Hospital price transparency still lags a year after new rule
A recent study finds that many months after hospitals were required to post their prices, only 6% of hospitals are adhering to all of the requirements.
In January 2021, a new government rule went into effect, mandating that hospitals make their prices for all services publicly available. While most hospitals had previously posted their “chargemaster” prices (the full price before any negotiations with insurers), that’s not very helpful information for the nearly 300 million Americans who have insurance.
The new rule was designed to help solve this problem: hospitals are now required to publish the prices they charge for every payer for all services, and make the negotiated prices for 300 “shoppable” services available in a consumer-friendly format. Hospitals can either post the list of shoppable services online, or make a price estimator tool available for patients to calculate their out-of-pocket costs for these services.
While the rule has the potential to help patients and payors reduce their healthcare costs, it can’t work if hospitals don’t comply. Unfortunately, compliance has been low thus far. A study in mid-2021 found that only 17% of hospitals in a random sample had posted their insurer-negotiated and cash prices in both machine-readable and patient-friendly formats.
Even six to nine months after the rule went into place, most hospitals still haven’t made their prices available. In a recent study in JAMA, Dr. Waqas Haque, clinical investigator at NYU Langone, and colleagues provide an update to these earlier investigations. They looked at price transparency rule adherence across 5,239 hospitals, six to nine months after the rule went into effect.
Across these hospitals, only 6% had all of the required types of prices (such as insurer negotiated prices and cash prices) publicly available in the required formats. About half of the hospitals did not have the required prices available in any format. Hospitals were much more likely to post their prices in a consumer-friendly format than machine-readable format, potentially because machine-readable files allow for more comparison and analysis across hospitals by researchers (such as this analysis from Health Affairs on colonsocopy prices).
What characteristics were associated with better compliance? The study results suggest that hospitals with the most to gain from keeping their prices secret are doing so. Hospitals that had monopolies in their region were 67% less likely to be compliant with the rule, compared to hospitals in areas with a lot of competition.
“It’s possible these hospitals are also just less likely and less incentivized to provide their price information than other, smaller providers,” said Dr. Sunita Desai, an author of the study and assistant professor of population health at NYU Grossman School of Medicine, in STAT News.
Hospital competition may give hospitals more incentives to post their prices, as insurers and patients demand more transparency and hospitals strive to gain an advantage against their competitors. Reduced price transparency could be another reason to be wary of big hospital mergers.
Wealthier hospitals are also better positioned to absorb the fines that the Centers for Medicare and Medicaid Services (CMS) has threatened to give to hospitals that don’t comply. The maximum $2 million/year fine is just a drop in the bucket for large hospitals in terms of revenue. CMS sent more than 300 warning letters to hosptials last summer, but just recently started imposing fines on hospitals, fining Northside Hospital in Atlanta, GA $883,180 and Northside Hospital Cherokee in Canton, GA, $214,320, according to Modern Healthcare. Hopefully these fines and additional scrutiny on hospital compliance will put pressure on hospitals to comply — although transparency is just one step toward getting hospital prices under control.