Hospital CEO discusses challenge of making charges more transparent

To make the often confounding costs of hospital care more transparent, the centers for Medicare and Medicaid Services, or CMS, are this year requiring hospitals to post their standard charges. The president and CEO of Holy Name Medical Center calls that a good first step, but one that could cause even more confusion. Correspondent Michael Hill recently spoke with Michael Maron.

Hill: Mr. Maron, the CMS came up with this rule last year and hospitals were to implement this on Jan. 1 — listing their prices, codes and so forth. What do you think of this?

Maron: I think it’s a very good first step, but it’s important for everybody to understand this is a very minuscule first step. This isn’t even getting your little toe in the water just yet. And the problem that I have, and the concern that I have, is if it’s not followed up quickly with other measures, other requirements, it’ll be more confusing and create more chaos than help.

Hill: What do you mean by that?

Maron: So, every hospital has her own unique charge structure. There is no uniform consistency as to what a hospital decides it wants to call a charge item, how we name it, how we number it and, obviously, what we charge for it — that’s step one. Step two, every payer pays differently. The charges that we published today, for 99 percent of the people that seek services here, are meaningless. That’s not how we get paid; it’s not how their bills get generated. It’s based on what Medicare decides to pay if you’re a Medicare recipient, how Medicaid decides to pay if you’re Medicaid, or how any payer, whether it be Horizon Blue Cross in New Jersey, or Aetna, or Cigna, or United Healthcare, they all have their own rate structures, their own methodologies as to how they pay. So when I go to Holy Name’s website, and say I want to look up what an EKG costs here, well I have to first find how we define EKGs, and then what good does it do if I can’t compare it to anybody else, because they use different nomenclatures, they use a different structure. And all of that is completely irrelevant to what your payer is ultimately going to pay.

Hill: Do you think you will ever see what you’re talking about, though, where someone can go online and say, “OK, here’s everything,” and really, actually do some comparisons?

Maron: Yes, and that’s why I think this is a very good first step because I think there has to be a little bit of a revolution that’s got to come from the payers — from the patients themselves — and they have to push, and I think you push hardest with the largest payers, which means first with the government. And New Jersey used to do this 30 years ago where there was an all-payer system and the methodologies and the rates that were applied were uniform across the board. It was actually not a bad system. It was like a utility system where the hospitals then would appeal to a rate-setting board and say, “These are what my rates should be.” But the methodology and the publication of those rates were consistent. Then you could actually do accurate price comparison from A to B. Today you can’t.

Hill: What was it like for Holy Name, the process of preparing for Jan. 1? I looked at your list online — you must have a million entries there when you talk about the procedures, you talk about the codes and you talk about the prices.

Maron: Right, so even our pricing structure here has gotten very complicated and complex over the years. There’s actually, it’s not a million, but there’s a little over 30,000 individual charge items. So again, how do I search through 30,000 items to find out what it is that I need? And a lot of those items aren’t discreet — they come in tandem. So when I come in for a service, it is never a single specific item, it is multiple items. So it’s like going to the food store, to use that analogy, I can’t just buy milk. I got to buy milk bundled with eggs, and cereal, and whatever because it’s around a breakfast as opposed to just milk, right? That’s how health care works. And that grouping and that organization doesn’t exist, and so it’s chaotic. And that’s what we’re grappling with now. The fact that we at least have made this step to make it public, to start to push toward that transparency, to start to talk and have the conversation how pricing needs to be available and visible to the end users is a big, big positive first step. But we have a long, long way to go.