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Hospital Prices: Fully Transparent or Still Somewhat Opaque?

By: David Ostrowsky

January 1, 2021.

In the throes of the first pandemic winter, still months before coronavirus vaccines would roll out in earnest, the Hospital Price Transparency Rule went into effect. It was a promising development in the world of healthcare cost containment—hospitals were now obligated to provide a single, machine-readable digital file containing standard charges for all services and items provided by the facility. Said charges included gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges. In order to be fully compliant with the novel legislation, hospitals were also mandated to present a user-friendly list of at least 300 “shoppable” services, ones that patients could schedule in advance. But now, two years removed from the rule being introduced, it behooves medical practitioners, patients, and legislators alike to assess whether the Hospital Price Transparency Rule has accomplished its overarching goal of empowering healthcare consumers to reap the benefits of a competitive marketplace.

Evidently, there’s not one definitive answer.

Earlier this week, U.S. News & World Report shared some encouraging news by reporting that a majority of hospitals are in compliance with the 2021 federal price transparency rules. More specifically, the report cited Medicare Director Dr. Meena Seshamani’s calculation that after merely 27% of hospitals complied in 2021, 70% of medical institutions acted in accordance with federal regulations this past year. Put another way, in 2022, millions more Americans were able to sit in their living rooms or studies and download comprehensive but nevertheless relatable files that delineate the prices charged by various hospitals for their upcoming cataract surgeries or colonoscopies. Resultingly, the likelihood of depressingly high medical bills landing in their mail slots in the months ahead decreased significantly.

While the aforementioned trend surely represents heartening news, simple arithmetic dictates that 30% of hospitals are still not in compliance. Why, exactly, were so many not doing their due diligence in posting the consumer-friendly pricing displays and readable files, especially given the heightened financial penalties for not obliging?

It’s possible that for some behemoth healthcare institutions, a six-figure penalty is still not going to deter them from operating behind closed doors. (As we speak, CMS is considering moving forward with more stringent enforcement efforts and zeroing in on hospitals that have been egregiously negligent.) And certainly, at least in the early part of 2022, COVID continued to account for an overwhelming surge of patients, diverting the attention of hospital administrators and executives. But perhaps the real culprit is that despite the notable progress made, more has to be done to ensure hospital prices become crystal clear to the masses. Many a healthcare consumer still needs to plow through mounds of fairly cryptic data to effectively price-shop for an impending procedure or service.   

“You have to find your plan, you have to find the procedure you think you're going to have, and you have to find the prices, and then you have to go to another hospital and pull up information there,” Lovisa Gustafsson, Vice President of the Controlling Health Care Costs Program at the Commonwealth Fund, was quoted as saying in the recent U.S. News & World Report piece. “It's not like they're side by side and you can easily compare them. You have to really seek this information out from every place. And so that makes it difficult. It's a lot of burden on patients to try to figure that out.”

Will 100% of hospitals be fully transparent with their pricing metrics over the balance of 2023? Impossible to predict, but in the meantime, more Americans should be aware that they are entitled to request a hospital provide them with the price tag for a procedure—irrespective of whether the facility has already made such information readily available.