Study Identifies Major Issue with Hospital Price Transparency Rule

Pricing information publicly disclosed by CMS’ hospital price transparency rule falls short of informing consumers of their charges for many common hospital-based services, a new study published in JAMA Network Open indicates.

The cross-sectional study of more than 4.5 million hospital-based encounters for shoppable care in 2018 found that practitioners who billed for the services independently of the hospital were frequently involved in shoppable hospital-based care. Their reimbursement also accounted for a substantial part of total of care.

Therefore, the reimbursement amount for services billed by the hospital, which would have represented the price disclosed under the hospital price transparency rule if it were effective at that time, was not strongly associated with the reimbursement of the independent practitioners, researchers stated.

The issue was especially prevalent for complex medical and surgical services, with independent practitioners being involved in over 80 percent of most shoppable services within this category (exceptions included physical therapy, routine electrocardiogram, left heart catheterization, and sleep study). The median reimbursement for the services billed by the independent practitioners ranged from $47 for physical therapy to a $9,545 for a major cardiothoracic procedure.

Independent practitioners were also frequently involved in shoppable evaluation and management services (7.6 percent to 42.4 percent), with median reimbursement for these practitioners ranging from $61 to $412, and radiology services (64.9 percent to 87.2 percent), with median reimbursement for independent radiologists ranging from $26 to $210.

“Our analysis highlights just how problematic this final issue can be for price transparency, severely limiting the value to patients of the disclosures required under the CMS hospital price transparency rule,” researchers wrote in the study.

CMS has required hospitals to publish their pricing information, including gross charges and payer-specific negotiated charges, on public websites since the start of the year. Hospitals must also display the information for at least 300 “shoppable” services in a consumer-friendly format. Shoppable services, according to the federal agency, are services that can scheduled by patients in advance.

Compliance with the new requirements has been low, with most hospitals in the largest health networks failing to publish all their pricing information in the format CMS specifies in the rule. Some hospitals have cited resource constraints, especially in light of the COVID-19 pandemic, while others with arguably more access to resources simply have yet to comply.

Hospital industry stakeholders have argued that the hospital price transparency rule, as it stands, does little to benefit consumers. The rule, for example, does not provide consumers with their expected out-of-pocket costs for care, depending on their health plan’s deductible at the time and other cost-sharing arrangements, several industry groups argued in a 2019 court case challenging the rule.

“Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry,” Rick Pollack, president and CEO of the American Hospital Association (AHA), said at the time.

CMS plans to require price transparency from payers in the near future. However, the regulation containing payer price transparency requirements also has significant limitations, researchers stated in the study.

“First, the regulation will not improve health care price discovery for individuals enrolled in grandfathered plans or uninsured individuals. Additional efforts will be needed to achieve health care price transparency for all,” they wrote.

“Second, patients seeking to obtain an accurate estimate of their out-of-pocket costs will be expected to anticipate what individual services will constitute the planned [healthcare] encounter,” the study continued. “This would be a challenging task for experienced [healthcare] experts, let alone nonexpert patients. As such, patients may still receive partial price information even under this prospective regulation.”

With consumers owing more for their care under high-deductible health plans, the frequency of care provided by independent practitioners and the reimbursement they bill creates significant barriers to effective healthcare price transparency, the study concludes.