Only One-Third of American Hospitals Adhere to Pricing-Transparency Regulations: Report

Health care workers treat patients outside the emergency room at the Community Hospital of Huntington Park in Huntington Park, Calif., on Dec. 29, 2020. (Bing Guan/Reuters)

Only around one out of three hospitals in the United States are compliant with a 2021 pricing transparency rule, thus depriving people of accurate and complete pricing information for their services, says a new report.

The federal Hospital Price Transparency Rule that came into effect on Jan. 1, 2021, requires hospitals to provide pricing information in an easily accessible and searchable format. This involves posting all standard charges of their products and services through an online file as well as publishing a consumer-friendly list of its 300 most common shoppable services.

According to a report (pdf) by nonprofit Patient Rights Advocate (PRA), which analyzed the websites of 2,000 American hospitals, only 36 percent were found to be “compliant with all requirements of the rule.” The remaining 64 percent were not in compliance with the rule “because one or more price transparency requirements were not met.”

The findings “align with our previous reports and other recent reports indicating that hospitals continue to provide incomplete or inaccessible pricing information,” the report said.

While 725 hospitals were found to have posted a complete file of standard charges, only 341 presented a consumer-friendly display of its 300 most common shoppable services.

The PRA has sent letters to President Joe Biden and congressional leaders detailing their findings and asking that further action be taken to ensure that hospitals are compliant with requisite transparency rules.

In a Fact Sheet on hospital price transparency, the American Hospital Association (AHA) admits that pricing information provided to patients may be inconsistent and that the calculations are done by various facilities in different ways.

As such, “patients do not have a clear indicator as to which source should be relied upon,” it said, while highlighting that “the overabundance of tools may create patient confusion rather than provide value.”

The AHA blamed the issue on the nature of hospital pricing and rate negotiations which it claims do not translate well into a single, fixed rate per service.

“Hospitals’ contracts with health plans are complex and the actual rate that may apply to a service (or bundle of services) can vary dramatically based on a patient’s specific scenario (e.g., how many services are being delivered during an episode of care or how sick is the patient),” AHA said.

“In addition, there is almost no way for a patient to use the machine-readable files to calculate the cost of any episode of care in which more than one item or service is provided. Not all of a patient’s required services may be known at the time of treatment scheduling.”

‘Lenient’ Federal Oversight

In its report, the PRA blamed the “minimal, lenient enforcement” by the Health and Human Services (HHS) Department’s Centers for Medicare and Medicaid Services (CMS) for making hospitals disregard the price transparency regulations. The CMS is officially responsible for enforcing the rule.

“In February of 2023, CMS acknowledged in a blog post that 30 percent of hospitals (approximately 1,800) were still non-compliant. Yet, in April of 2023, only two more hospitals were fined. Both were still found to be non-compliant in this review. As of the time of this report, a total of four hospitals have been penalized, 0.2 percent of the hospitals that CMS recognized as non-compliant. Clearly, CMS is not strongly enforcing the rule,” the report said.

The PRA asked the CMS to “quickly and thoroughly” conduct the enforcement of the rules and post the entire compliance process publicly. It sought an end to price estimates provided by hospitals as they do not hold these entities accountable while leaving patients “vulnerable to overcharges, billing errors, and fraud.”

Instead, the PRA wants hospitals to provide “actual, binding, upfront prices” as well as discounted cash prices. “We recommend that CMS close the estimator tool loophole and require a tool with real, binding prices.”

It asked for clear pricing data standards, attestation of pricing data from a senior hospital official, and the expansion of price disclosure requirements to all healthcare providers, including outpatient surgical care facilities.

Bill for Hospital Pricing Transparency

Lawmakers have pushed various proposals to strengthen pricing transparency at hospitals. In May, Rep. Cathy McMorris Rodgers (R-Wash.) introduced the Promoting Access to Treatments and Increasing Extremely Needed Transparency Act, or the PATIENT Act of 2023.

The bill requires that hospitals publish an annual list of the shoppable services they offer, including pricing information.

“Beginning in 2025, a hospital may not use an internet-based price estimator tool to meet the publication requirement for shoppable services,” according to the bill. It also requires “providers of diagnostic laboratory tests under Medicare to publish online certain price information.”

“Additionally, the bill requires health insurance plan issuers (or the PBM providing services on behalf of the plan) to report to the plan sponsor specified information about prescription drugs dispensed under the plan. This includes rebates, fees, alternative discounts, or other remuneration the plan receives from drug manufacturers.” PBM refers to pharmacy benefit managers.

This month, the Transparency in Billing Act was introduced in the House of Representatives by Rep. Virginia Foxx (R-N.C.). The proposal mandates accurate billing practices at hospitals, ensuring that group health plans make payments for any appropriately billed services.