HomeHealth Care NewsHospitals Could Face Steep Fines for Not Posting Prices - Maybe

Hospitals Could Face Steep Fines for Not Posting Prices – Maybe

The public is waiting to see how serious the Biden administration is about enforcing a pro-consumer rule by the Trump administration requiring hospitals to post the prices they charge for 70 “shoppable services” and 230 other procedures in a user-friendly format.

The rule went into effect on January 1, 2021, before President Biden was sworn into office on January 20. It was unclear how the new administration would enforce the rule or whether it would buckle to pressure by the hospital industry. The American Hospital Association and three other national organizations sued the federal government over the rule and in December 2020, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Trump rule in a 2-0 decision.

Nevertheless, a March study in Health Affairs found 65 out of 100 of the nation’s largest hospitals were “unambiguously non-compliant.” A report in July by the watchdog group, Patient Rights Advocate that found 94.4 percent hadn’t met one or more of the rule requirements. That month, the Centers for Medicare and Medicaid Services (CMS)  told Bloomberg Law it sent out 165 letters warning hospitals they had 90 days to comply with the rule.

CMS also proposed increasing the penalties for price transparency violations from $300 a day to $10 per day per bed, up to $2 million per year for larger hospitals. CMS also said it would crack down on hospitals failing to make the price data more accessible in automated searches and direct downloads.

Domino Effect

Making hospital prices more transparent is considered a hallmark in health care reform because it can have the effect of keeping all prices under control, similar to what consumers experience when booking a flight or shopping for goods online.

“Armed with actual prices, including discounted cash and secret, negotiated rates, healthcare consumers can enjoy easy recourse if their healthcare bills do not match – without needing a lawyer,” states Patient Rights Advocate.org, an early proponent of health care price transparency.

The Health Care Choices 20/20 plan, for example, urges Congress to codify the price transparency rule, so consumers “can compare prices and obtain the best value.” On May 7, the Health Care PRICE Transparency Act, sponsored by Rep. Warren Davidson (R – OH) was introduced in the House. The bill, however, keeps fines for violations to the $300 a day limit stated in the original rule. Until the price rule, consumers and even large health care groups had nearly an impossible time getting a list of prices hospitals would charge for any service. Prices could differ among plans and even within plans.

Even though many consumers use a third party to cover hospital expenses, there is a role for finding the lowest cost site of care, says Katy Talento, the executive director of the Alliance of Health Care Sharing Ministries and a former top health advisor at the White House who led the drive for price transparency. “Almost everyone has some sort of cost-sharing,” Talento told Health Care News.

With rising deductibles and co-insurance, nearly one in five Americans are unable to pay for needed health care, according to the Journal of the American Medical Association. Talento says the health care system is to blame.

“Price information is usually hidden in health care, and prices can vary – for the same service at the same facility – by orders of magnitude for no discernible reason except for their secrecy,” said Talento. “Uninsured patients, insured patients with high deductibles, and members of Health Care Sharing Ministries have every reason to demand an end to this broken system as they seek medical care.”

Health care sharing ministries are particularly sensitive to hospital pricing because they function as a cooperative.  Members “share” the medical expenses of others.  Additionally, they are non-profit, and while that keeps downs member contribution costs down, there is no reserve fund to cover higher than average claims.

“Our ministries share what our members can bear and the more discounted prices that they can obtain for their members and help their members negotiate for themselves, the more bills they can share in and the more people they can serve,” said Talento.

According to the Alliance of Health Care Sharing Ministries, more than 1.5 million Americans are using health care sharing ministries and since 2019, members have “shared” $1.3 billion of medical expenses.

Price Transparency Pushback

There has been skepticism that price transparency can work in communities where more often, there is only one hospital in town.

That makes the case of price transparency in health care even stronger, says Talento.

“Patients are willing to drive someplace else if we’re talking about saving thousands of dollars,” said Talento. “They are even willing to get on a plane and go somewhere else.”

Talento says she knows of one patient in Georgia who was able to negotiate with her hospital after looking up the price posted by the Surgery Center of Oklahoma.

“They took her price,” said Talento.

Another concern has been that large hospital systems will create “price wars” and put smaller competitors out of business.

“The idea that these big hospital systems, these bloated, corporate academic medical centers that claim they can’t possibly operate without all kinds of federal funding streams to keep themselves afloat because they’re ‘so special and academic,’ the idea that they are going to undercut an innovative competitor like the Surgery Center of Oklahoma, is a joke,” said Talento.

Congress and the Biden administration need to fight hard to promote hospital price transparency, says Talento. “Hospital compliance with the new rule is still unacceptably low,” said Talento. “We call on all hospitals to stop the cover-up and honor their patients’ rights to meaningful price transparency in advance of care.”

 

AnneMarie Schieber (amschieber@heartland.org) is the managing editor of Health Care News.

 

AnneMarie Schieber
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.

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