A Cleveland Clinic Foundation study found that only about a third or 32 percent of hospitals are completely transparent about their joint replacement costs, while a recent Rice University study also found that only 35 percent of America's top hospitals disclosed their maximum, minimum and cash service prices.
The Centers for Medicare and Medicaid Services (CMS) hospital price transparency rule said all hospitals must provide a list of standard charges for all services and items online in a downloadable format. Each item or price must be identified by the code used by the hospital for billing, and the information must be freely provided without requiring access to personal information.
Each transaction, operation, pricing, total fees, payer-specific fees, minimum and maximum spot price and discounts must be made public and accessible to patients. It must also include a cost estimate for the 300 most common services. They also require that the information is machine-readable. This will allow patients to know what they should expect to pay and let them compare the prices with what they would pay if they go through insurance.
A study published recently in the Journal of the American Medical Association added to mounting evidence that hospitals are largely ignoring the law.
In analyzing 5,000 hospitals nationwide, the study found that only 300 or fewer than six percent were fully compliant with the rules of having published both machine-readable files and separate price estimators. Many other hospitals were partly compliant, but 50 percent had none of the required components. (Related: Hospitals raise their prices despite public outcry from over-burdened patients.)
The Hospital Price Transparency Rule was put in place to reduce unnecessary costs and improve consumer-friendliness, however, this does not seem to be the case as hospitals and insurance companies set their own prices for different procedures, and patients usually have no idea what the costs entail until after they get the bill.
The Cleveland study only evaluated joint replacement surgeries, but these surgeries are very common with predictable costs and outcomes, so they are illustrative of a hospital's overall compliance.
The Rice University study also confirmed their findings, showing that more than 60 percent of the top-rated hospitals in the U.S. are not fully transparent for three different joint replacement surgeries, MRI, ultrasound and chest X-ray. (Related: As health care costs explode, hospitals are now trying to force patients to PRE-PAY for treatment.)
Other peer-reviewed studies also identified the lack of pricing transparency as one of the major causes of substantial spending on healthcare in the United States.
However, despite extensive research that showed the value of price transparency, the rule received severe pushback and has been the subject of lawsuits by major hospitals against the Trump administration when it was first introduced.
Hospitals that communicated with the media often cited resource constraints and administrative burdens for delaying their compliance. However, the CMS has previously shown that the benefits outweigh the risks when it comes to reducing healthcare overspending and reducing financial stress for customers because of price concerns.
A 2021 study also found that stiffer fines and tougher penalties can fix price transparency non-compliance for hospitals because despite giving 300 warnings in 2021, the CMS has not collected fines since the rules came into place, although the agency expanded potential nondisclosure fines from $109,500 in 2021 to more than $2 million per year per hospital in 2020, which suggests that they are looking into harsher penalties.
The Biden administration also pushed back enforcement of the major areas in the rule by six months, with the expectation that CMS will fully enforce the rule beginning June 1, 2022.
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