of the health plan established to disclose out-of-pocket costs, under section 23 of chapter 176O. A health care provider may assist a patient or prospective patient in using the health plan’s toll-free number and website.

D. H.R. 1326: Health Care Price Transparency Promotion Act of 2013.Representative Michael C. Burgess, MD, of Texas introduced this bill on March 21st, 2013. It did not become law. In this legislation, all states would have be required to disclose information on hospital charges, to make such information available to the public and to provide individuals with information about estimated out-of-pocket costs for health care services.

E. Summary. As you can see, there is a lot of momentum gaining toward medical cost transparency – and there has to be. Health care costs makes up almost 20% of our nation’s economy. Health care insurance also makes upward of 20% of a middle class American family’s budget today and that is expect to double to an unfathomable 40% by 2020. For costs so great, you deserve to know what they are beforethe time of purchase just like you do for the other 80% of goods and services sold in our country!