Hospitals’ “list prices” drawing greater scrutiny

Here’s a word most health care consumers probably have never heard but should care about: “chargemasters.”

That’s what health care industry insiders call hospitals’ list prices. They’re important because hospitals can set their prices for procedures and services however they want, with the understanding that payers, typically your health insurance company, will pay less through a negotiated rate.

Patients who are uninsured or at a hospital not in their insurance network are typically charged the full amount.

Now chargemasters are drawing more scrutiny because of rising health care costs and wide variations in pricing practices.

“These list prices do have an impact – hospitals have every incentive to keep raising them and no incentive not to,” George Nation, a professor of law and business at Lehigh University, told the journal Modern Healthcare.

What’s more, these prices have little relation to the actual cost or quality of the procedure, according to a study published in Health Affairs. The study looked at Medicare payment data from 3,230 U.S. hospitals’ chargemasters and found that hip replacement surgery varied from $39,100 to $71,600.

Generally, large for-profit hospital systems had higher chargemasters than smaller, independent nonprofit hospitals. The study also found that some list prices more than doubled over the past 10 years, which may be why a growing number of academics and economists have called for greater transparency and reform.

Have you had an experience with a high hospital bill? Were you able to negotiate a lower payment? Share your story with Voices for Affordable Health.