Lawmakers Question Why Hospital Pricing Isn’t Living Up to Transparency Goals

Hospitals’ compliance with US price transparency rules will be under the microscope when lawmakers question health experts and advocates in a hearing Tuesday in Washington.

(Bloomberg) — Hospitals’ compliance with US price transparency rules will be under the microscope when lawmakers question health experts and advocates in a hearing Tuesday in Washington. 

Lagging adherence, a lack of standard price lists and low penalties for violators have watered down a policy meant to help patients shop for cheaper health care. In the hearing, the House Committee on Energy and Commerce’s Subcommittee on Health will examine where the rules fall short and how they can be improved, along with other obstacles to competition in health care.

The US has the world’s most expensive health system, with annual costs of about $4.3 trillion in 2021, driven by opaque contracts, lack of disclosure and industry consolidation. Despite spending as much as two to three times more on health care, the country has lower life expectancy and higher infant mortality rates than many other industrialized peers. While compliance with the Centers for Medicare and Medicaid Services’ hospital price transparency rules has increased since they went into effect in 2021, researchers say the data remain inconsistent and not available from all institutions.  

“The fact that hospitals put some stuff out and may have complied with the rule, it kind of doesn’t matter because the information is not very useful,” said Gary Claxton, senior vice president and director of Kaiser Family Foundation’s program on the health care marketplace, in an interview before the hearing.

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Following a 2019 executive order from then-President Donald Trump, CMS announced rules requiring hospitals to create consumer-friendly price tools for at least 300 services and publish standard charges for all items and services in machine-readable files that enable researchers to study the issue. However, the rules don’t specify a structure or format for the files, resulting in data that are organized in different ways and can’t be easily compared, Claxton said. 

Low Fines

CMS has issued nearly 600 warning notices and issued almost 240 corrective action plan requests to hospitals, according to the agency, and two Georgia hospitals were fined more than $1 million in June 2022. However, even after an increase, the maximum fine for hospitals is just over $2 million for a full year of noncompliance. 

“If you’re bringing in millions of dollars a day, what do you care if there’s a small fine,” said Vivian Ho, a health economist at Rice University and Baylor College of Medicine.

Some hospitals see price transparency as a threat, according to Ge Bai, a professor of accounting and health policy and management at Johns Hopkins University who found that hospitals were less likely to comply with CMS’s rules if others in the same market withheld their data. HCA Healthcare Inc., the biggest US for-profit hospital chain, has cited the potential impact of transparency among business risks.  

“Trends toward clinical and pricing transparency may impact our competitive position, ability to obtain or maintain favorable contract terms and patient volumes in ways that may be difficult to predict,” the company told investors in its 2022 annual report.  

‘Serious About Compliance’

Assessments of data released by HCA varies. HCA largely follows CMS rules, according to Turquoise Health, a company that compiles hospital pricing data whose chief executive officer, Chris Severn, will testify at the hearing. However, a recent report from Patient Rights Advocate, a nonprofit group advocating price transparency, said it reviewed 173 of HCA’s 182 hospitals and found them all out of compliance. 

HCA wouldn’t comment on whether its hospitals had received warnings or corrective-plan requests from CMS. 

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CMS has suggested a standard template for hospitals to use when publishing prices, but the American Hospital Association opposes making this template a requirement. There’s a lot of inherent complexity in health-care pricing, said Molly Smith, AHA’s group vice president for policy.

“I just struggle to see if the kind of administrative cost and burden of some sort of standardization would actually get you closer to where you could compare an individual item across all 6,000 hospitals,” she said. 

But CMS’s next step is likely to be the requirement of standardized pricing reports, said Carol Skenes, a provider and payer strategist at Turquoise. Some hearing witnesses said in their testimonies that they will urge Congress to strengthen the transparency rule. 

“If CMS is serious about compliance and enforcement, as it seems like they are this year in particular, I think that’s what we’ll see,” Skenes said. 


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