Skip to main content

Holmes Heads to the Hospital: Price Transparency Meets Price Inconsistency

September 20, 2023

Sir Arthur Conan Doyle would have been quite pleased with the story coming out of a respected medical publication this month. It was as if his own creation—the character we all know as Sherlock Holmes—had cracked his latest case in the usual spectacular fashion. Undercover operatives, corporate intrigue and the circumvention of federal law—what more could the public ask for in its pursuit of the next best-selling crime thriller?

On the Trail

According to a study published in the Journal of the American Medical Association (JAMA) this month, a sizeable percentage of hospitals were found to be advertising different prices for medical services online versus over the phone. As we stated in last week’s alert, the Hospital Price Transparency regulation establishes enforceable guidelines by which hospitals must reveal the standard charges they have established. We went into great detail on the penalties facilities face for ignoring or openly flouting this regulation. That’s what makes the investigation published in JAMA all the more alarming.

Researchers out of the University of Texas Medical Branch, who issued their findings to JAMA, conducted a “secret shopper” operation. Like an undercover detective, they received information on cash prices for 60 U.S. hospitals between August and October of 2022, based on online searches. The services targeted were vaginal childbirths and MRIs of the brain. The team then called each of these facilities, requesting the lowest cash prices for these same medical services.

The findings confirmed those of previous research that demonstrated a wide divergence in pricing between different hospitals, and even within the same hospital based on a patient’s insurer. For example, the new study found online prices for vaginal childbirth posted by top-ranked hospitals ranged from $0 to $55,221. The results also suggest that hospitals may not even be aware that their own prices reflect a wide discrepancy between their published online rates and those they provide potential patients over the phone.

Magnifier in Hand

Of the 60 hospitals reviewed, 22 were able to provide both online price and telephone quotes for vaginal childbirth. Those prices were within 25 percent of each other at just 10 hospitals. However, nine hospitals had internal price differences of 50 percent or more. Forty-seven hospitals were able to provide prices online and by telephone for a brain MRI. The prices for this service were within 25 percent of each other at 31 hospitals. Twelve hospitals had differences of 50 percent or more. Online and telephone prices completely matched in nine hospitals for a brain MRI. For vaginal childbirth, they completely matched at three.

For example, researchers found five hospitals with online prices greater than $20,000 for a vaginal childbirth, but telephone prices of less than $10,000. For a brain magnetic resonance imaging scan, two hospitals said the cost was more than $5,000 over the phone, but the price tag was $2,000 online.

According to those conducting the investigation:

The findings provide evidence of hospitals’ continuing problems in communicating their own prices to patients. These results illustrate the promise of, and substantial barriers to, translating newly available hospital price data into actionable information that ultimately facilitates comparison shopping.

Price discrepancies could be due to a variety of factors, according to the study:

  • Hospital billing office staff might not have understood the inquiry.
  • Hospitals may not adequately train staff.
  • Hospitals might not be aware of its online price estimator tool.

Researchers also said that the lack of correlation may simply “reflect a chaotic and disorganized pricing structure.”

Solving the Case

The Centers for Medicare and Medicaid Services (CMS) has authorization to fine hospitals up to $2 million for failing to post prices. However, according to a September report in HealthcareDive, “there is no formal mechanism for the agency to audit or penalize hospitals that post incorrect or misleading medical costs.” If true, there may be no current or urgent impetus for hospitals to resolve the wide variations between online and over-the-phone prices. Nevertheless, such discrepancies cannot be a good look, and hospitals will ultimately need to address the issue.

The first step to resolving these embarrassing inconsistencies will be to have appropriate personnel undertake a regular review of prices found online for the services that require transparency and ensure that they accurately reflect the price that is given over the phone. Only certain individuals should have the responsibility to give out prices verbally. Coordination of the responsible individuals should be routine rather than rare. The second step is to ensure that the administration makes this coordination of pricing information a priority through (a) regular meetings where such communication is on the agenda, (b) and training, where indicated. No one wants their institution to be accused of giving out conflicting information. That undermines the public’s faith in such institutions, and we have enough of that to deal with in our everyday lives. Furthermore, studies like this appearing in prestigious journals such as JAMA will not escape the attention of regulators at CMS. The secret shopper operation may cause the agency to look at introducing new rules to penalize not only those who fail to publish prices but who fail to publish them accurately.

With best wishes,

Chris Martin
Senior Vice President—BPO

Get the Latest RCM News Delivered

Receive practical tips on medical billing and breaking news on RCM in your inbox.

Get in Touch