Hospital Price Transparency: From 2019 to Now

In November 2019, the Department of Health and Human Services (HHS) established transparency requirements for hospitals to disclose costs for services. 

The Health Care Price Transparency Rule, which went into effect January 1, 2021 (with alterations still pending), requires hospitals to publish a public list of about 300 hospital charge items/services and display them on their website for easy price transparency. The standard charges listed are for shoppable services such as an ultrasound, a knee replacement or any other services that a consumer would have the time to research out. 

Hospitals are supposed to make public a few different charges: 1) gross charges; 2) discounted cash prices for those without insurance; and 3) payer-specific negotiated charges, including de-identified minimum/maximum negotiated charges for all shoppable services.

“By disclosing hospital standard charges,” the Federal Register log states, “we believe the public (including patients, employers, clinicians, and other third parties) will have the information necessary to make more informed decisions about their care. We believe the impact of these policies will help to increase market competition, and ultimately drive down the cost of health care services, making them more affordable for all patients.”

The Affordable Care Act already required hospitals to disclose prices and update those lists every year before the November 2019 ruling. Many hospitals were posting their chargemaster prices, but overtime CMS didn’t feel this practice helped patients since chargemasters do not represent the actual cost of care. 

Not everyone agreed with the transparency requirements. The American Hospital Association (AHA), along with three other national organizations, sued the federal government challenging the final rule. The case is pending in a federal appeals court.

In fact, the AHA sent a letter at the beginning of January 2021 to HHS, “urging the agency to exercise enforcement discretion with respect to the rule, at least until the end of the COVID-19 pandemic.” 

The letter also argued that legislation passed at the end of 2020 (approximately a year after the initial transparency ruling and immediately before its effective date of January 1, 2021) included “additional transparency requirements like providers needing to develop ‘good faith estimates’ for total expected charges for scheduled items and services.” The AHA pointed out that regulations defining how to meet these requirements have not yet been issued.

However, a new study by the Peterson-KFF Health System Tracker found that patients still face significant barriers to shopping for healthcare services, despite these new transparency requirements. 

Awareness of price transparency tools is still low among consumers, compliance to these requirements is nonexistent and listed prices are at least partially inaccurate and vary widely by geographic region and within the same region.

For example, the average price of a lower back MRI in Oakland, California, was $853, a whopping 244% higher than the average price in Orlando, Florida, where it was only $349.

Fees can even vary within the same network of hospitals that operate in the same health system. The Health Affairs podcast reported that for a right knee replacement, fees ranged from $15,000–56,000 within the same system of hospitals.

Of course, payer contracting with each health care provider and patient deductibles are the cause of so much grief within pricing estimates. Not to mention, adjustments and modifiers added to a claim can add to a patient’s charges and make the estimated price inaccurate. 

In March 2021, a Health Affairs blog reported on their study of the 100 largest hospitals by bed count and determined that 65 of them were “unambiguously non-compliant” to the transparency rule between January and February 2021. Some hospitals posted no pricing data, some posted unsearchable pricing data, some included charge prices but not negotiated rates.

In regard to the unsearchable pricing data, the Wall Street Journal reported similar findings in April 2021 stating that some hospitals hide pricing data from online search results. 

Noncompliance has become such a problem, in fact, that CMS proposed new rules that would increase penalties for noncompliance for larger hospitals, reported NC Policy Watch in July 2021. Under these new rules, penalties would increase from $300 per day to $10 per bed for those with more than 30 beds, with a maximum fee of $5,500 per day. Hospitals with fewer than 30 beds would remain with the same fine of $300 per day.

The proposed rules are about halfway through a 60-day comment period that began August 4.

However large the problems around healthcare price transparency may be, U.S. health care cost specialists see hospital price transparency requirements as a worthy start, reported NPR.

George Nation, a professor of law and business at Lehigh University who studies hospital pricing, told NPR that price transparency is good news to consumers. "Individuals will be able to get price information, although how much they are going to use it will remain to be seen."

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