The “list price” for healthcare treatments can vary wildly and may not reflect what will appear on a patient’s bill, a new study finds.
After reviewing listed prices for a particular therapy — radiation treatments for prostate cancer — researchers concluded that publicly-available price lists for cancer treatment may not help patients who want to shop around for the best deal.
Since 2019, hospitals have been required by the U.S. Centers for Medicare and Medicaid Services (CMS) to post prices online for the services they offer, in what is called a chargemaster.
“The prices we found were all over the map,” said Dr. Trevor Royce, an assistant professor of radiation oncology at the University of North Carolina at Chapel Hill and the study’s senior author. “And they were much higher than what Medicare typically pays.”
The point of making hospitals create a chargemaster was to facilitate comparison shopping and to foster competition, Royce said.
The problem with the system is that the list prices may not reflect what insurance companies are actually paying for services, Royce said. “They are not the true negotiated rates that the hospitals and insurance companies agree upon,” he explained. “Those numbers might be more meaningful, but that is not what is listed publicly because they are considered to be proprietary.”
While the CMS has tried to fix the problem by issuing a new rule that would force hospitals to post negotiated rates, that change may not be implemented any time soon, Royce said. “Several hospital groups have filed lawsuits in federal court to prevent it from becoming a reality,” he added.
To get a sense of whether the CMS rule mandating hospitals post prices would help patients, Royce and colleagues concentrated on a common treatment, radiation therapy for prostate cancer, and checked prices listed at National Cancer Institute designated cancer centers.
As reported in JAMA Oncology, of the 63 designated hospitals, 52 listed a price for the treatment the researchers were looking for. “We found prices were hard to find on websites and not at all uniform,” Royce said.
In fact, prices varied wildly, with the highest price 20 times that of the lowest: $399,056 versus $18,368. The average cost was $111,728.80, which is more than 10 times the $11,091 that Medicare pays.
The wide variation in prices didn’t surprise Amanda Starc, an associate professor of strategy at the Kellogg School of Management at Northwestern University in Chicago.
What you’ll pay generally depends on the deal your insurance company negotiated, said Starc, who wasn’t involved in the study. But there is a group of consumers for whom the numbers may have more meaning: those without insurance.
Without an insurance company to negotiate, consumers can end up with a bill for the amount shown in the chargemaster, Starc said.
As for shopping around, that’s not something everyone can do, Starc said. “If you’re looking at MRIs, you might be willing to travel a little further to get a less expensive MRI,” she added. “But that’s a little different from traveling for cancer services.”
The new study highlights the difficulty patients face trying to find out how much their care will cost, despite efforts by the CMS to make pricing more transparent, said Dr. Akila Viswanathan, interim director in the department of radiation oncology and molecular radiation sciences at Johns Hopkins Medicine in Baltimore.
“Royce and Colleagues’ article shows how much ‘mis’ informative price transparency can be for patients,” Viswanathan said in an email. “Information on price does not reflect the true cost of care, nor does it reflect the charges sent to a patient on a bill. Obtaining the true cost of care and the potential financial impact on a patient remains elusive despite price transparency.”
