Price Transparency May Not Aid Patients in Preparing for Financial Toxicity

How providers communicate medical bills to payers and patients, mandated by the US Centers for Medicare & Medicaid Services, still did not help patients and health care professionals in understanding differences in cost.
BY Kristie L. Kahl
PUBLISHED January 17, 2020
Hospital chargemasters, which is how providers communicate medical bills to payers and patients, and the descriptors for radiation therapy mandated by the US Centers for Medicare & Medicaid Services (CMS) are not uniform, according to a study published in JAMA Oncology. Therefore, costs can be highly variable and hard for patients and providers to understand.

“This study suggests that implementation of the CMS price transparency policy may not be sufficient to enable patients to estimate or compare prices,” the researchers explained. “…the potential harm of discouraging appropriate care by listing inaccurately high prices deserves further study. Price transparency has the potential to drive value-based decision-making and decrease the financial toxicity of cancer care; however, this analysis demonstrates the potential perils and short- comings of recent price transparency policy.”

Because financial toxicity is a consistent challenge for patients with cancer, price transparency has been a proposed solution to help individuals budget for expected treatment costs.

In January 2019, the CMS finalized a rule requiring hospitals to publicly publish the standard prices for all hospital services and procedures. Then, in June, President Trump issued an executive order to mandate disclosure of negotiated rates between insurers, hospitals and physicians to provide more actionable cost information.

“The stated goal was to encourage ‘consumer friendly communication’ to help patients understand their financial liability and ‘enable patients to compare charges...across hospitals,’” the researchers wrote.

However, chargemasters have been criticized for having limited correlation to final costs. Therefore, the researchers compared these costs among National Cancer Institute (NCI)–designated cancer centers to determine the variability in charges in intensity modulated radiation therapy (IMRT) for a patient with prostate cancer.

“We used patients with prostate cancer as an example because these patients often have various treatment options and seek second opinions at different institutions, but the results can be applied to other patients who need radiation therapy as well,” the researches explained. “…Even the patients with the greatest sophistication may have difficulty deciphering price information.”

In particular, they analyzed the degree of price variation, the association of the average price to the price paid by Medicare and the association of the prices with the practice expense geographic practice cost index, as determined by Medicare.

Of the 63 designated hospitals, 52 (84%) listed a price for simple IMRT that is associated with standard prostate cancer radiation treatment.

The researchers found a 21.7-fold difference in price was found between the least and most expensive hospital.

In particular, for a standard 28-fraction treatment, the charges ranged from $18,368 to $399, 056, with an average of $111,728.80. Procedure descriptions were inconsistent and the average price was 10.1 times the price paid by Medicare.

“Prices were listed per individual procedure (not the entire course of care), were often difficult to find on the website, and used inconsistent nomenclature for procedures across different hospitals,” the researchers wrote. “Prices also varied more than is typically expected in commercial insurance market and had a mean price more than 10 times the price that Medicare pays, making it unlikely that the price information is reliable enough to facilitate comparison shopping or drive price competition.”

In addition, there was a weak positive association between price and geographic practice cost index.

“There is wide variation in the price of radiation treatment, but the complexity of chargemaster information and the unclear association between price and patient cost make the value of the information for patients questionable,” the researchers concluded.
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