Will transparent pricing encourage US medical tourism?


CMS is the US government agency within the Department of Health and Human Services (HHS) that administers the nation’s major health care programmes, including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the state and federal health insurance marketplaces. CMS collects and analyses data, produces research reports, and works to eliminate instances of fraud and abuse within the health care system.

US healthcare pricing principles

CMS has published a strategy on price transparency for US patients, which covers the following principles:

  • Patients should be empowered with the information they need so they can make decisions based on cost and quality, which will make the US health care system evolve to one that competes for patients.
  • Patients deserve to know the price of services upfront.
  • The lack of price transparency has resulted in a system that denies a patient the ability to make value-based health decisions centred on out of pocket costs.
  • Consumers must have more access to price and benefit information, so they are empowered with the information needed to make decisions on their healthcare.
  • Empowered consumers will drive cost and quality by demanding that the healthcare system evolves to compete for patients and deliver better results.
  • Putting patients in the driver’s seat shows a need to integrate quality and price information.
  • Consumers must be able to see the whole picture, empowering them to seek out high value care among providers competing on both cost and quality.

CMS achievements to date

So far, the CMS has achieved the following related to their strategy:

  • Pharmaceutical companies must disclose the list price of drugs in direct to consumer ads.
  • Pricing information is required in the explanation of benefits that plans provide to beneficiaries.
  • CMS has improved the accessibility of hospital standard charge information by requiring hospitals to make it available in a machine readable format. This makes it easier for patients to know the cost of services before they commit to them and allows them to shop for the best value.
  • The ‘Procedure Price Lookup’ tool, launched in 2018, which allows consumers to compare Medicare payments and co-payments for certain procedures that are performed in both hospital outpatient departments and ambulatory surgical centres.

Problems with current published pricing

CMS has already introduced hospital price transparency rules for patients paying the bills. Hospitals must present prices for the thousands of individual services and products for which a hospital may bill, covering everything from the price for a bed per day, blood tests and surgical operating room time (billed in 15-minute intervals), to the cost of a single Tylenol tablet. The hospital selects the majority of the services for which it will post prices, but must also include 70 services chosen by CMS.

In most cases however the posted rates are the highest a hospital would ever charge per service and are rarely the actual prices finally paid because insurers and the government generally negotiate significantly lower prices.

The other historic problem is that services and products are identified in obscure abbreviations, billing codes and medical terminology that doctors or nurses sometimes don’t understand. This is why the new CMS rules are seeking to make hospitals set out prices in a simple understandable way that can be compared.

US hospitals are slowly changing, but at present CMS cannot enforce the rules. A few hospitals show package prices and full lists, but others publish only those details they must show, which is often hidden away on their websites.

A few US states do require hospitals to give consumers price estimates, but the laws are limited in scope and inconsistent across states. Colorado, for example, mandates that hospitals post self-pay prices for the 50 conditions that yield the most revenue from Medicare. Doctors must also post prices for their 15 most popular procedures. In California, law requires hospitals to disclose prices for the top 26 outpatient services by revenue.

New, enforceable price transparency rules

The latest CMS action seeks to empower patients with price transparency, increase competition among hospitals, lower costs for Medicare beneficiaries and allow patients to shop for health care that meets their needs and budgets.  The rules are intended to give customers the ability to compare out-of-pocket costs across different settings of care and be a first step towards ending surprise-billing practices.

Hospitals will have to show the negotiated prices they’ve agreed with insurers, as well as the book prices for self-paying customers. This follows President Trump’s Executive Order on price and quality transparency that lays the foundation for a patient-driven healthcare system.

Forcing hospitals to disclose negotiated rates between payers and providers is a landmark change for America's healthcare system and comes at a time when patients are paying a bigger share of their healthcare costs, thanks to high deductibles that can sometimes reach into the tens of thousands of dollars for families.

The proposals for 2020 include significant changes that would require hospitals to take the following actions:

  • Make public their standard charges (defined as two types of charges: gross charges and payer-specific negotiated charges) for all items and services provided by the hospital.
  • Publish online standard charges in a machine-readable file that includes additional information such as common billing or accounting codes used by the hospital and a description of the item or service. This provides a common framework for comparing standard charges from hospital to hospital.
  • Make public payer-specific negotiated charges for the 300 most common services, in a manner that is consumer-friendly.  A patient can schedule these common services in advance. Examples include x-rays, outpatient visits, imaging and laboratory tests or bundled services such as a caesarean delivery, including pre-and post-delivery care.
  • Consumer-friendly means the hospital charge information must be made public in a prominent location online (or in written form upon request) that it is easily accessible, without barriers, and searchable. It also means the service descriptions are in plain language and the service charges are displayed and grouped with charges for any ancillary services the hospital customarily provides with the primary service.  

CMS considers a hospital to be any facility that is licensed in a state as a hospital that receives Medicare patients. To ensure that hospitals comply with the requirements there will be new enforcement tools, including monitoring, auditing, corrective action plans, and civil monetary penalties of US$300 per day.

CMS is also seeking feedback on the best way to capture information on the quality of hospital inpatient care so that information can be provided to patients in a way that is useful for them when comparing care options.  

What does this mean for medical tourism?

For customers in the USA seeking treatment in their own or another state, this will show the true costs of treatment.

It may also make it easier for overseas customers to compare US prices. However, it will not include all the extra non-surgical costs that a patient or their insurer will pay.

It should also highlight organisations, overseas hospitals and medical travel agents who quote unrealistic US prices just to get a favourable cost comparison.

US healthcare price and service comparison sites, many of whom are changing from just offering information to arranging hospital appointments, will have a huge amount of extra price information to call on.

Real pricing comparison is far from complete, but the steps in the USA plus those in the UK and a handful of other countries to make hospitals and clinics openly show prices online, are a sea change in medical tourism.

Where patients travel from overseas to the USA or UK, domestic providers of healthcare services can react by altering their prices to compete for custom.

To expect a rise in inbound medical tourism, due to more competitive and comparative healthcare pricing, is however too simplistic. Medical tourism is increasingly about availability of service, quality of service and access to the many other customer offerings relating to medical travel rather than price alone.



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