Despite new regulation, few hospitals are transparent about their prices

In January 2021, a new rule on hospital price transparency from the Centers for Medicare and Medicaid Services (CMS) went into effect. The rule requires hospitals to publish the prices that they negotiate with insurance companies, as well as the cash price for patients without insurance.  Additionally, hospitals have to publish their prices for 300 “shoppable” services in a consumer-friendly format, either in a list of services or a price estimator tool.

This new rule could be a gamechanger for employers, insurers, and patients. For patients who are deciding where to go for an upcoming elective procedure–particularly those with a high deductible–being able to compare prices at different hospitals beforehand could be very helpful. Employers and insurers can also use hospital price information to try and lower their costs, either by negotiating prices down, or encouraging beneficiaries to go to cheaper hospitals.

Are hospitals disclosing their prices?

However, none of these potentially transformative changes can happen if hospitals don’t comply with the rule. About a month after the rule went into effect, we took a look at the websites of eight hospitals/systems in the Boston area, and found that compliance was spotty.

Now, two new studies find that the pattern of low compliance is nationwide. In JAMA Internal Medicine, researchers from the Harvard Medical School looked at the websites of a random sample of 100 hospitals, as well as the 100 largest hospitals by revenue. They found that only 17% of the random sample were fully compliant with the rule. The largest hospitals weren’t much better either, with just 25% fully compliant.

Researchers from the University of Minnesota School of Public Health found a similar pattern in their analysis of 470 hospitals, with less than a quarter fully compliant with the rule. However, there was some good news: The majority of hospitals (73.5%) included data in a consumer-friendly format for shoppable services.

A closely guarded secret

The sticking point for hospitals appears to be the payer-negotiated rates. Both studies found that hospitals were least likely to include the prices they charged each insurer. “That’s by far the most sensitive information [and] the product of a negotiation between an insurer and a hospital. [It] has typically been closely guarded and private until now.” said Jean Abraham, the lead author of the study and professor in the division of Health Policy and Management at the University of Minnesota, in Modern Healthcare.

According to the University of Minnesota study, private nonprofit hospitals and hospitals within systems were more likely to disclose their prices compared to public hospitals or hospitals not affiliated with a system. Public hospitals may be facing implementation difficulties, given the stress of Covid-19 surges and their relative lack of financial resources.

However, even the wealthiest hospitals are taking their time in disclosing prices, as the study by Harvard Medical School researchers shows. It’s likely that the potential $300/day fine from CMS is not enough to scare these large hospitals into giving away their secret price negotiations…at least, not yet.