Hospitals are not complying with price transparency rule, two studies find

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Recent studies published in the Journal of the American Medical Association and the American Journal of Managed Care show that most of the hospitals sampled are not complying with the January 1 mandate to post their negotiated rates with payers.

JAMA’s report analyzed 200 samples. First they took a look at a random sample of 100 hospitals and then also analyzed the 100 hospitals with the highest grossing revenue in 2017. 

Of 100 random hospitals, 83 were non-compliant with at least one major requirement, the authors of the June 14 report said. Only 33 reported payer-specific negotiated rates and 30 reported discounted cash prices in a machine readable file. 

A total of 52 hospitals offered a price estimator tool for the required 300 shoppable services, of which 23 posted payer-specific negotiated rates in a machine readable file. All price estimator tools required personal health plan information while discounted cash prices did not.

Of the 100 highest revenue hospitals in the JAMA study, 75 were noncompliant with at least one requirement. Thirty five reported payer-specific negotiated rates and 40 reported discounted cash prices in a machine readable file. A total of 86 offered a price estimator tool, of which 34 posted payer-specific negotiated rates in a machine-readable file.

A caveat is that the authors examined the hospital websites in March, 65 to 70 days after the price transparency rule’s implementation and during the pandemic. But the effective dates were set in November 2019, before the pandemic, said the authors, who are affiliated with the Department of Health Care Policy at Harvard Medical School.

Authors of a study published June 21 in the American Journal of Managed Care said only  60% of hospitals displayed their cash prices and 5% displayed their minimum negotiated charges on their public websites. 

The study evaluated the public websites of the 20 hospitals listed in a 2020-2021 US News & World Report honor roll between February 1 and February 14, selecting two imaging studies: brain MRI and abdominal ultrasound. It also looked at three hospital services: cardiac valve surgery; total joint replacement; and vaginal childbirth. For each, the authors determined whether the discounted cash price and minimum negotiated charge were displayed and, if displayed, what the prices were.

Among 20 hospitals, 13 displayed the cash prices for the MRI and ultrasound; eight for valve surgery; 10 for joint replacement; and 10 for childbirth. Only one displayed the minimum negotiated price for the two imaging studies and none for any of the hospital services. 

The mean range cash price for MRI was $3,793 ($464-$6,215) and for ultrasound it was $767 ($136-$1,391). The mean range cash price for cardiac surgery was $236,125 ($72,250-$349,782); for joint replacement, $46,008 ($22,170-$71,985); and for childbirth, $19,568 ($7314-$29,068).

This wide variation in prices among hospitals for identical services suggest the potential for significant cost savings for patients, the authors said.

WHY THIS MATTERS

The Centers for Medicare and Medicaid Services required that, starting on January 1, all U.S. hospitals publicly display the cash price and negotiated charges for 300 shoppable services. 

Hospitals must display price data, including expected out-of-pocket costs, for shoppable services that can be scheduled in advance in a consumer-friendly manner that facilitates hospital comparisons.

The penalty for noncompliance is a maximum of $300 per day.

However, the JAMA study said, the cost of disclosure of negotiated rates could be greater than any fines.

“Compliance may increase over time, but the early selective compliance suggests reluctance that may persist,” the authors said.

THE LARGER TREND

In March, Health Affairs published findings also showing hospital non-compliance with the price transparency rule.

The rule survived hospital legal challenges.

The American Hospital Association argued that the disclosure of privately negotiated rates does nothing to help patients understand what they will actually pay for treatment. It also accelerates anticompetitive behavior among commercial health insurers and hinders innovations in value-based care delivery, the AHA said. 

Health plans are also being required to publish their negotiated rates with hospitals. CMS’s final rule on price transparency for insurers is requiring most private health plans to disclose pricing and cost-sharing information to provide easy-to-understand personalized information on enrollee cost-sharing for healthcare services and to publicly disclose the rates they pay providers for specific services. 

Sections of the rule go into effect on January 1, 2022, January 1, 2023 and January 1, 2024.

Twitter: @SusanJMorse
Email the writer: [email protected]

   

  

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