The cost of a common procedure, such as delivering a baby, can vary by thousands of dollars among hospitals, said Ben Steffen, Maryland Health Care Commission executive director.
"The price difference can't always be attributed to quality," Steffen said in a statement. "Sometimes prices are just higher, and consumers are entitled to know that."
Prices for the same procedure can vary by thousands of dollars in neighboring hospitals based on their overhead costs, competition, payer network and other market factors. Part of that variation is related to a hospitals' list prices, which they often inflate to give them better bargaining leverage with commercial insurers.
Yet, list prices "have at most a limited correlation" to care quality, according to a 2017 Health Affairs study.
Business leaders, public officials, government agencies and consumers have called on healthcare organizations to be more open about their pricing. They have often been reluctant to share the information because of the perceived competitive advantage.
Sen. Bill Cassidy (R-La.) is leading a bipartisan coalition of senators who support price transparency. The CMS recently announced plans to require hospitals to publish their list of standard charges online. HHS Secretary Alex Azar includes price transparency as part of the administration's healthcare reform platform.
Yet, little progress has been made on a wide-scale basis. If providers and insurers have revealed their costs, they have been difficult to understand since the information is presented in varied ways—some provide unit costs, others total costs. Early returns on these transparency tools show that fewer consumers than expected use them to compare prices.
Maryland has been relatively proactive on the transparency and policy front. It has a unique all-payer model, which helps Maryland populate the cost data via its all-payer claims database.
Maryland's total healthcare cost index was 14% below a five-region average analyzing the Maryland, Utah, St. Louis, Minnesota and Oregon markets, according to a 2016 analysis of commercial claims published by the Network for Regional Healthcare Improvement. The cost index reflects Maryland's overall service utilization—lowest among the regions—and its slightly below average prices.
Providers have been under pressure to release prices and are required to release quality information by state and federal agencies, but that's not enough, Steffen said.
"Consumers need to play a role, and our updated website will help educate and encourage them to appeal to hospitals and others to make prices and information on quality and safety readily available," he said.
