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Analysis

New York State Price Transparency Proposal May Not Work as Intended

By Alexandra Wilson Pecci  
   February 18, 2020

While posting hospital prices online seems like a good idea, in reality, it would likely cause more confusion for patients.

When New York Governor Andrew M. Cuomo announced late last year he would direct state agencies to create a consumer-friendly website to allow New York patients to compare hospital healthcare costs, familiar alarm bells went off in the revenue cycle community.

Although elements of the proposal were similar to others, there was also a difference.

"Private negotiations between hospitals and insurance companies will be revealed to the public," Kerry Martin, co-founder and CEO of Vitalware, said of the new efforts.

The in-development website, nyhealthcarecompare.ny.gov, aims to allow consumers to easily compare cost and quality of healthcare procedures; access educational resources and financial assistance options; and teach people what to do about a surprise bill.

"Governor Cuomo is proposing that hospitals disclose the negotiated prices they have with payers and provide that information to patients," Martin told HealthLeaders via email.

He says that "on paper" posting hospital prices online seems like a good idea, but in reality, would likely cause more confusion for patients.

As Melissa Greer, vice president of revenue cycle at UCHealth in Colorado, told HealthLeaders last year, "I would argue that it is almost useless information, and in fact, in many cases, is a disservice to patients because it's not what they would expect to pay in almost any scenario."

In addition, Martin pointed out that healthcare providers often make decisions mid-procedure that may change the costs that patients were expecting.

"By the end of the procedure the total cost could be completely different," he said. "If a patient had done their research online and determined the anticipated cost using the New York State website, and is then presented with a far different bill, who is to blame?"

Although price transparency and calls for publishing the chargemaster is nothing new—and something that health systems are complying with in varying degrees—Martin said that the New York proposal will also reveal to the public "private negotiations between hospitals and insurance companies."

"Not only does this remove the capitalistic opportunity for the hospitals, negating the need for negotiated prices, but it tightens hospitals’ purse strings significantly. This can be especially damaging for teaching hospitals trying to educate students at far higher costs," he added.

Instead of mandating things like publishing chargemasters, Martin said, "the number one thing lawmakers and states should do is involve the payers."

"They are the ones with the full understanding and knowledge of what exactly goes into the negotiated price and what patients pay out of pocket," he said. "The caveat is that payers are private companies and protect these negotiated prices so fiercely it’s highly doubtful they would give that information to the public freely."

Another solution might involve giving ranges for procedure pricing, along with "a large disclaimer that a certain percentage of the time the proposed price will become inaccurate due to unforeseen factors during the procedure," Martin said.

Alexandra Wilson Pecci is an editor for HealthLeaders.


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