Home Health Care News Hospitals Dodge Price Transparency Rule

Hospitals Dodge Price Transparency Rule

Few hospitals across the United States have complied with a federal order to provide accessible online descriptions and costs of all provided items and services, even with months to prepare.

Effective on January 1, the Hospital Price Transparency Rule requires publicly posted costs of 70 core services and 230 other services in plain language for the consideration of health care shoppers. All items and services must be displayed in a “consumer-friendly format.” According to the Centers for Medicare and Medicaid Services (CMS) website, this is key for “consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.”

More than 90 percent of Americans support transparency in health care costs, according to multiple studies. With the Trump administration introducing the rule and President Joe Biden’s expressed support, it is likely to remain intact.

Hospitals, however, are not fully complying with the price transparency requirements. At a March 11 presentation before the Americas Health Insurance Plans conference, Deloitte US, an audit, consulting, tax, and advisory services company, stated hospitals are reluctant to release data until they see how their competitors are following suit.

Standardization a Problem

Compliant hospitals lack standardization. Inconsistent labeling and pricing for services were noted by the consulting firm ADVI, which reviewed 20 of the nation’s largest hospitals. In their report, ADVI analysts found some hospitals evaded transparency by making available data difficult to locate on the hospital website.

“We found the results varied greatly amongst the hospitals, as some made the required information obvious on their websites while others seemingly buried the links,” the report said. “All of the top 20 hospitals published some type of pricing information, but not all appeared to completely comply with the mandate and show information for 300 shoppable procedures.”

The firm also found that data was not always downloadable in a user-friendly format, and hospitals often failed to provide HCPCS codes for services, which can cause price confusion.  For example, one of the most commonly billed Medicare services analyzed by the company ranged in price from $200 to $1534, and a commonly used radiology code for non-contrast CT scans varied from $90 to $2,033.

Hospitals Fought Back

The rule faced strong opposition from the American Hospital Association, U.S. Chamber of Commerce, and other groups, citing violation of First Amendment rights. The AHA’s lawsuit to overturn the rule was dismissed June 23, 2020, and the U.S. Circuit Court of Appeals for the District of Columbia denied an appeal filed by the AHA, on December 29.

The rule, as reported by Health Care News, surpasses previous attempts at hospital pricing transparency by requiring the public posting of out-of-pocket cash prices charged to uninsured patients and negotiated prices for payers. Beginning January 1, 2022,  CMS will require machine-readable public files and posting of negotiated rates with third-party payers, removing cost data control from most health plans.

One issue is the difficulty in knowing the complete price of a procedure,  state Joseph Antos, and Peter Cram, M.D., in an April 5 JAMA Network article, “Making Hospital Price Transparency Work for Health Care Consumers.”

“In addition to the main procedure (for example, a major joint replacement), ancillary services (such as laboratory services, radiology, or charges for professional services) are often billed separately,” Antos and Cram write. “Physicians who are not employed by the hospital set their own charges without informing the hospital. Hospitals are not required to include prices for ancillary services they do not provide themselves. As a result, the package price of shoppable services may not include additional charges that could be sizeable.”

Additionally, the rule does not require ambulatory surgery centers and other sites, which may charge less, to publish their prices, the authors write.

A Fundamental Flaw

There is one fundamental flaw, however, says John Goodman, president of The Goodman Institute and co-publisher of Health Care News.

“The Trump administration was well-motivated, but it overlooked one important thing: hospitals don’t compete for patients based on price,” Goodman said. “Because of the third party payment system, they only compete on amenities.”

That reality explains why hospitals may be dragging their feet on posting prices.

“It is no surprise that hospitals have responded to the transparency rule by posting prices in a way that patients can’t possibly understand and posting them in places that are difficult to find,” Goodman said. “When providers compete on price, as they do in the markets for cosmetic and Lasik surgery, patients have no trouble finding out what procedures are going to cost.”

Ashley Bateman (bateman.ae@googlemail.com) writes from Virginia.

 

Ashley Bateman
Ashley Bateman is a policy reform writer for The Heartland Institute and contributor to The Federalist as well as a blog writer for Ascension Press. Her work has been featured in The Washington Times, The Daily Caller, The New York Post, The American Thinker and numerous other publications. She previously worked as an adjunct scholar for The Lexington Institute and as editor, writer and photographer for The Warner Weekly, a publication for the American military community in Bamberg, Germany. Ashley earned a BA in literature from the College of William and Mary.

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