What physicians need to know about the Healthcare Transparency Act

The healthcare transparency act was recently updated. Here’s what it’s about and its potential consequences.

The Centers for Medicare and Medicaid Service’s (CMS) Healthcare Transparency Act, which came into effect on January 1st of this year, states that all hospitals are to release a list of all pricing information for their shoppable services. The list must feature at least 300 such services and the lowest prices they are willing to accept for said services from patients who don't use insurance.

Hospitals must also list all the healthcare services that patients can ask for in advance and exclude urgent services from the list.

The standard charges include the following:

  • Gross charges
  • Payer-specific negotiated charges
  • Charges for cash-paying customers
  • Minimum negotiated charges
  • Maximum negotiated charges

According to the act, the list will be public property published online. The act further demands that healthcare outlets share the list in a single data file compatible with all computing systems.

Further instructions include that the hospital must mention:

  • Billing codes
  • Accounting codes
  • Descriptions of all items or Services on the list

Purpose

The intent of the Healthcare Transparency Act is to help patients compare the prices of different healthcare services across providers and hospitals. Many patients have a hard time deciding which provider to choose for healthcare services and often end up paying more than what they could have saved.

Criticisms

Some have argued that the Act is superficial. They say that healthcare economics are more complicated than consumer economics because the former involves several factors that do not contribute to planned billing. One of the reasons is that most hospital visits are spontaneous and urgent.

Therefore, they claim, it is baseless to link the healthcare system with any individual business. There are several cases where physicians refer patients to other physicians and hospitals depending on their health conditions. In such cases, unifying the costs of a health procedure on a list seems superficial. In an emergency, patients will not whip out their phones to check for prices while running to the medical care. This completely debunks the idea that healthcare consumerism contributes to the difficulties patients face when getting healthcare.

Consequences

The Healthcare Transparency act is sure to cause a ripple effect and leave several consequences. Here are some:

Increased competition

With the introduction of the new act, competition between hospitals is sure to rise. The hospitals might introduce new and more competitive prices in response to the act. Patients might end up paying a lot more money than they would have previously. It is also possible that many hospitals might offer more services in their outpatient hospital departments in place of their inpatient departments.

Increased prices

Private payers pay less, and if this law is applied to its full extent, the payment disparities might come up. This can cause a paradigm shift where large organizations might see that they are not charging what other smaller establishments are. Moreover, many small healthcare outlets may significantly increase their prices taking inspiration from competitors.

Closure of small hospitals

Survival of the fittest is a phenomenon that one cannot ignore any longer. Small scale hospitals that operate within rural communities must pay their physicians higher salaries to hire or retain them. Considering this, if the act comes into play, these small-scale hospitals might not have enough funds to pay these physicians and could end up losing them to higher-paying establishments.

Stunted Technological Growth

Hospitals are only able to experiment with emerging technology because they have the funds to do so. If they do not have the funds, they might stay back while the world around them progresses. The lack of funds and technological growth will only harm the patients in the long run.

The Healthcare Transparency Act on the surface seems like the best solution, but what goes on underneath the surface is a different affair altogether.

About the Author
Lyle Solomon principal attorney and VP at Oak View Law Group.