Many Hospitals Refuse to Follow U.S. Price Transparency Rules

New rules requiring hospitals to let patients know ahead of time what their care will cost – covered here and here – continue to be badly implemented if not ignored altogether, according to a new study posted by the Peterson-KFF (Kaiser Family Foundation) Health Tracker.

The new rules took effect Jan. 1 but hospitals have known — and complained and litigated — about them since they were announced last fall. Many news organizations have done solid stories since then that illustrated enormous price differences for the same medical procedures even within the same hospital. Variations between hospitals can be even greater.

These findings, of course, stemmed from hospitals that complied with the rules. Most have not done so and some have actively worked to avoid the scrutiny that public pricing information is likely to trigger.

The Wall Street Journal, for example, reviewed more than 3,100 hospital web sites and found that hundreds of hospitals embedded computer code in their disclosure documents that prevented hospital prices from showing up in search-engine results.

The KFF study documents extensive non-compliance with the new rules. It looked at the two largest hospitals in each state. These are generally the largest and most affluent care providers, with the budgets and staff expertise to implement the new rules. If they chose to do so.

The new rules require hospitals to list no fewer than five prices for 300 common services and medical procedures. Hospitals are free to choose 230 of them, with the other 70 being mandated by the Centers for Medicare & Medicaid Services (CMS).

CMS said its list included services that consumers could shop for thus compare. The rise of high-deductible health insurance plans has created  compelling reasons for consumers to have access to pricing information.

For the 300 procedures, the KFF study noted, hospitals must provide “1) gross charge; 2) payer-specific negotiated charge; 3) de-identified minimum negotiated charge 4) de-identified maximum negotiated charge; and 5) discounted cash price.”

In plain English, these requirements would permit consumers to know the hospitals’ gross sticker price (which may have little to do with its true cost of providing a service), what different health insurers agreed to pay it, the minimum price it accepted for the service, the maximum payment it received from a health insurer, and the cash price it would accept, presumably from someone without health insurance.

KFF researchers found that nearly 80 percent of the big hospitals provided their gross rates and about 55 percent posted their discounted cash rate. Tellingly, however, only three hospitals let consumers see what different insurers paid for the 300 services.

Given that 90 percent of Americans have some form of health insurance, failing to let them see what their insurers agreed to pay for a service effectively guts the new rules.

Beyond the percentages, even those hospitals that did provide pricing information did so in different ways that make direct comparisons of prices difficult. Comparing auto prices would be impossible if cars did not have to provide standard information.

Adding injury to insult, the new rules specifically require hospitals to give this information without requiring consumers to identify themselves. Most of the big hospitals did not comply.

“Most hospital website’s consumer tools that we examined generally required patients to input personally-identifying information,” the study found. “Such tools required patients to know complex medical terminology or billing codes to search for prices. It is unlikely that most patients would use these tools as they exist.”