Price shopping in Michigan proves difficult despite new rule for hospital costs
Mar. 16—A new federal rule requires hospitals to post prices online for 300 "shoppable" health care services that can be scheduled in advance — but the information can be challenging to find online and might not include all of the charges, a Detroit News review found.
The Hospital Transparency Rule, which took effect Jan. 1, was adopted by the federal Centers for Medicare and Medicaid Services in November 2019 in hopes it would help consumers make better-informed decisions, spur competition between hospitals and bring down prices.
The News compared the cost of a routine colonoscopy at 10 Metro Detroit hospitals but found it difficult to make apples-to-apples price comparisons. The hospitals all posted multiple prices, depending on the scenario — such as whether there was a polyp. And the procedures were described in medical jargon, such as "Colonoscopy Flx Dx Wi/Collj Spec When Pfrmed (Outpatient) — CPT 45387."
The cost of the simplest colonoscopy varied by thousands of dollars between the health systems and sometimes even between hospitals belonging to the same system.
But hospitals also differed on what was included in the estimate. Some provided a comprehensive estimate that included hospital charges, doctor fees and lab tests. Others included only the cost of the hospital's services, which made direct price comparisons nearly impossible.
Competition will eventually make hospitals more consumer-friendly, said Cynthia A. Fisher, founder of the Patient Rights Advocate, a Newton, Massachusetts-based nonprofit focused on hospital price transparency.
"In general, we have not been able to see prices, whether you're the employer or the individual consumer," Fisher said. "For the first time, all of us are going to be empowered to see and know the real prices in health care so that collectively as individuals, and also if you're an employer, we can start to shop."
But the way hospitals are complying with the rule, including in Michigan, is not providing transparency, she said.
"We are already seeing tech innovators come into this space to take the downloaded files ... and to synthesize and aggregate them so that people can shop easily," she said.
Eventually, hospitals might start bundling colonoscopy-related charges so people are charged a single price whether there's a polyp or not, Fisher said. That situation would make it easier to comparison shop.
"That we know can be done because you can go online to a surgical center and find the exact all-in price — a fully bundled price, soup to nuts," she said.
Some day, Fisher said, there will probably be phone apps that allow consumers to comparison shop for health care in the same way they do now for groceries, cars and other products.
Asked to comment on the transparency requirement, Terrisca Des Jardins, executive director of the Center for Health and Research Transformation, and Nancy Baum, health policy director at the University of Michigan center, said "the devil will be in the details."
"Our biggest concern is whether price transparency is going to provide meaningful and actionable information to consumers about what the actual cost of their care is," they said in an email. "And unless there is a clear and consistent process for translating and comparing price data, it may be confusing to consumers."
What the rule requires
The federal Affordable Care Act already required hospitals to post prices, but they usually published their "chargemaster" prices, or the cost of services before any discounts or insurance coverage is applied. Part of this year's requirement was to beef up the amount of information available on chargemaster spreadsheets, which include tens of thousands of lines of data.
Chargemaster prices provide little help to consumers because they don't reflect what individuals or insurance companies actually pay, Fisher said.
More important for consumers, the new rule requires hospitals to post supposedlyeasy-to-understand information on their discounted cash prices, or the real prices paid by cash-paying customers, as well as the prices hospitals negotiate with individual insurance companies for 300 medical services. The U.S. Centers for Medicare and Medicaid Services, known as CMS, stipulated 70 of those services; hospitals chose the rest.
The American Hospital Association and other industry groups opposed the rule and challenged it in court. Critics argue CMS underestimated how much it would cost to implement the requirement, and pricing information is complex and can be confusing to customers.
There's no standard format for how hospitals present pricing information, and the federal rule could make it hard to comparison shop, said Ryan Catignani, vice president of managed care and accountable care services at Southfield-based Beaumont Health, Michigan's largest health care system with eight hospitals.
"Beaumont and the other systems are trying to do right by the ruling, but I do believe it's going to unintentionally cause more confusion than it's intended to do," he said.
"Not every system's file looks exactly the same or contains the same amount of information. So I think it would not be as easy as the government would have hoped for someone to sit down and pull (prices) for four systems and get the complete information that they want.
"The complexity of management care contracting, and the way that providers and insurers contract with each other — it does not lend to an oversimplified type of disclosure."
Catignani added Beaumont wasn't "overly concerned about the rule."
"Generally, we knew going into it that we were already priced competitively, and price transparency wasn't going to be a sticker shock dynamic for us," he said. "We've had a price estimator for a long time at Beaumont Health."
How to navigate data
To test the usefulness of the information, The News checked out the prices for a routine colonoscopy at 10 Metro Detroit hospitals — three each from the Beaumont Health, Henry Ford and Ascension Michigan health systems as well as Michigan Medicine, the University of Michigan health system.
The health systems all provide a link on their websites to the price information, but it can take a few minutes to find.
From the homepage at beaumont.org, for example, the user needs to click on Patients and Families to get to the price information. At UofMhealth.org, Michigan Medicine's main page, consumers select the Patient and Visitor Guide, then Billing and Payment, to reach the cost estimator tool.
