A state price transparency rule that went into effect this year should give patients, employers, and insurers a clearer picture of the true cost of hospital care. When the Trump administration unveiled the rule in 2019, Seema Verma, then head of the Centers for Medicare & Medicaid Services, promised she would “turn the status quo on its head to empower patients and put them first”.
I wanted to test this statement by comparing prices in two major California hospital systems. I’m sorry to tell you that this status quo – the tangled web that has long obscured hospital prices – is alive, at least for the time being.
I spent hours switching between multiple spreadsheets, each with thousands of numbers, comparing the prices of 20 common outpatient procedures such as colonoscopes, cataract surgery, hernia repairs, and breast lesion removal.
After three months of glassy eyes and a headache from banging my head against the walls of numbers, I throw in the towel. It was a fool’s business. My efforts ultimately resulted in only one piece of helpful advice: do not try this at home.
I’d realized this longest when a conversation with Shawn Gremminger brought me across the border.
“You’re a health reporter, I’m a health care lobbyist, and the fact that we can’t do this ourselves is an indication of where things are now,” said Gremminger, director of health policy at Buyers on Health. which represents large employers who pay their employees’ medical bills directly and who have a great interest in price transparency. “The subset of people who can do that is pretty small, and most of them work for hospitals.”
I’ve heard similar comments from other health industry veterans, even the former managed care manager who inspired the story.
He’d come to me with a table full of pricing information that seemed to show that a Kaiser Permanente hospital in the East Bay was charging significantly higher prices for many procedures than a nearby hospital owned by ore competitor Sutter Health.
That was a compelling claim, as Sutter is widely recognized in California as a poster child for inflated prices. Almost two years ago, Sutter settled a high-profile antitrust lawsuit that accused the hospital system of using its dominance in Northern California to illegally drive prices up.
I knew from the start that it would be difficult to compare Kaiser and Sutter, because operationally it is apples and oranges.
Sutter negotiates separate contracts with numerous health insurers, the prices of which for the same service can vary by thousands of dollars depending on the insurance company. Kaiser’s hospitals are integrated into its insurance line, which collects premiums – so it practically plays with house money. There is only one Kaiser health tariff for each medical service.
Still, the story seemed worth a look. These Sutter and Kaiser prices are important because they are used to calculate how much patients are paying out of pocket. And knowing patients in advance what they owe is one of the goals of the transparency rule.
Federal regulation requires hospitals to price all medical services they provide in giant spreadsheets that can be processed by computers.
It also obliges them to indicate prices for 300 so-called shoppable services, i.e. processes that can be planned in advance, in a more “consumer-friendly” format. And it requires that they state the cost of “ancillary services” such as anesthesia that are normally provided as part of these procedures. Of the 300 shoppables, 70 are set by the government and the rest are chosen by each hospital.
Most of the 20 common medical procedures I tried to compare were among those 70. But some of the best outpatient procedure lists provided by the Health Care Cost Institute were not. I decided to use the more comprehensive, less user-friendly spreadsheets for my comparisons as they included all of the 20 procedures I chose.
Each had a five-digit medical code known as the CPT, a trademark owned by the American Medical Association that stands for “current procedural terminology.” The transparency rule requires hospitals to provide billing codes because they supposedly provide a basis for price comparison, or in the jargon of the rule, “an adequate zebra crossing between hospitals for their items and services”.
Much to my chagrin, I soon found that they didn’t have a proper crosswalk, even within a hospital.
My first inkling of insurmountable complexity was when I noticed that Sutter’s Alta Bates Summit Medical Center in Oakland was listing the same outpatient procedure three times with the same CPT code, thousands of lines apart, at completely different prices. CPT 64483 is the designated code for the injection of anesthetics or steroids into a spinal nerve root using imaging that relieves pain in the lower back, legs, and feet caused by sciatica or herniated discs. The table showed a maximum negotiated price of $ 1,912 on row 12,718, $ 3,650.85 on row 19,014, and $ 5,475.80 on row 19,559 (just glaze your eyes for a few seconds so you know how it feels) . The reason for the triple listing has to do with Medicare billing policies, Sutter later told me. I’ll spare you details.
My head started really hurting when I decided to compare some of the prices I pulled from the large spreadsheets to the same items on the shorter shopping lists. Kaiser’s prices were generally consistent across the two, but Alta Bates had huge discrepancies.
For example, the highest negotiated price for breast lesion removal was $ 6,156 for the large sheet and $ 23,069 for the shorter one. The difference seems to be largely due to the estimated costs of additional services, some of which are rather unspecific and which Sutter lists on the smaller sheet as accompanying material to the procedure: anesthesia, EKG / EKG, imaging, laboratory, perioperative, pharmacy and consumables.
But why not include them in both spreadsheets? And what do the two dramatically diverging prices actually include?
“How many bills they really represent and what they mean is difficult to interpret,” said Dr. Merrit Quarum, CEO of WellRithms based in Portland, Oregon, who helps employers negotiate fair prices with hospitals. “It depends on the timing, it depends on the context that you don’t know.”
In some cases, Sutter said, the shoppables spreadsheets show charges not only for fringe services usually performed on the day of the procedure, but also for related procedures that may precede or follow it by days or weeks.
The listings of Kaiser’s fringe benefits do not always match those of Sutter, which makes the comparison even more difficult. The problematic fact is that hospitals performing the same procedures pool their bills differently, use different drugs, value time in the operating room differently, and use more or less advanced technology. And the medical expenses are not even included in the published prices, at least in California.
All of this makes it nearly impossible for mere mortals to predict the total cost of their medical procedures, let alone compare prices between hospitals. Even if it were possible, it could be of limited value as independent imaging centers and surgical centers, which are becoming more common and generally cheaper, are not required to quote their prices.
The bottom line is I’m afraid that, despite my best efforts, I don’t have anything particularly revealing about Kaiser prices compared to Sutters. The prices I examined were as transparent to me as hieroglyphics, and I’m pretty sure the hospital management – who unsuccessfully complained about the implementation of the price transparency rule – won’t lose any sleep over it.
This story was produced by KHN, an editor of California Healthline, an editorially independent service of the California Health Care Foundation.
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