Why Aren’t U.S. Hospitals Complying With the Price Transparency Rule?

As part of a bipartisan effort this year, the U.S. government ordered hospitals to begin publishing a complete itemized list of the prices they negotiate with private insurers.

The insurers’ trade association criticized the rule, calling it unconstitutional and claiming it would undermine competitive negotiations. Several hospital associations sued the federal government to block the rule. Seven months after they lost, many hospitals continue to ignore the requirement.

As of July, the Centers for Medicare and Medicaid Services (CMS) had issued 170 letters to hospitals that failed to publish prices but had not yet charged any fines. According to CMS spokeswoman Catherine Howden, hospitals that do not comply within 90 days of receiving a warning letter may be sent a second letter. Next year, the agency plans to increase fines to as much as $2 million per year for large hospitals.

Data from compliant organizations show that hospitals are charging patients vastly different amounts for the same basic services, such as X-rays and pregnancy tests. In addition, major health insurers are negotiating prices for their customers that are higher than what they would pay if they had pretended to be uninsured.

Until now, the lack of transparency has allowed insurers to refuse to provide information to patients and the employers that hired the companies to provide coverage. It has also allowed the insurers to charge customers many times more than what public programs such as Medicare are willing to pay for services. Given that the more expensive the care is, the more an insurance company can earn, insurers have little incentive to negotiate well.

Insurers and hospitals argue that published rate sheets do not provide a full picture of their negotiations, as they don’t include other aspects of their contracts, like bonuses for providing high-quality care.

Source: The New York Times, August 22, 2021.