Patients and health insurers expecting hospitals to make their prices publicly available may still be out of luck, despite federal price transparency regulation going into effect at the beginning of this year.
Obamacare requires hospitals to post prices of their services. In November 2019, the Trump administration issued regulations under the law that require hospitals to post the prices of the 300 common services in a file that can be downloaded from their websites. The prices that must be displayed include the gross charge for service, the price a cash-paying patient will pay, and the rates negotiated with insurers. The regulations went into effect on Jan. 1.
Recent research shows that most hospitals are not complying or are doing so in ways that make it difficult to find their prices. Studies in both Health Affairs and Journal of the American Medical Association found that over half of hospitals were not providing downloadable files or were noncompliant in some other way.
Hospital prices are increasing in importance for patients. Deductibles for both employer-sponsored insurance and insurance on the Obamacare exchanges have increased in recent years, meaning that patients will likely be paying more out of pocket when visiting a hospital. Price transparency is also popular. A YouGov poll from 2020 found that 91% of respondents said hospitals should be required to post their prices publicly, and 66% believed price transparency would improve healthcare.
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Hospitals have multiple reasons for keeping their prices private.
“In other industries, consumers can see prices ahead of time. That gives them choice and the ability to compare. But hospitals are resistant to showing their pricing because they do not want to be in that kind of competitive environment,” said Keith Smith, an anesthesiologist and co-founder of the Surgery Center of Oklahoma, which posts its prices online.
By keeping their prices hidden, hospitals can negotiate different rates from different insurers, often charging one insurer a price that is many times higher than what is charged for another. For example, a joint replacement at California Pacific Medical Center Van Ness in San Francisco ranged from $22,865 to $101,571. At Northwestern Memorial in Chicago, it ranged from $4,613 to $50,680.
Niall Brennan, CEO of the Health Care Cost Institute, which is partially backed by payers, pointed to another reason hospitals are reluctant to post prices.
“It’s been well documented that hospitals engage in extremely aggressive pricing, especially for people with employer-sponsored coverage. I don’t think they want working Americans to know that they charge them $1,000 for something that Medicare pays them $100.”
With price transparency, employers could remove higher-priced hospitals from their plans.
The penalty for noncompliance is a $300-a-day fine. Brennan suggested that was another reason that hospitals are not displaying their prices.
“It is such a small amount that in the context of a billion-dollar business, which many hospitals and hospital systems are, noncompliance is a financial risk worth taking,” Brennan said.
Groups representing hospitals did not comment for this article. The American Hospital Association Hospitals did not respond to a request for comment, while a spokesperson for the Federation of American Hospitals declined to comment.
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However, hospital groups opposed the new regulations fiercely. The American Hospital Association, the Federation of American Hospitals, Association of American Medical Colleges, and the Children’s Hospital Association filed suit in federal court to block the rules. After the district court dismissed the lawsuit, the groups appealed. The D.C. Appellate Court ruled against the groups last December.
