New ACA Provision Calls for Cost Transparency in Hospitals

May 3, 2014
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As part of the Affordable Care Act, the Centers for Medicare and Medicaid (CMS) has put a new rule about healthcare costs for hospitals: the word is transparency. It’s not uncommon for healthcare consumers to be blind to the costs of a hospital stay until a few weeks post discharge when they get a statement in the mail. Even then, unless it’s itemized, they may not even realize the individual burden of certain procedures or medications.

As part of the Affordable Care Act, the Centers for Medicare and Medicaid (CMS) has put a new rule about healthcare costs for hospitals: the word is transparency. It’s not uncommon for healthcare consumers to be blind to the costs of a hospital stay until a few weeks post discharge when they get a statement in the mail. Even then, unless it’s itemized, they may not even realize the individual burden of certain procedures or medications.

Cost transparency  

Cost Transparency | ACA Provision 

New rules put forth by the ACA will require hospitals to be transparent about the costs of care at their facility. They can do this in one of two ways: either by releasing a list of procedures and their costs, or, releasing the information after an inquiry by a patient.

The hope is that more informed patients will make more informed decisions about their healthcare, and an overall reduction in spending by healthcare professionals will follow. Reducing costs is the number one concern for many healthcare organizations, and while some overspending has been curbed by RAC audits, this only applies to Medicare beneficiaries. By releasing information to all healthcare consumers, reductions will hopefully be seen across the board by both publicly and privately insured patients.

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Cost Transparency | Cost Variation 

A major factor in the ACA’s recommendation of cost transparency comes from the simple fact that costs vary from one hospital to another; sometimes within the same geographic region. It’s not uncommon for a procedure at one hospital to cost more or less than it would at a hospital a few towns away,  both organizations potentially serving the same demographic.

As you can imagine, if consumers knew the cost outright, before making a decision about treatment, they would choose the facility that will charge less. While the ultimate goal of cost transparency may not be to foster competition between hospitals, it certainly demands accountability.

Cost Transparency | Numbers Consumers Can Use

This provision under the ACA requires hospitals to make public their charges, but they do have a certain degree of decision making when it comes to disseminating the information to patients. Hospitals will be tasked with designing and supplying these numbers to patients, ideally in a way that is easy to comprehend and actionable. Numbers mean nothing to consumers unless they can use them.