All four health systems' websites have price estimator tools even if consumers don't have an account at the hospitals. The hospitals also have online and telephone assistance.
Each health system requires users to agree to a disclaimer acknowledging they'll be getting only an estimate, and the price could be different depending on severity of the patient's condition, length of the procedure and other variables.
Consumer advocate Fisher argued hospitals, like other businesses, should post one price and stick with it. Hospitals would benefit from winning more patients' business, and the cost of complicated procedures would be balanced by those that are easier to perform, she said.
"We believe that estimates are not appropriate," Fisher said. "In every other sector of the economy, we can get the actual price. And estimates are yet another game being played to keep patients in the dark."
The estimator tools ask consumers to enter the name of the procedure. There can be multiple options to choose from, depending on details such as whether anesthesia is used or a biopsy is done.
Under "colonoscopy," the Henry Ford Health System listed 20 options. Beaumont Health listed eight, while there were five each at Ascension Michigan and Michigan Medicine.
"It is a little complicated," said Eric Neal, director of patient pay services at Henry Ford Health System,noting people can call for assistance in choosing the right code. "In the future, we won't have to have so many buttons.
"If folks aren't confident in their selection, we would want to walk them through it."
On all of the websites, each option includes at least one CPT code, a five-digit number that describes the service for billing purposes. With a little research, The News identified the code for the most basic colonoscopy procedure with an ultrasound — the price of which was used to compare prices at each health system.
"Typically, your order for colonoscopy will tell you what your code is," said Denise Waters, vice president of revenue cycle at Beaumont Health.
The News found the price of a colonoscopy can also vary even among hospitals that are part of the same health care system. And some estimates do not contain all of the charges a patient can expect — so it's important to read the fine print.
Neal said Henry Ford hospitals post doctors' fees because the health system employs all of its doctors, so they know what the charges are. Health systems where most doctors are in private practice — and not employed by the hospital — aren't likely know what their physicians charge, he said.
The estimates provided by Henry Ford Health System, Ascension Michigan and Michigan Medicine covered both hospital fees and physicians fees. But the estimates for Beaumont Health hospitals included only the hospital fees.
Among Ascension Michigan hospitals, the estimated out-of-pocket cost for a basic colonoscopy paid in cash without insurance ranged from $4,049 at Ascension St. John Hospital in Detroit to $4,113 at Ascension Genesys Hospital in Flint to $7,089 at Ascension Providence Hospital Southfield.
Asked why the cost was so much higher at Ascension's hospital in Southfield, the health system said in a statement: "Pricing does not reflect our financial assistance and charity care policy, and could vary by individual patient and by facility. We encourage those who are seeking or scheduling care to contact their Ascension care site for pricing."
The estimated out-of-pocket cost totaled $5,330 at all three Henry Ford Health System hospitals The News looked at — Henry Ford Hospital in Detroit, Henry Ford West Bloomfield, and Henry Ford Allegiance Hospital in Jackson.
Michigan Medicine estimated the cost at $2,619, including doctors' fees.
Beaumont Health estimated the price at $1,131 for its hospitals in Royal Oak, Dearborn and Trenton — but the estimate didn't include doctors fees, which are included in the estimates from Henry Ford, Ascension Michigan and Michigan Medicine.
'Price transparency' is the future
Hospitals that don't comply with the new rule can be fined $300 per day, up to a total of $9,500 per year, and can be barred from participation in the federal Medicare and Medicaid programs that provide a large chunk of hospitals' revenue.
The rule doesn't apply to ambulatory surgery centers or physicians who are not directly employed by the hospital. Critics contend a large share of outpatient procedures are done outside of hospitals, and most physicians are not employed by hospitals.
The cost estimator tools allow people to plug in their own insurance information to get an estimate that considers their particular policy and the amount of their co-pays and deductibles.
"If a patient is shopping for health care, if a patient is trying to find the best quality at the lowest cost, we want to drive patients to 'Get An Estimate' because it incorporates the patient's responsibility in the estimate," said Neal of Henry Ford's estimating tool.
"When they're having a procedure done, that procedure might cost them zero if they've met all their cost-sharing obligations."
Neal said he still thinks overall the new transparency requirements will benefit consumers.
"I think that price transparency is the future of how folks utilize health care," Neal said. "In our pricing department, we find folks every day asking for estimates and trying to understand what options they might have to make important decisions."
More transparency is a good thing, but people aren't going to comparison shop if the information is too hard to wade through, said Marjorie Mitchell, executive director of the Michigan Universal Health Care Access Network.
"Just to know what one hospital does and then having to shop all of them is not simplicity," said Mitchell, whose group advocates for Michigan's health care consumers. "Few people will go through all of that to find something."
The ease of using the information could be improved over time, she said, but only if consumers demand improvement.
"Usually those things do not move forward without some push from the public," Mitchell said.
Twitter: @kbouffardDN
