New Year’s Day marks the second anniversary of a federal hospital price transparency rule that has the potential to substantially lower outrageous healthcare costs burdening patients, workers, businesses, and taxpayers. The Centers for Medicaid and Medicare Services recently announced the nation spent $4.3 trillion on healthcare in 2021, nearly 20 percent of GDP and almost two times the developed-world average. The Biden administration can mark this occasion by committing to robustly enforce the rule to turn it into a reality for American healthcare consumers.
The rule addresses the root of exorbitant hospital prices: hospitals’ opaque charging practices that blind consumers to prices, then blindside them with inflated bills they often never would have agreed to if prices were known upfront. It requires hospitals to publish their discounted cash prices and negotiated insurance rates by health plan. Armed with this information, consumers can survey well-documented wide price variations for the same care, even at the same hospital, to avoid price gouging and access care at fair market rates.
Robust price transparency can hold hospitals accountable for egregious overcharging such as $5,000 MRIs and $100,000 knee surgeries that cost $250 and $18,000 at cash-based centers, respectively. Employers and unions knowing pricing data will allow them to benefit from competition. Price discovery will usher in quality transparency.
Consider the union SEIU 32BJ, which saved $30 million on its health plan by shopping for care. It recently dropped New York-Presbyterian Hospital from its health plan after analyzing its claims data and determining the hospital was price-gouging its members. For example, the hospital billed the plan an average of $10,368 for outpatient colonoscopies versus $2,185 at the city’s public hospitals. Hospital price transparency can make it easier for other employers and unions to follow in SEIU 32BJ’s footsteps and significantly reduce healthcare costs.
Unfortunately, the price transparency rule has been marred by widespread hospital noncompliance.
A recent study by PatientRightsAdvocate.org finds that only 16 percent of hospitals nationwide are following it. Most are not publishing their prices broken down by health insurer and plan as required, and some post no prices at all.
By refusing to comply, hospitals are perpetuating a pricing scam that has saddled 100 million Americans with healthcare debt. This patient misery funds hospital private equity. The nation’s “nonprofit” hospitals are sitting on more than $283 billion in financial assets they invest Wall Street-style to generate even higher returns. HCA Healthcare, the nation’s largest private healthcare system, made $7 billion in profits in 2021.
CMS has assisted hospitals by choosing not to enforce the rule robustly. It has issued financial penalties on only two hospitals out of the thousands nationwide that are noncompliant. Yet even this meager response indicates that enforcement works. The two fined hospitals quickly became compliant and posted exemplary price files.
At a conference earlier this month, CMS Administrator Chiquita Brooks-LaSure was non-transparent about future enforcement, stating: “We have a lot of priorities, and the things that we will do in terms of enforcement always are ongoing and not things that we share.”
This lack of resolve is out of step with the American public. According to a new Kaiser Family Foundation poll released last week, 95 percent of Americans want policymakers to make healthcare price transparency a key priority — more than any other proposed healthcare reform.
The two-year anniversary of the hospital price transparency rule is an occasion for the Biden administration to stand up for American healthcare consumers and step up to properly enforce the rule. Doing so can generate a consumer revolution that ushers in a functional, competitive healthcare marketplace that stops hospital overcharging and reverses outrageous national health expenditures.
Cynthia A. Fisher is founder and chair of PatientRightsAdvocate.org