New rule requires hospitals to post charges online

Due to a new law that went into effect on Jan. 1, hospitals, including the Stephens Memorial Hospital, have been required to release the charges of the procedures they offer.

While the move was made as an effort to help promote transparency in pricing, SMH CEO Matthew Kempton said the listed charges may not be the most reliable when it comes to determining how much you will pay.

“I believe the legislature is trying to find a market solution to drive more competitiveness …. To drive down prices,“ Kempton said. “However, those are not prices. The prices a patient pays is based on what their insurance plan is and who their insurance carrier is.”

What is listed in the document are charges that are part of what are called a chargemaster, which Kempton said the hospital sets based on what the costs are for the hospital to do a specific procedure.

The charges are on the SMH website, under their “Price Transparency” tab. When one visits it, they are greeted with a long list of procedure titles, codes and a charge that comes with that procedure. There is also a disclaimer that states what is listed is not necessarily what the patients may pay. Rather, they are baseline charges. The disclaimer compares the charges listed to a manufacturer’s retail price (MSRP) on a vehicle.

As mentioned the charges listed are not reliable when determining what you may pay for a specific procedure. Kempton said due to how insurance works, the charges can vary.

Kempton said not only does it depend on what plan a patient may have, but added because each insurance carrier has its own contract with the hospital, what each carrier pays can vary as well. In short, the carrier tells the hospital through negotiations what rate it will be willing to pay for procedures, which may have nothing to do with what is listed in the chargemaster. This can also vary with coverage involving Medicare and Medicaid, which also pay their own rates and fee schedules.

Kempton gave an example of something listed at $1,000, but some carriers may be contracted or allowed to only pay $80.

“It’s hard to look at the chargemaster online and say, ‘Okay I can figure out what my price is by multiplying this, or subtracting this,’” Kempton said. “It’s kind of hard to figure that out because each plan is so different in what they will or won’t allow.”

On top of all the hurdles that may exist between prices and the consumer, Kempton said insurance companies are always changing their policies in what they will or won’t pay. So it is not uncommon for the hospital to run a procedure for a patient with the understanding that insurance will cover it, then find out the insurer no longer covers that specific treatment.

For those who don’t have coverage and are paying out of pocket, the charges still may not represent the real price paid. The hospital offers discounts and other services to those who are paying out of pocket. This includes options like an opportunity to have a certain amount knocked off the bill if they pay it off within a certain timeframe. Charity care is also a factor, which helps people who may be financially unable to pay for their care.

Despite how the charges may not be the most reliable in figuring out what bill you might pay, Kempton said he believes it is a positive in the sense that it starts a conversation about how healthcare works.

“Often people will blame the hospitals for high prices and high charges, but they don’t understand it’s not us that sets the prices,” Kempton said.

This is especially true for smaller, rural hospitals, Kempton said. Because of how small the market is in Stephens County, it limits the negotiating power they can bring to the table when discussing rates and charges with insurance companies. Due to the small amount of patients, insurance companies have much more leverage to leave the area if they don’t get the prices they want.

“They pretty much tell us what they’re going to pay,” Kempton said. “We don’t have the population to have any type of leverage with them …. Because they can simply say at any time ‘well we’re just going to walk out and you won’t have coverage at all.’”

Kempton said with this change, he hopes it will cause patients to look into why they pay what they do and begin to go to their insurance providers to see what they do and don’t cover to help demystify the system.

Ultimately, Kempton said he doesn’t believe this change will help drive down prices. The expectation with the new rule is to allow patients to shop around hospitals to see who offers the lowest cost. But if the hospital were to cut charges in one area to try and compete with another hospital, they would still be getting the same rate from the insurance companies on the other end, while now receiving less money from lower charges.

Overall, Kempton stressed the importance of people educating themselves on healthcare, and how this may provide an opportunity for people to do so.

“The best thing [people] can do when choosing their health plan is to understand all of the different pieces that it does cover and doesn’t cover,” Kempton said. “And plan their health expenses so they can make sure what they’re buying is what they’re getting and what they want.”

To see the chargemaster, visit the smhtx.com and visit the ‘Price Transparency’ tab.