Wall Street Journal Examines State Law Requiring Hospitals To Disclose Price Schedules
Some hospitals in California "are being forced to defend themselves against allegations that they have preyed on patients for debts that were inflated" after a law (AB 1627) requiring hospitals to list their pricing schedules has shown that prices for medical goods or services "fluctuate wildly" across the state, the Wall Street Journal reports (Lagnado, Wall Street Journal, 12/27/04).
The law, introduced by Assembly member Dario Frommer (D-Los Angeles), requires hospitals to report fee schedules for supplies and services to the Office of Statewide Health Planning and Development (California Healthline, 9/29/03). The law does not require hospitals to explain how they determine a price.
According to the Journal, hospital pricing can be affected by competitive market forces and regional factors, such as labor costs, real estate, labor union influences and capital-improvement costs.
Frommer said the law -- which requires each hospital to disclose its "chargemaster," or book that lists prices for all medical services and goods -- was intended to help people determine how much some medical services would cost and to encourage hospitals to limit or alter markup policies, the Journal reports. However, several hospitals have reported that few state residents have asked to examine the chargemasters.
Tenet Healthcare spokesperson Harry Anderson said that hospitals' pricing systems serve as a "negotiating tool" for HMOs that request discounts. To remedy price discrepancies, hospitals should develop a new system that is fair to both consumers and hospitals seeking reimbursement, according to Anderson. However, some industry officials have said that pricing systems would be difficult to change.
In the article, the Journal lists pricing differences among hospitals in the state for various goods and services, including Tylenol, chest scans, brain scans and leeches used for medical purposes (Wall Street Journal, 12/27/04).