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Nearly every term, state legislators propose a bill to enforce hospital price transparency.
If they know a federal law already exists, they appear to ignore it. Unfortunately, most hospitals ignore it, too. This might tell us something about the effectiveness of such legislation.
Congress did take up the question of federal regulatory enforcement this year.
House Republicans target Biden admin over hospital price transparency noncompliance
To improve price transparency, the government could consider extending reporting requirements to more provider sites, or make compliance a condition of participating in Medicare, witnesses testified.
Democrat and Republican lawmakers in a House Ways and Means committee hearing on Tuesday were split on how much price transparency can help curb healthcare costs, with Republicans criticizing the Biden administration for not doing enough to enforce price transparency reporting requirements on hospitals.
Since 2021, hospitals have been required to post a machine-readable standard charges files for their items and services, along with the actual price of 300 shoppable services. Only 25% of hospitalsare fully complyingwith price transparency rules, according to Patient Rights Advocate. CMS has fined four hospitals for noncompliance to date.
“Do we really think that nearly every American hospital is in compliance? We don’t know, because CMS doesn’t make compliance reviews and enforcement actions public. We can get more information about a local restaurant from Yelp than you can get about your local hospital from CMS,” said Chairman Jason Smith, R-Mo.
The main reason for noncompliance is that, though a majority of hospitals are posting files, most of the information is incomplete or illegible, PRA found. Republicans blamed the Biden administration for not buckling down.
“CMS has largely failed to hold the hospitals nationwide accountable for compliance,” said Rep. Michelle Steel, R-Calif.
The federal government could take a number of actions to improve compliance, testified Chris Whaley, a health economist at nonprofit Rand.
The government could also take lessons from the states, Whaley said, noting how Colorado recently implemented a policy preventing hospitals that don’t publicly post price information from pursuing patients for medical debt. In addition, regulators could make complying with price transparency requirements a condition for participating in Medicare, Whaley suggested.
The government also should standardize how hospitals report price data to improve the usability of the files, testified Bill Kampine, co-founder and CIO of comparison-shopping site Healthcare Bluebook.
Currently, price transparency requirements for the most part allow users to look at information from the facility, not prices set by doctors unaffiliated with the hospital, such as anesthesiologists. In addition, the hospital outpatient department is generally the most expensive site for services like an ACL repair, meaning right now, patients can only compare the lowest cost for services across the most expensive provider type, Kampine said.
“We should not pretend, however, that transparency and shopping alone is the magic of the marketplace,” said Rep. Richard Neal, D-Mass., the committee’s ranking member. “Likely we’ll have to go much farther in making sure that consumers actually have access to affordable, dependable and comprehensive coverage.”
The fundamental issue with price shopping in U.S. healthcare is that it’s a broken market, argued multiple Democrat lawmakers and witnesses.
Comparative price data is helpful, but not a panacea in a system riddled with powerful, entrenched cost drivers, like rampant consolidation and middlemen like pharmacy benefit managers, testified Rick Gilfillan, former director of CMS’ innovation center and former CEO of nonprofit Trinity Health.
“There remain powerful drivers of cost in the system, and against all that we ask mostly lower income patients when they are sick and vulnerable to find the best price for services they desperately need. Have any of us actually done that?” Gilfillan said.
Audio and more resources here: https://www.healthcaredive.com/news/republicans-target-biden-hospital-price-transparency-compliance/650480/
However, it's not just lack of transparency, and CMS has not been idle.
Hospitals share differing medical prices online versus over the phone, secret shopper survey finds
The study raises new questions about the dependability of hospital pricing, and builds on a mountain of past research finding wide varieties in facility costs.
Dive Brief:
- Hospitals have been required to post their prices for shoppable services online since 2021, but costs shared online rarely correlate to prices hospitals share with consumers on the phone, according to a new secret shopper survey.
- The study found wide variations when comparing hospitals’ online cash prices for childbirth and brain imaging with prices told to consumers who inquire over the phone.
