Hospital prices posted online tend to be confusing

Under Trump administration mandate, all hospitals are required to post their list prices online as of January 1, but doesn’t seem it will be helpful.

UTHealth School of Biomedical Informatics professor Dr. James Langabeer said a chargemaster or charge description manager (CDM)  is a tool hospitals use to manage prices, which lists of every single item that can be used in a procedure, or every single procedure that is provided, associated costs, markup, service it's attached to and final price.

He said it's nearly impossible for patients, or even hospital officials, to accurately pre-determine within a 20-percent difference what your final charges would be for a hospital stay.

"With healthcare, there's no pricing for the final set of procedures that were performed. And, partly that's because even the administrators and physicians that provide care, they don't know all the things that are going to go into the final bill," said Langabeer.

He said it makes the line item prices completely irrelevant, if someone tries to factor in every single line item and ancillary charges and get an accurate final cost.

"Which are going to pull from lab fees, which are going to plug in from bloodwork, which are going to come from nursing charges, possibly, room stays, medications that were administered," said Langabeer.

He said bring in insurance plans and that changes the cost, as well.

However, making hospitals publicly posting prices show how widely facilities vary in what they charge.

And, reportedly, hospitals don’t want to provide the average prices they accept from insurers, because negotiated rates are a trade secret.

California hospitals have been publicly posting prices for more than a decade.

Langabeer said instead, charges should be bundled together, rather than the overwhelming hundreds of thousands of line items.

"We bundle things into a common, practical code, where hospitals could drop down and say, 'if you have this payer and you have this kind of service, this would be an idea of what your final bill would look like'," said Langabeer.

The Golden State uses bundles, called "diagnosis-related groups," or DRGs, in Medicare jargon.

There is not currently a penalty for hospitals that don’t post their prices.

Langabeer said healthcare has been allowed to operate this way because it's an industry unlike any other. He said the mandate is an effort to be more transparent is a step in the right direction, but is unrealistic for an accurate final price. He added the real change needs to be what health economists have known for years, which is the shopping problem in healthcare.

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