Hospital Price Transparency
In November 2019, Medicare finalized policies following directives given by a President Trump executive order. Its name, “Improving Price and Quality Transparency in American Healthcare to Put Patients First,” summarizes the intent of the order.
Before you view the pricing information for any hospital, we want to provide you with some basic background information about:
- The provided pricing information
- How it relates to a final hospital bill or pricing information included in an explanation of benefits (EOB) from your health insurer
While this information should help you compare prices from hospital to hospital, it is unlikely that your final bill will exactly match the prices listed. We’ll explain more about that later. Each hospital sets a “gross charge” for every individual service rendered to patients within their “chargemaster” or CDM (charge description master). The chargemaster captures the costs for services, supplies, drugs and fees associated with those services. As a patient receives services throughout his or her visit, a charge for each service provided is generated on the patient’s account, resulting in a claim that is submitted to the insurer. The EOB provided by individual insurers details each patient’s actual cost for services provided. Hospitals typically cannot publicly disclose the negotiated rates, making it difficult to compare final prices from one hospital to the next using the gross charge information from the chargemaster.
The Information You Will See: Standard Charges Shoppable Items
Medicare has defined several different types of standard charges that should be available for patients to see. They are:
- Gross charges
- Discounted cash price
- Payer-specific negotiated charge
- De-identified minimum negotiated charge
- De-identified maximum negotiated charge
Here’s a quick overview of each:
The gross charge is the full list price from the hospital chargemaster. Gross charges can vary, sometimes greatly, from hospital to hospital for the same procedure or service based on how each hospital manages its charges and costs. Charges can vary based on geography, physician supply and medication preferences, the kinds of services the facility typically provides, and the expertise required to deliver these services. External factors also play a role: The cost of living in a given area can have a significant effect on wages, which is a major factor in cost calculations for hospitals. Drug and supply costs also vary greatly depending on which (if any) group purchasing organization the hospital is part of.
Discounted Cash Price
The second type of standard charge defined by Medicare is called a discounted cash price, which is the price offered to patients willing to pay in cash at the time of service without involving insurers.
Payer-Specific Negotiated Charge
The payer-specific negotiated charge is the charge that a hospital has negotiated with a third-party payer for an item or service; this is sometimes referred to as the “allowed amount” on an EOB. This charge amount will likely vary from payer to payer and even between insurance plans for the same insurance payer.
De-identified Minimum Negotiated Charge
The de-identified minimum negotiated charge is simply the lowest charge that a hospital has
negotiated across all insurers for an item or service.
The high degree of variation in charging practices and differences in reimbursement methodologies between insurance payers make it difficult for patients to get the intended full benefit of “pricing transparency.” Medicare wanted to give patients another way to compare prices, so they’ve also asked hospitals to create a list of shoppable services.
Medicare defines “shoppable services” as a service that typically can be scheduled by a patient in advance on a non-urgent basis. Medicare has identified 70 shoppable services that all hospitals should include and has asked hospitals to each choose at least 230 additional shoppable services that they perform most frequently.
Every shoppable service will contain an easy-to-understand description of the item or service and standard charges information, including the gross charge, discounted cash price, average negotiated charge for each insurance payer, de-identified minimum charge, and de-identified maximum charge.
You’ll also see a specification for whether the procedure is done on an inpatient or outpatient basis, as procedures done on an inpatient basis may incur additional charges, such as room and board charges.
Where Can You Get More Information?
Calling your insurer is always a good idea if you’re considering an elective procedure and want to get a general idea of your out-of-pocket costs. Your insurer can help you understand how your coverages and deductibles work, as well as your current payment history, as an essential first step.
If you want to get a more general idea of costs or compare your likely costs to those incurred by others, there are a few public pricing resources to consider:
The Centers for Medicare & Medicaid Services (CMS)
Medicare releases annual payment information for inpatient and outpatient procedures. For more information, visit the CMS website.
FAIR Health Medical Cost Look-Up
This is a consumer-oriented tool that provides information on out-of-pocket costs to consumers.
For more information, visit the organization’s website.
If You Have Questions
If you have questions about pricing or paying for procedures or services, we urge you to contact
us our financial counselors at (973) 414-6818. We will be happy to help you with any questions
you may have and want to help you understand your costs for care received at East Orange
Standard Charge Files
You are about to download a spreadsheet of standard charges, which the hospital making available in accordance with Section 2718(e) of the Public Health Services Act and guidance issued by the CMS.
- By clicking below, you acknowledge that the hospital’s list of “standard charges” reflects data in the hospital’s chargemaster, but that your actual financial liability for any hospital items and services received may differ based on your health care coverage or any financial assistance you may receive. Medicare, Medicaid, and other government-sponsored health coverage as well as employer-sponsored and commercial health care plans that have a network provider agreement with the hospital may pay a different amount, and any deductible, copayment, or coinsurance obligation you might have may vary accordingly. In addition, some patients are eligible for financial assistance under our financial assistance policy. If you have questions or concerns about the cost of care, you are urged to contact our financial counselors at the number above.
- By clicking below, you also acknowledge that charges for certain items and services may differ from the “standard charges” shown on this spreadsheet as follows: (1) Charges for drugs and biologicals vary based on market prices, and the “standard charges” shown reflect the charges in effect based on market prices on the date shown. (2) Charges for inpatient admissions vary depending on the particular items and services a patient receives during his or her inpatient stay and the current charges for those items and services, and (3) the “standard charges” shown for inpatient stays reflect the average charges billed during an inpatient stay between the dates shown with no adjustment for subsequent changes in charges.
- To better understand your potential cost-sharing obligation, we recommend that you contact our financial counselors at (973) 414-6818.
I have read and understand paragraphs 1, 2, and 3 above and wish to download the All Services Charges, Shoppable Items and Chargemaster.
To download these files for East Orange General Hospital, please click here.