- For example, researchers found five hospitals with online prices greater than $20,000 for a vaginal childbirth, but telephone prices of less than $10,000. For a brain magnetic resonance imaging scan, two hospitals said the cost was more than $5,000 over the phone, but the price tag was $2,000 online.
Dive Insight:
Hospitals are required to post a consumer-friendly display on their website of the prices of 300 shoppable services under a CMS rule finalized in 2019. The rule aimed to inject more transparency into medical prices by allowing consumers to choose more afforable sites of care.
However, the push toward price transparency has hit notable roadblocks, including a lack of standard formatting for price sharing, shoddy data and poor hospital compliance.
The new study published in JAMA Internal Medicine raises additional questions about the dependability of hospital pricing.
For the study, researchers collected cash prices online for 60 U.S. hospitals between August and October last year, before calling those hospitals and requesting the lowest cash prices for vaginal childbirths and brain MRIs.
Their results back up past research that found wide variety in pricing between different hospitals, and even within the same hospital based on a patient’s insurer. For example, the new study found online prices for vaginal childbirth posted by top-ranked hospitals ranged from $0 to $55,221.
The findings also suggest hospitals may not even know their own prices due to the wide discrepancy between self-posted online prices and those they tell potential patients over the phone.
Of the 60 hospitals analyzed, 22 were able to provide prices online and by telephone for vaginal childbirth. Those prices were within 25% of each other at just 10 hospitals. Nine hospitals had internal price differences of 50% or more.
Forty-seven hospitals were able to provide prices online and by telephone for a brain MRI. Those prices were within 25% of each other at 31 hospitals. Twelve hospitals had differences of 50% or more.
Online and telephone prices completely matched in nine hospitals for a brain MRI. For vaginal childbirth, they completely matched at three.
“The findings provide evidence of hospitals’ continuing problems in communicating their own prices to patients. These results illustrate the promise of and substantial barriers to translating newly available hospital price data into actionable information that ultimately facilitates comparison shopping,” researchers wrote in the study.
Price discrepancies could be due to a variety of factors, according to the study.
Hospital billing office staff might not have understood the inquiry, hospitals may not adequately train staff or they might not be aware of a hospital’s online price estimator tool. Researchers also said that potentially the lack of correlation “simply reflects a chaotic and disorganized pricing structure.”
The CMS can fine hospitals up to $2 million for failing to post prices, but there is no formal mechanism for the regulator to audit or penalize hospitals that post incorrect or misleading medical costs.
To date, the CMS has fined 14 hospitals a combined $4.6 million for noncompliance with the price transparency rule...
https://www.healthcaredive.com/news/hospital-price-variation-online-phone-transparency/693866/
Ultimately, we're forgetting something about market forces if we only look at government-driven solutions.
Law and regulation are inadequate substitutes for the real thing.
Nothing beats the power of consumers' expectations when spending their own money.
Want price transparency? Look to the simplicity of free market alternatives who already offer clear pricing. Put spending power back in individual hands.
Sometimes, we need baby steps.
To incentivize healthcare shopping, Heritage Foundation's March 31, 2025 white paper suggests "modest" changes in federal law.
Clipped here due to length.
Currently, if a patient chooses a less expensive provider, the plan typically pockets all the savings—giving patients no financial incentive to shop for care. However, that could change dramatically if health plans instead rewarded patients with cash (out of some of the money saved) when they opted to get care from a lower-cost provider.
First, Congress can clarify in the tax code that when a health plan gives a patient a cash reward for choosing to get care from a better-value provider, that payment is tax-free to the patient (just like other insurance reimbursements or refunds).
Second, Congress can modify the tax code so that patients can deposit health plan rewards into their health savings accounts without those rewards counting against the maximum annual contribution limit.
Edmund F. Haislmaier
Senior Research Fellow, Center for Health and Welfare Policy
Ed is an expert in health care policy and frequently is asked to help lawmakers design and draft reforms to the health systems.
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