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Imagine your living room couch is falling apart to the point where you have to replace it to prevent it from becoming a hazardous situation.

It’s a long drive into town and you’ve got to plan for the extra cost it will take you to get there, but your hometown repair guy says you have to get a new couch, so you have to do it. There isn’t a store in town that sells couches though, so you’re going to have to drive to the nearest city.

So, in this imaginary situation, you go to the nearest city and stop at St. Vincent’s Home Care Alliance to buy a couch. But the couch doesn’t have a price tag. And you don’t really get a choice as to what kind of couch it is, or what color it comes in. You ask about the price tag, and a special billing person from St. Vincent’s says it should be around $400, but it could be more or less depending on your credit card company, so you hope that your credit card company has negotiated a good deal with St. Vincent’s.

And imagine that when the couch is delivered, it comes with three pillows, two end tables and a lamp, all from other stores, and all of whom St. Vincent’s has determined are necessary accessories from their preferred couch accessory providers. These too come without a price tag, and are not negotiable in terms of type, style or color. But, again, you can’t go without the couch, so you accept them and hope that your credit card company has negotiated good deals with those stores as well.

Now imagine that a month or two after you buy the couch, you start getting separate bills for the couch, the pillows, the end tables and the lamp. St. Vincent’s has decided that the couch is worth $750. Big Home Store has provided the pillows and thinks they’re worth $150 each. Mega Furniture Provider has provided the end tables and says they’re worth $400 each. And Comfort Living has provided the lamp it determined is worth $200. 

Now, your credit card company has an agreement with St. Vincent’s and it has decided that the couch is only worth $500, but that you are responsible for paying $100 of that, based on the terms of your credit card contract. And your credit card company has an agreement with Big Home Store, so it decides the pillows are only worth $50, and you’re responsible for $25 of that because it’s pillows and not a couch. However, the credit card company doesn’t have an agreement with Mega Furniture Provider, so they say you owe them $800 for the two end tables. And while your credit card company has an agreement with Comfort Living, you haven’t spent enough on your credit card so far this year, so per your credit card contract, you’re responsible for the entire $200, but if you buy more lamps, you’ll only have to pay $100 for each lamp.

In this scenario, buying a $750 couch, that someone told you would only cost $400, now costs you $1,175 even though you have a great credit card company. It’s a price tag you weren’t expecting, had no idea would be so much, and comes largely from stores St. Vincent decided were essential to replacing your couch.  

And if you want to question the prices, you have to call St. Vincent’s since it’s so far away. They blame the credit card company. When you call your credit card company, they blame the companies that provided the pillows, the lamp, and the end table. When you call the accessory companies, they all blame St. Vincent.

This, in essence, is the financial reality of our healthcare system.

And despite new legislation that requires hospitals to be more transparent about billing, the hurdles facing rural residents when it comes to their healthcare costs are leaving many fearful of surprise bills that can prevent them from seeking the care they need.

“It’s ridiculous that the only person who doesn’t know how much a medical procedure will cost is the consumer,” said Andrea Ducas, senior program officer with the Robert Wood Johnson Foundation. 

Ducas said one of the problems with the American healthcare system is its lack of transparency when it comes to billing.

It’s very difficult, she said, for a hospital to give a patient an overall price for how much a particular treatment or procedure will cost because there are so many variables involved in the procedure and how it’s paid for.

Take a hip replacement, for example. When a patient goes into a hospital for hip replacement surgery, the only thing the hospital bills for are the facilities fees – what the hospital provides as part of the surgery. But the orthopedic surgeon doesn’t work for the hospital, they work for a provider group. That provider group will bill for the surgeon’s time. And the anesthesiologist works for another provider group, and they will bill separately from the hospital – as will any pathology group that does lab work and radiology group if there’s a need to take x-rays.

To further complicate things, in many cases, services are provided in an itemized fashion. So an anesthesiologist can’t give you an estimate as to how much it will cost to put you under for the hip surgery because there’s no telling how much drug they will have to use, or how long they will have to have you under for.

In addition, insurance providers negotiate with hospitals how much they will pay for a service, with different companies negotiating different rates.

“It’s very difficult for a hospital to tell you how much a procedure will cost,” Ducas said. “Most hospitals, even the non-profit ones, are businesses that have to survive financially. The problem is no one is looking out for the consumer.”

In an effort to give patient consumers more of an understanding of what a hospital will bill them for a procedure, the Trump administration put in place the Hospital Transparency Rule

Starting on January 1, 2021, the Centers for Medicare and Medicaid Services (CMS) required all hospitals to post pricing for their services on their websites – both as a comprehensive machine-readable file with all items and services, and displayed in a consumer-friendly format.

Not doing so could result in fines of up to $300 per day for the hospital, CMS said.

“These actions are necessary to promote price transparency in healthcare and public access to hospital standard charges,” the agency wrote in the final rule. “By disclosing hospital standard charges, we believe the public (including patients, employers, clinicians and other third parties) will have the information necessary to make more informed decisions about their care. We believe the impact of these final policies will help to increase market competition, and ultimately drive down the cost of healthcare services, making them more affordable for all patients.”

But so far, hospital compliance is low, said Jennifer Schultz, Ph.D., a professor in the Department of Economics and the director of the Health Care Management Program in the Labovitz School of Business & Economics at the University of Minnesota Duluth.

“Less than a third of hospitals across the country have complied,” Schultz said. “Many hospitals are saying the cost of complying is so large that they are opting to pay the fine instead.”

For hospitals that do comply, some make locating the information so difficult it’s impossible for consumers to find.

One study in March found that out of the 100 largest hospitals in the country, 65 were not compliant with the new rule.

Even those that are compliant can vary wildly in the information they provide. The information provided by Massachusetts General Hospital, for example, contains 3,669,193 observations covering more than 65,000 items and services for 19 payers and 54 insurance plans. Information provided by Pocahontus Memorial Hospital in Buckeye, West Virginia, provided not only the base charge for services in an easily readable format but how that price compared to the average charge for the same service at other area hospitals.

But the transparency rules don’t go far enough, Schultz said. The rule doesn’t provide information about what discounts are provided or what insurance companies pay or even what it costs the hospital to provide the service.

“Costs are increasing, and what’s driving those cost increases are hospitals,” she said. “Hospitals have no incentives to limit costs.”

And those transparency rules don’t apply to third-party vendors – like anesthesiologists, surgeon groups, and radiology groups.

Combating the lack of information consumers have when making healthcare decisions starts at the local level, she said. It starts with the hospital board members standing up for consumers, she said, and for those in positions of power at the local and state level to question why things cost so much and why the healthcare system is so confusing for the average consumer to navigate.

Because hospitals, doctors, and insurance companies have powerful lobbyists working on their behalf, it’s an uphill struggle for consumers to be heard, she said.

“Lobbyists have such a huge influence on lawmakers,” she said. “Unfortunately, there’s not that many powerful lobbyists out there protecting the interests of the consumer.”