Majority of hospitals not complying with price transparency rule: JAMA

Hospital Administration

Dive Brief:

  • A majority of hospitals aren’t complying with a Trump-era rule on price transparency, according to a study published in JAMA on Monday.
  • Under the rule, which was finalized in 2019 and took effect in January, hospitals have to publicize their negotiated rates with payers for common services. But early data shows that’s often not the case.
  • The study, conducted by researchers at Harvard Medical School, randomly sampled 100 hospitals, as well as the 100 highest-earning hospitals of 2017. Of the randomly selected facilities, 83% were noncompliant with at least one of the rule’s requirements. The top-earning hospitals were more compliant but not by much, with 75% noncompliant with at least one requirement.

Dive Insight:

The Trump administration finalized the rule with hopes mandating price transparency would make it easier for consumers to shop between different sites of care, lowering medical costs in the U.S.

The rule enacted two major new requirements. First, hospitals have to publish discounted cash prices applicable to all uninsured patients and payer-specific negotiated rates for all services. Additionally, hospitals have to publish price data, including expected out-of-pocket costs, for “shoppable services” such as an X-ray that can be scheduled in advance, in an easily understandable format to facilitate shopping across different hospitals, such as a price estimator tool.

The new study, albeit on a small sample size, is the latest of a string showing early noncompliance from hospitals, which fought fiercely against the rule’s implementation.

Provider groups, which tried and failed to axe the rule in court, have pointed to previous research showing that price-shopping by patients is limited even when prices are available, though advocates point out it could lower prices through other means.

March data collected from the 100 randomly sampled hospitals found just 33 reported payer-specific negotiated rates, while only 30 reported discounted cash prices in a machine-readable file. A total of 52 facilities offered a price estimator tool for shoppable services, of which 23 posted payer-specific negotiated rates in a machine-readable file.

All available cost estimator tools required patients to input personal insurance information to see prices, while discounted cash prices could be viewed without plan information.

​”Compliance could be limited because the penalties for noncompliance are minimal (maximum $300 per day) and the costs of disclosure potentially great,” researchers wrote.

For example, employers could use the information to remove high-cost providers from their networks.

That’s why the study also looked at top-earning facilities, where the administrative costs of being in compliance should be inconsequential, but disclosure could push employers and patients to find less expensive services.

Of the 100 highest-revenue hospitals, 75 were noncompliant with at least one requirement. Only 35 reported payer-specific negotiated rates and 40 reported cash prices in a machine-readable format. Eighty-six facilities offered a price estimator tool, of which 34 posted payer-specific rates in a machine-readable way.

“Selective compliance was especially pronounced for the 100 highest-revenue hospitals, a low proportion of which fully disclosed their negotiated rates despite high compliance with the price estimator tool requirement,” researchers wrote. “Because patient-oriented price estimator tools make prices visible only for a given patient and insurance plan and not to payers or the public, selective compliance may fail to expose abuses of market power, affect price negotiations, or support broad analysis of price variation to the extent intended by the transparency initiative.”

Researchers noted an important limitation of the study was its timing, as they analyzed websites about two months after the rule was implemented, and it kicked in during the coronavirus pandemic, when many providers were forced to shuffle resources to fight COVID-19.

“Compliance may increase over time, but the early selective compliance suggests reluctance that may persist,” researchers said, suggesting policymakers consider stiffer penalties, additional technical assistance or public reporting of noncompliance.

There’s support in Washington for such moves: A bipartisan group of lawmakers in April urged HHS Secretary Xavier Becerra to conduct regular audits of hospitals and rethink enforcement tools, including the amount of civil penalty for noncompliance.