Hospitals now required to list prices online for every medical procedure, service

Hospitals in Michigan and across the country rang in the New Year with a federal mandate to reveal their once-secret master price lists, although it's unclear whether this new requirement will assist many patients or contain ever-rising health care costs.

Starting Jan. 1, hospitals must publish online the starting price tags for every service or procedure. These detailed lists, known as chargemasters, include thousands of entries, from $791,790 for a heart transplant at Henry Ford Hospital to $2 for a syphilis test at Detroit Receiving Hospital.

The 2010 Affordable Care Act required hospitals to make these lists available to the public, but until this week, hospitals were not required to publish them. The new mandate marks an effort by the Centers for Medicare & Medicaid Services to improve price transparency in health care.

However, health care experts stress that consumers — even those with high-deductible plans or even no insurance — should not consider these lists to be realistic price guides.

That is because these prices are typically starting points for payment negotiations between hospitals and insurance companies and have little connection to what most patients actually pay. 

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The only time that most consumers glimpse chargemaster prices is on hospital bills as amounts they might have owed before insurance negotiated down the price.

“It’s not a particularly useful datapoint," said Marianne Udow-Phillips, executive director of the Center for Health and Research Transformation in Ann Arbor. "I don’t expect it to have a significant impact, and I don’t expect it to be a driver of lowering health care costs.”

For patients with commercial health plans such as Blue Cross Blue Shield, the price of services and procedures is determined by private negotiations between their insurance company and the hospital.

So these patients should check with their insurance company for actual pricing information, including whatever deductibles they must pay before insurance fully kicks in.

“If a patient goes online and sees a (chargemaster) price that they can't afford, I’m concerned that some consumers might forego needed care — especially if that price is the total cost of service and not what the consumer is expected to pay based on what their insurance plan covers or not," said Dr. Mark Fendrick, a University of Michigan professor and director of U-M's Center for Value-Based Insurance Design.

Some uninsured patients may indeed be directly billed at chargemaster prices. But hospitals typically give discounts when requested, experts said.

In addition, a Michigan law prevents hospitals from charging full prices to lower-income uninsured patients. Those patients can't be charged at higher than 115 percent of Medicare rates.

"The chargemaster itself is essentially the sticker price that nobody pays," said Jim Lee, vice president of data policy and analytics with the Michigan Health & Hospital Association, an industry group. "It is the starting point or floor for pricing."

Wide variation

The Free Press found wide variations in the quality and depth of chargemaster price data posted online by southeast Michigan hospital systems. There also was significant variation in prices — even among hospitals in the same health system.

Hospital systems such as Henry Ford, Detroit Medical Center and the University of Michigan have voluntarily published additional lists that show all-in prices for various procedures.

For instance, the list price for a hip replacement is $70,621 at Henry Ford Hospital in Detroit. The same procedure is priced at $79,178 for Michigan Medicine hospitals and $90,556 at DMC's Harper University Hospital.

The Free Press could not find comparable all-in prices for hip replacements for Beaumont Health hospitals or for Ascension St. John Hospital in Detroit.

An Ascension Michigan representative said the health system encourages patients seeking detailed price information to contact their hospitals directly.

Robin Damschroder, chief financial officer at the Henry Ford Health System, said that Henry Ford could later this year introduce an online tool that would give patients price estimates that reflect their specific insurance plan.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @JCReindl