In a recent letter to Health and Human Services Secretary Xavier Becerra, the leadership of the Energy and Commerce Committee came together in a bipartisan effort to encourage HHS to step up its enforcement and accountability of the law that requires hospitals to list their negotiated prices in a transparent manner.
According to one organization, compliance has been extremely low, with many of the hospitals opting to pay the monetary penalty of $300 per day or $109,500 annually to avoid transparency. For most facilities, this penalty could be considered a rounding error and worth it to continue the practice of keeping prices hidden and secretive.
Even though HHS committed during a Senate Health, Education, Labor, and Pensions Committee hearing on Feb. 23, 2020, that the agency will “do robust enforcement to make sure price transparency is there for all Americans,” the Biden administration is proposing to repeal a requirement for hospitals to post their privately negotiated Medicare Advantage rates in their Medicare cost reports. Medicare Advantage plans have grown at a rapid rate over the years and represent nearly 40% or over 24 million of Medicare beneficiaries, making this a significant payer category for hospitals nationwide.
The Centers for Medicare and Medicaid Services has stated it will get rid of the requirement because it could impose an “unnecessary burden on hospitals.” This laughable claim by the American Hospital Association was made in its legal brief in an appellate court in a case it lost soon thereafter. Its claim of financial burden was especially ironic, as the cost to implement rivaled the monetary penalty hospitals choose to pay to keep their prices hidden.
According to a brief by the Kaiser Family Foundation, prices vary by region and across the country, but new information has revealed that there is incredible price variation even within the same hospital, depending on the insurer. This variance and opacity of pricing were what the Trump administration was seeking to end by implementing a rule to shed light on the negotiated rates. Then-candidate Joe Biden also upheld this priority, as his healthcare task force pledged, “We will work to increase price transparency in the healthcare system across all payers.” Biden’s pick for secretary of HHS has also stood behind the order during his confirmation hearing, boldly stating that “the American people are entitled to know what they’re buying.”
Needless to say, healthcare price transparency is far from being a partisan issue. Most people want hospitals to show their prices. According to a recent Harvard-Harris poll, nearly 90% of respondents favor an initiative by the government to mandate disclosure of negotiated prices by hospitals, insurers, and other medical professionals.
Patients of all political stripes are using their respective voices to show support for the transparency rule. In an ad that aired during the 2021 Academy Awards, a commercial starring Susan Sarandon and patient activists brought the point home, saying, “Patients deserve to know the prices of the procedures that they need ahead of time. They need to have the power to make good choices. The ability to be an informed consumer around some of the most unpleasant situations people encounter in their lives, as they have health problems, is extremely important. It’s enough stress to be in need of healthcare. We don’t need to add to that stress with hidden costs.”
The opacity of pricing in healthcare has prevented free market forces from working in healthcare for nearly 60 years, during which we’ve seen exponential growth in spending as a percentage of our gross domestic product.
This is exactly why CMS must stay the course and improve upon the order by bringing about more transparency, not less. Healthcare price transparency won’t fix all of our problems with this incredibly complex industry, but it’s a good start.
David Balat is the director of the Right on Healthcare initiative at the Texas Public Policy Foundation. He has broad experience across the healthcare spectrum, with special expertise in healthcare finance.
