The hospital price transparency bill that was signed into effect on August 21 has elicited criticism from the Duke health community.
House Bill 834 mandates that hospitals and medical care agencies in North Carolina—including Duke University Medical Center—provide pricing information on 140 of the most common health care procedures to the Department of Health and Human Services. The DHHS will require information from hospitals on the exact pricing of the 100 most common in-patient treatments, 20 surgical procedures and 20 imaging services. The information will be made available to the public online.
The bill is intended to protect patients’ rights and help them make informed financial decisions regarding health care treatments, according to a press release from Gov. Pat McCrory’s office. Before the law passed, for example, hospitals could file a lien on a patient’s residence in order to collect unpaid medical bills in some situations, but now the practice is banned.
“It certainly does not appear that the legislature understood the complexity of health care economics,” said Kenneth Morris, senior vice president, chief financial officer and treasurer of DUHS.
Morris noted that the law lacks specificity and that posting a single price for procedures at each hospital does not necessarily reflect the price that a patient would pay. Although there may be a flat figure for how much a treatment costs, different patients pay different amounts due to varying levels of insurance coverage. In addition, individual hospitals negotiate contracts with insurance companies which can lead to further variance in medical costs.
“Every patient potentially pays us differently, and the relatedness of what we get paid for and our charges is almost nil,” Morris said.
Another criticism of price transparency revolves around the idea of effectiveness.
Price transparency may not aid patients in obtaining lower cost healthcare or encourage hospitals to match competitors’ lower prices, said Peter Ubel, professor of business administration and medicine.
He added that the new law may increase medical care prices. In many medical insurance plans, the patient’s costs are fixed as a deductible. Any treatment costs over that amount are paid by the insurance company, so patients would pay the same amount at different hospitals, regardless of varying prices.
“If my cost is the same no matter where I go, then I may as well go to the more expensive one if I think that it means it has higher quality.” Ubel said.
Ubel added that reducing health care costs is not something that can be solved by the government alone.
“I think it is an evolving issue and it will be the mix of government and private industry that is going to create a better marketplace,” he said.
The new policy will have little direct impact on Duke Medicine’s operations, Morris said.
“Duke Medicine prioritizes transparency, and we are pleased that the state has joined us in this commitment,” wrote Paul Vick, Duke Medicine’s associate vice president for government relations, in an email Wednesday. “Most of the elements of House Bill 834 are procedures that are already a part of our operations.”
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