Price Transparency Can Address Fear of Health Care Financial Ruin
COMMENTARY
The media instills fear (some of which is justified) in Americans every day over COVID-19. Yet it largely ignores another major health care scare nearly on par with the pandemic: going to the hospital. According to recent reporting by Axios, roughly two-thirds of Americans avoid needed health care due to fear of unknown, inflated prices.
This trepidation is not unfounded. Under the country’s opaque health care system, health care prices generally aren’t known until bills show up in the mail long after care. When prices do finally arrive, they are often ruinous. According to the Urban Institute, one in six Americans has health care debt in collections. For Black Americans, this figure is even higher. When considering adults with medical debt in general, it increases to one in three.
The Biden administration can help Americans overcome their well-founded fear of financial ruin from medical bills by strengthening hospital price transparency in a final regulation — known as the Outpatient Prospective Payment System rule — that will be published soon.
Since the beginning of the year, hospitals have been required to post their real prices, including their cash and contracted rates. Yet relatively few are doing so. The OPPS rule proposes significantly upping penalties on violating hospitals to encourage them to turn over their prices. The rule also suggests creating clear price disclosure standards so ordinary patients can easily access them.
By robustly following through on these proposals, this rule can generate real price transparency and give patients much-needed peace of mind about their health finances.
Ordinary patients’ health care billing horror stories can influence the final rule. Here’s mine: Last year, I had hip replacement surgery at Baylor St. Luke’s Health Center in Houston. I paid $19,000 out of pocket and received a bill summary from the hospital months later. I found out later the hospital forgot to file a claim with my insurance company and instead billed me directly.
Making matters worse, I discovered that my itemized bill was riddled with overcharges and false charges. I counted at least 15 billing discrepancies. For instance, I was charged $240 for an hour physical therapy session that was less than 15 minutes. The bill included additional physical therapy sessions that I didn’t receive. I was charged $175 for gait training that I didn’t get. I was billed $1,255 for a room whose price is listed at $409. And I was charged $368 for a $60 antibody screening.
These overcharges and fraudulent charges inflated my bill by at least $3,000, according to my itemized bill and the hospital’s price estimator tool. (The final OPPS rule should recognize that price estimators offer patients no protection from receiving inflated bills long after care and clarify that hospitals aren’t allowed to use them instead of real prices.)
Real price transparency is needed to hold hospitals accountable. With upfront prices, patients like me can immediately challenge overbilling in the same way consumers can easily fight overcharges on their home renovation project if it exceeds the quoted, agreed-upon price. Price transparency can address widespread health care overbilling and erroneous billing by empowering patients.
Several months after my procedure, I received a separate, additional bill from the anesthesiologist. No wonder Americans are so afraid to go to the hospital. Why can’t health care prices be all-in like other products and services in the economy? Because patients are at the mercy of hospitals and their billing practices that would never be tolerated in other sectors.
By strengthening price transparency in its forthcoming OPPS final rule, the Biden administration can flip this power dynamic, creating a competitive, consumer-driven health care market that assuages patients’ fear of bankrupting bills and lowers high health care costs. Hopefully by then, the fear over COVID-19 will be gone too.
Anita Livings is a resident of Houston.
