Health care and health insurance costs, like everything else, are on the rise. For many Americans, the only way to keep monthly premiums down is to choose a high deductible health insurance plan with copays and hefty out-of-pocket maximums. But as much as you want to keep your health care costs down, it's challenging when health care pricing isn't straightforward or easy to find.
The Disparity in Hospital Prices
Deciphering hospital bills and finding advance pricing for medical services is an arduous task. If you are part of a health care plan, the list of specific prices you'll pay exists, but often it's only the insurance company and hospitals who have it. And pricing is not the same for every health insurance company or health care provider.
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Comparing health insurance plans is a challenge, too, as rates vary so widely from hospital to hospital.
How can this be? The cost of medical services, such as your emergency room visit, hospital stay or MRI, is not standardized. Individual health insurance companies negotiate rates with hospitals that their health plan members will pay for medical services and hospital charges. Your out-of-pocket costs are directly impacted by these negotiations – and can leave you wondering if your health insurance provider is bargaining in your favor.
With this system, the costs of medical services aren't equitable for consumers. The variation in pricing isn't reflective of care quality and often can cause "surprise bills" for patients.
However, pricing for Medicare and Medicaid patients is set by federal and state governments, respectively, and it is often at least 50 percent less than what private insurance companies can negotiate for medical service and hospital stays.
In short, the discrepancies in health care service costs have many privately insured Americans spending more money. And, until recently, there was no hospital pricing transparency.
Consider also: These Are the Odds on Big Surprise Medical Bills
Hospital Pricing Transparency
The Centers for Medicare & Medicaid Services (CMS) and the U.S. Health and Services Department (HSS), along with healthcare watchdog groups, have been working to expose and repair the way health care pricing and hospital billing works.
In 2019, an executive order required hospitals to disclose the prices negotiated with health insurance companies. In July 2021, President Biden issued the Competition Executive Order, which helps the CMS hold hospitals further accountable for price transparency and impose steep fines for non-compliance.
The jury is out on whether pricing transparency will ultimately decrease or increase costs for consumers. Still, one thing is certain: the American consumer deserves to be informed and able to shop around for inpatient or outpatient hospital services.
What It Means for You
Depending on the copay or coinsurance structure of your health insurance plan, researching and getting price estimates before you schedule a health care service with a provider can cut down the cost of your annual health care.
Consumers with lower-premium, high-deductible plans are fronting the cost of doctors visits and other covered services throughout the year. Some deductibles are high enough that younger consumers in good health aren't likely to reach the point where coinsurance finally kicks in.
For those patients, the costs of health care services hit the pocketbook directly all year long. And for patients of all ages and states of health, getting more for every health care dollar is vital.
Consider also: How to Save a Ton on Health Insurance Immediately
Steps You Can Take
If you have an employer-sponsored health plan, you may not have a choice between insurance companies, but among in-network providers in your health system, you can get price estimates for health care services. If you select your own health care plan, it's still not easy to know which insurance companies negotiate the best pricing, even with price transparency regulations.
However you are insured, before booking an inpatient or outpatient medical service, visit your healthcare provider's website for their price transparency page, list of standard charges and shoppable services. You'll need to enter information about your HMO or PPO health plan for the most accurate pricing.
If you don't find pricing transparency, you can use a tool to help you estimate costs or call the healthcare facility and ask.
In addition to shopping around, it's always a good idea to use tax-advantaged dollars, such as a health savings account (HSA), to pay for hospital services and medical care.
Until health care and hospital pricing are fair and transparent, you need to be the smartest healthcare shopper – and payer of medical bills – that you can be.
Consider also: What Is a Health Savings Account?
- Health Care Cost Institute (HCCI): The Insanity of U.S. Health Care Pricing: An Early Look at Hospital Price Transparency Data
- Centers for Medicare & Medicaid Services(CMS.gov): Hospital Price Transparency
- HCCI: Healthy Marketplace Index
- The George Washington University School of Business" What Is a Chargemaster and What Do Hospital Administrators Need to Know About It?
- Consumer Reports: How Paying Your Doctor in Cash Could Save You Money
- Clear Health Costs
- Healthcare Bluebook
- Centers for Medicare & Medicaid Services: Hospital Price Transparency: Consumers
- Northwestern Medicine: Patient Estimates (Guest Account)
- Northshore University Health System: Cost of Care Estimates
- CMS.gov: National Health Expenditure Data 2020
- Census.gov: Health Insurance Coverage in the U.S. 2020
- American Hospital Association: Understanding Healthcare Prices: A Consumer Guide