Cold Iron Truth

Price transparency comes to medicine


There is a Chinese curse which says “May he live in interesting times.” Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also more open to the creative energy of men than any other time in history.

–Robert Kennedy, Cape Town, South Africa, 1966

Well, you may not know it, but price transparency is coming to medicine, including dermatology. The transparency of coverage rule was finalized and released on Oct. 29, 2020, by the

Centers for Medicare & Medicaid Services. It has survived a challenge by the American Hospital Association in federal court, which generally means it is going to “stick.” Its effects should start to appear on Jan. 1, 2022.

Dr. Brett M. Coldiron, a dermatologist and Mohs surgeon in Cincinnati.

Dr. Brett M. Coldiron

The newly finalized rule will require insurers to publicly disclose in-network provider-negotiated rates, historical out-of-network allowed amounts, associated facility fees, and drug-pricing information in easily accessible machine-readable files. This information will be disclosed for the 500 most commonly billed physician services starting Jan. 1, 2022, and expanded to include all services the following year. Understand that you, as a practitioner, do not have to do anything, as insurers will do it for you, but your charge data will be on display. It is not clear if there is an appeal mechanism for physicians to correct erroneous data.

This should provide a fascinating look at just what things really cost, and may prove, as we suspect, small practices are less expensive. Important exemptions to reporting include emergency services, anesthesia, lab tests, and pathology fees, which will not be required, but recommended, to be disclosed.

Bear in mind that this rule was not designed to benefit physicians or hospitals, but rather to allow patients to comparison shop and drive down the cost of medical care. True price transparency may well accomplish this, particularly in our age of sky-high deductibles, if the information is accurate and readily accessible.

Although studies of patient behavior have shown that few patients actually use price comparison tools, the data required to be publicly disclosed and accessible will make this much easier. The Wall Street Journal or ProPublica will likely be all over this with applications to make comparisons easier. Still, many patients are price insensitive, particularly if they are Medicare recipients and only responsible for a nominal deductible.

Almost all the evaluation and management codes, as well as many dermatology procedure codes, are listed in the top 500 items and services included in the initial stage of the finalized rule. These include skin biopsies, destructions, drainages, several different benign and malignant excisions and, of course, Mohs surgery (but only the first stage, the 2nd stage will be listed in 2023).

While it is unlikely for patients to doctor shop for services that are performed on the same day as the office visit, such as a biopsies or destructions, we would expect comparisons for more expensive, planned procedures such as Mohs surgery and cancer excisions. Considering the rule, Mohs surgery may compare favorably to excisions performed in the hospital if the operating room charges are included, but not so well if the pathology and anesthesia charges are not included in the cost. It is inherently unfair to compare Mohs to excision in an operating room since the Mohs procedure has the anesthesia and pathology work embedded in the code (at 55% of the value of the code), and the multiple frozen sections taken by the surgeon in the operating room will not be listed as they are technically considered to be exempt additional pathology services.

Dr. Brian Bishop, fellow in micrographic surgery and dermatologic oncology at the Skin Cancer Center in Cincinnati

Dr. Brian Bishop

This could put the Mohs surgeon in the interesting position of billing for excisions and frozen sections instead of Mohs surgery in order to compete with the hospital-based surgeon. This is not unbundling, if overall charges are lower and if distinctly different procedures are followed and different paperwork is generated. This is how I currently handle patients who demand Mohs surgery for inappropriate sites.

The effect on hospital groups that can charge facility fees could be quite dramatic, as it could be on large groups and on private equity groups who may have negotiated better rates. These increased costs will be revealed to consumers. In January 2023, the insurers will have to deploy a tool on their web site, updated monthly, that details rates for the 500 most common procedures for all in- and out-of-network providers and how much the patient can expect to pay out of pocket. All facility fees for procedures will be included. As noted earlier, we would expect third parties to already have done this. The historical and current costs for medications will also be included, which should make for interesting times in the pharmaceutical industry.

In January 2024, insurers will be required to post all the additional codes they cover, including complex closures, flaps, and grafts and any associated facility fees. Of course, a patient or a surgeon does not know what sort of repair a patient will need after Mohs surgery, but with high deductibles hitting harder, we would expect more patients requesting healing by second intent.

Whether these price comparisons will drive patients from relatively high-cost centers to less costly ones is unclear. This has certainly been the case for MRI and CT imaging. Price transparency for MRIs increased use of less costly providers and triggered provider competition.

Whether the price differentials will allow smaller practices some leverage in negotiating rates is also uncertain. Who knows, perhaps the out-of-network rate is greater than what your contract currently specifies, which could spur you to drop their network entirely. There may be great opportunity here for the smaller practitioner who has been boxed out of the big-group pricing and networks.

Be prepared in January 2022, to discuss these issues with patients and insurers, and be sure to check where you fall in cost comparisons. What possible logic could an insurer have for excluding you from a network where your average charges are less than their current panel? As noted before, this may be a boon for small practices that have been forced to the fringes of reimbursement and an opportunity to demonstrate that they are really much less expensive. We live in interesting times.

Dr. Coldiron is in private practice but maintains a clinical assistant professorship at the University of Cincinnati. He cares for patients, teaches medical students and residents, and has several active clinical research projects. Dr. Coldiron is the author of more than 80 scientific letters, papers, and several book chapters, and he speaks frequently on a variety of topics. He is a past president of the American Academy of Dermatology. Dr. Bishop is doing a fellowship in micrographic surgery and dermatologic oncology with Dr. Coldiron at the Skin Cancer Center in Cincinnati. Write to Dr. Coldiron at [email protected].

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