Price Transparency Rule Could Pose Challenges

While the jury is still out on how consumers will react to the administration’s proposed price transparency rule, there are two clear challenges that the ruling could pose for providers, according to one expert.

Under the proposed rule, hospitals would be more transparent about their charges.

“First, the proposed rule might significantly affect providers’ ability to negotiate varied rates in payer contracts,” says John Kelly, principal business advisor, Edifecs, a global health information technology solutions company based in Bellevue, Washington, with operations internationally. “Providers often do not want payers knowing the various rates they are charging and the discounts that some payers might be receiving.”

Second, this rule would require providers to publish a price list, he says.

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“However, in fee-for-service models, providers need to charge according to the chargemaster fee schedule,” Kelly says. “The reality is, hospital chargemasters are often far out of sync with the payments made under contracts to payers. Calculating a single price list that reflect reality will be a significant challenge. Patients rarely are charged the chargemaster price, so publishing the official chargemaster would be misleading and create a very negative view of a hospitals actual pricing practices.” 

According to Kelly, as healthcare executives consider responding to this proposed rule, one solution might be to consider charging based on an average price of a service rather than the chargemaster price.

“Regardless, there is a clear movement toward greater cost transparency for patients, the key will be how we provide patients with the most current and accurate information rather than outdated models,” he says.