The Spread in Hospital Chargemaster Prices for Common Drugs: How New Hospital Transparency Regulations Fall Short
The new Centers for Medicare & Medicaid Services (CMS) ruling requiring hospitals to provide transparent hospital pricing unfortunately comes up short. Most hospital chargemaster lists are anything but transparent.
As of January 1, 2021, hospitals are now required to release pricing data for medications, labs, and services in the form of a chargemaster list, in an effort to make hospital prices more shoppable. But instead of improving transparency, these chargemaster prices are riddled with data issues, are unapproachable for patients, and only really highlight the variable and seemingly random nature of hospital pricing.
Introduction
Recent research on these chargemaster prices illustrates some of their issues. A Bernstein analysis of hospital prices for more than 15 specialty drugs observed a markup 2.5 times higher compared to the average sales price (ASP). And research from Pharmaceutical Research and Manufacturers of America found that hospitals received payments from commercial health plans that were nearly 2.5 times greater than the amount the hospital paid to acquire the medication. However, these analyses are all focused on notoriously expensive specialty medications.
Our team here at GoodRx wanted to compare chargemaster prices to something more tangible — pharmacy cash prices for commonly filled medications. These cash prices, also referred to as the average retail prices, are readily available, and provide a good benchmark for a “fair” price a consumer should pay. But according to our research, in a hospital setting, things aren’t always fair.
After months of parsing the chargemaster data, it’s clear that new legislation aimed at improving transparency may only be a bandaid on a gaping issue within healthcare pricing, and patients, especially the most financially vulnerable, may still be left in the dark.
The below report details our findings on prices for 16 geographically diverse hospitals’ chargemasters for 12 common drugs. Among our key findings:
Charges for routine generic drugs are expensive and vary hospital to hospital.
Hospital chargemasters price common generic medications as much as 6,000% higher than the average retail price at pharmacies nationwide.
Many hospitals are still not adhering to CMS rules.
Data issues abound, hurting transparency and ultimately consumers.
Data and policy changes are necessary for consumers to benefit from the ruling.
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