The majority of American hospitals are still not transparent on their pricing of hospital procedures, even though transparency policies were initiated in 2019, according to recent studies on hospital pricing for joint replacements and other procedures.
A study by the Cleveland Clinic Foundation found that only around a third—32 percent—of hospitals were totally transparent with their joint replacement prices. A recent study by Rice University on top American hospitals also found only 35 percent made their maximum, minimum, and cash prices for services public.
“It is understandable that there may have been delays in implementation,” wrote the authors of Rice University’s study (pdf), but reasoned that even with the COVID-19 pandemic interfering with implementation, “hospitals have now had multiple years to prepare.”
Under the Centers for Medicare and Medicaid Services (CMS) hospital price transparency rule, all hospitals must provide a list of standard charges for all services and items online in a downloadable format.
For each operation, pricing, gross charges, payer-specific charges, minimum, maximum, and discounted cash prices must all be made public.
Additionally, each item or price must be identifiable by any code used by the hospital for billing, and the information must be available free of charge without requiring personal information to access.
However, the Cleveland Clinic researchers found that only around a third of hospitals were compliant with transparent pricing, with only around 23 percent of hospitals allowing customers to easily search up the procedures through their codes.
One-fifth of hospitals asked for personal information to give pricing estimates and 17 percent of hospital websites took researchers more than 15 minutes to find the prices. These all demonstrated delayed compliance to pricing transparency policies.
The Hospital Price Transparency rule under the CMS was introduced to reduce unnecessary spending and price transparency to improve consumer-friendliness.
The policy was first initiated under the Trump administration in 2019 and the final version came into effect in 2021 under the Biden administration.
Though the Cleveland study only assessed joint replacements, as these operations are very common with predictable costs and outcomes, they are illustrative of individual hospitals’ overall compliance.
Rice University’s study further supported their finding, showing over 60 percent of highly-rated, major American hospitals were not fully transparent for three different joint replacement operations, MRI, ultrasound, and chest x-rays.
Many peer-reviewed studies (pdf) have identified a lack of price transparency as a leading cause of substantial health care spending in the United States.
However, despite strong research showing the merits of price transparency, the rule received severe pushback and lawsuits from major hospitals against the Trump administration when it was first introduced.
Though hospitals in the media often cited resource constraints and administration burden, the CMS has outlined previously that the benefits significantly outweigh the risks with reduced overspending in health care and reduced financial stress for customers in pricing scares.
A study in 2021 highlighted severe fines and stricter penalties to fix the non-compliance in price transparency for American hospitals.
The CMS gave 300 warnings in 2021, but zero fines since the rules came into place. However, the agency has expanded potential nondisclosure fines from $109,500 in 2021 to more than $2 million per year per hospital in 2022, suggestive of harsher penalties.
The Biden administration pushed back enforcement of major areas in the rule by six months in August 2021, with the expectation that the Centers for Medicare and Medicaid Services (CMS) will fully enforce the rule from June 1, 2022.