Price transparency is good for patients

Price transparency is good for patients

More than eight in 10 hospitals are flouting a federal rule requiring them to publish their prices, according to a new report.

That rule has been in force for over a year now. It’s long past time for hospitals to comply. The lack of transparency in the health care market is costing patients billions of dollars.

Since Jan. 1, 2021, the Centers for Medicare and Medicaid Services have mandated that hospitals share how much they charge for at least 300 different “shoppable services” — non-urgent, scheduled procedures like colonoscopies, CT scans, and x-rays.

Such transparency should allow patients to compare prices and seek care at the hospital that offers the best value.

But because most hospitals aren’t in compliance with the rule, patients have to resort to guesswork to figure out what a procedure might cost. And that can be difficult, considering prices can vary by nearly 300% between hospitals.

In New Hampshire, for example, a patient with employer-sponsored insurance through Anthem could get a colonoscopy for $5,155 at St. Joseph Hospital in Nashua. Or the patient could drive 37 miles to Concord and get the same procedure for $1,745 — one-third the price at St. Joseph.

Similarly, a North Carolinian with Blue Cross Blue Shield insurance in need of a pelvic CT scan could pay $561 at Central Carolina Hospital in Sanford. Catawba Valley Medical Center in Hickory charges the same individual over six times as much.

Such price discrepancies may not be unwarranted. Some hospitals in areas with high costs of living may have to pay their personnel more — and so have to charge more for procedures. Other facilities may charge a premium because they provide better-quality care. Some highly trained specialists may command higher pay because of their status as noted doctors in prestigious hospitals.

But that shouldn’t excuse hospitals from being forthright about what they intend to charge a patient for a routine procedure before that procedure occurs. Without transparency, patients have no way of evaluating why some hospitals may charge more — or knowing where to bring their business.

This opaque status quo is good for hospitals looking to charge above-market rates. The initial fine for ignoring the price transparency rule was just $300 a day. For many hospitals, those fines were a fraction of what they could make through higher prices.

Six months after the rule went into effect, a survey found that less than 6% of hospitals were adhering to it.

To try to enforce compliance, CMS hiked fines at the end of last year. Under the new system, large hospitals could face over $2 million in fines each year if they fail to comply.

But according to research published in February by PatientsRightsAdvocate.org, the compliance rate is just 14%.

Perhaps that’s because CMS hadn’t actually made any noncompliant hospital pay up as of this past December — despite issuing nearly 350 warning notices.

That has to change. Patients would benefit enormously from a more transparent health care system. A RAND Corporation study found that price transparency could save patients and insurers nearly $27 billion annually by allowing them to choose lower-cost care options.

Transparency could also improve patient health. Roughly 40% of Americans report skipping doctors’ visits because of the cost. The same percentage of Americans say they’re more frightened of paying for health care than they are of actually getting sick. If those patients were able to shop around for a cheaper option, particularly for non-urgent procedures, they might be more likely to get the care they need.

Absent a more transparent health care system, patients will continue to overpay for or even forego essential treatment. It’s time for federal officials to put patients first — and crack down on hospitals who aren’t playing by the rules.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.