Good faith health care law demands paperwork, not accuracy
- Despite legislation aiming to increase price transparency in healthcare, the current system makes it difficult for hospitals to provide accurate upfront cost estimates.
- A simplified, standardized billing system, potentially modeled after the diagnosis-based reimbursement for inpatient care, could improve price transparency and empower patients.
- Capping patient responsibility for unforeseen additional outpatient services on the same day could also help bridge the gap between estimated and final costs.
It was to be a watershed moment for American health care. Beginning Jan. 1, 2021, every hospital was required to post online a list of services and their costs. One year later, the 2022 No Surprises Act, including good faith estimates, further bolstered consumers by protecting them from unforeseen costs. Finally, it seemed patients had the tools to make empowered decisions.
This January saw another iteration of the law, but it too is destined to disappoint. Despite several revisions, these federal laws have uneven compliance due to their poor design. Good faith estimates given to patients are sometimes incomplete, and thus, inaccurate. Hospitals support price transparency and work to provide patients with thorough information.
The federal government has set a noble goal, but there are built-in incompatibilities, with instructions that conflict with other government rules. The mismatch means hospitals are managing the tension on their own, making some patients vulnerable.
Accurately informing all patients of their total costs is possible if government and hospitals work more closely together to simplify medical billing.
In my profession, I have observed that Medicare, the largest payor in the nation, influences how all claims get made. Private insurance companies regularly follow the federal behemoth in deciding their own provider documentation requirements and coverage determinations.
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Insurers often use what’s known as prospective payment: The hospital submits details of what service was provided (if outpatient) or the diagnoses (if inpatient). The insurer then sends payment back accordingly. Herein lies one fatal flaw for up-front price transparency — before the patient arrives, no one knows exactly what services the patient will need.
Physicians’ orders must routinely be altered. For example, adding blood tests before imaging contrast can be safely administered or needing more procedural work than expected, with more anesthesia and more recovery time under nursing supervision. There is little to no time to check if there will be an out-of-pocket cost.
For inpatients, until a full evaluation is complete, no one can say for sure what information will be submitted to the insurance company. As much providers may wish to allow unexpected services to be “on the house,” we also must bill patients equitably. Absent clear direction, different facilities will handle these changes differently.
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Hospital employees around the country diligently create custom good faith estimates for certain outpatients daily. However, compliance with the good faith law only demands administrative effort — not accuracy. Add-on services may bring the total far from the estimated amount, and this is permitted.
The more high-stakes and expensive the care, the more likely any cost estimate is to be wildly off-base. The kicker? Uninsured patients with a good faith estimate usually have no legal right to dispute the additional charges, since the dispute resolution process is only for price discrepancies from the original order (the “good faith” part).
Providers can also add services for “unforeseen circumstances.” Such clinical nuance is commonplace enough that the entire good faith estimates process becomes suspect.
A 2023 amendment required estimates add known “co-providers,” such as a radiologist with an MRI scan. The 2025 revision dictates that online prices have more information fields, such as rate negotiation methodologies, drug measurements and potential claims modifiers.
Nothing accounts for the fact that the U.S. payment system will not reliably allow patients to know everything they will be billed for until after the fact. The constant legal revisions indicate that the federal government values the appearance of action, but not effectiveness.
A regulation with many loopholes isn’t effective. Unless insurers, led by Medicare, move to a condensed menu of billable services, price transparency laws will continue to fail. Worse, patients who do get an upfront estimate may be lured into false confidence.
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Drastically clarifying national billing codes would make accurate estimation achievable at scale. In the 1980s, hospitals survived the transition to diagnosis-based reimbursement for inpatient care. Creating a similar model for outpatients now would narrow the gap between expected cost and the final bill, for patients with and without insurance.
Another solution could be to cap patient responsibility for outpatient services added on the same day due to unforeseen circumstances. Should the Centers for Medicare & Medicaid Services, the American Medical Association and others agree on a clearer fee schedule, hospitals could then give patients unchanging price information with confidence.
The first Trump administration created the faulty transparency regulations, and increasing enforcement won’t solve the underlying problems. Simplifying our nation’s medical billing industry would truly bring transparency.
Ashley Emans is a health administrator, president of the Northeast Florida Association for Healthcare Quality and a Fellow of the American College of Healthcare Executives.
This guest column is the opinion of the author and does not necessarily represent the views of the Times-Union. We welcome a diversity of opinions.
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