Price Transparency Becoming More Vital for Hospitals (Part 2 of 2): The Local Unveiling

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Steve Sonenreich, chief executive of Mount Sinai Medical Center in Miami Beach, scored several points for price-transparency advocates when he “made a public pledge Monday to divulge the contractual rates the hospital charges private insurers for diagnoses and treatments,” Daniel Chang reports for The Miami Herald.

Sonenreich’ announcement comes “in the wake of last week’s unprecedented move by the federal government to publicly share what hospitals bill Medicare for the most common diagnoses and treatments.” In doing so, the public discovered what it instinctively knew all along: “hospitals across the country, and even in the same communities, charge the government wildly different amounts for the same care, and they receive varying reimbursements from Medicare in return,” Chang writes.

By revealing what Mount Sinai charges to private insurers, Sonenreich is taking price transparency a step farther. He told WLRN 91.3-FM host Tom Hudson, “We will post our prices relative to Blue Cross, and Aetna, our contractual prices, and we’ll challenge Baptist [Health South Florida] and the other systems in the community to do the same.” Although Baptist didn’t accept the challenge, chief executive Brian Keeley, who was also being interviewed by Hudson, agreed that the industry is going in this direction.

Steven Ullmann, a professor of health management and policy at the University of Miami, told Chang that even though consumers traditionally have not had to worry about this level of price transparency, it will begin to factor into their decisions since the way they’ll pay for insurance coverage is changing.

He explained, “We’re moving more from co-pays to co-insurance, which means that instead of paying a dollar amount for an MRI, say $100 out-of-pocket, now they’re moving it toward a percentage of the price, so you might be paying 20 percent,’’ Ullmann said. “So 20 percent of a $1,000 MRI is going to be really different in terms of out-of-pocket costs versus a $3,000 MRI.’’

Furthermore, most consumers will be purchasing higher-deductible plans “in which patients are responsible for paying a pre-agreed amount of the costs before the insurance kicks in.”

All of these factors will motivate consumer “to shop around more since the first chunk comes out of their pockets.”

Does this mean more health systems will follow Sonenreich’s lead and begin publishing their prices for medical treatment? According to Keeley, this could make matters more complicated for the consumer since “the pricing is…so convoluted. It’s all pre-negotiated rates based many times on an aggregate number of per-stay, per-diagnosis or per-day, not broken down piecemeal.”

A solution to do this could be taken from the pages of telecommunication companies who bundle the prices of their services.

As for Sonenreich, Chang writes, he “has yet to say exactly what pricing information Mount Sinai will reveal to the public, explaining that the hospital bills private insurers according to negotiated rates, sometimes at a per diem rate, sometimes as a percentage of cost.”

What is your opinion on Sonenreich’s move? Is he being wise, or is he grandstanding? Would revealing your private-insurer prices complicate matters for patients, as Keeley asserts?

-by Pete Fernbaugh

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