Large Hospitals Using Price Estimator Tools for Price Transparency Rule

The majority of the top 100 hospitals by gross revenue are using a price estimator tool to comply with a landmark hospital price transparency rule from HHS, according to a recent study.

The study analyzed a random sample of 100 out of a total 6,171 US hospitals, as well as 100 hospitals with the highest gross revenue in 2017. Researchers, who come from Harvard University and Yale University, also studied the highest-grossing hospitals because “the administrative costs of compliance should be inconsequential, but the repercussions of disclosure may be greater.”

The analysis was conducted from March 1st through the 10th of 2021.

The study found that top grossing hospitals were more likely to use a price estimator tool compared to other hospitals. A total of 86 of the top-grossing hospitals offered a price estimator tool versus 52 of the randomly sampled hospitals.

However, overall hospital price transparency compliance was low with 83 of the randomly sampled hospitals being non-compliant with at least one major requirement of the rule, the study showed.

Additionally, only 33 of the hospitals reported payer-specific negotiated rates and 30 reported discounted cash prices in a machine-readable format.

For the top grossing hospitals, 75 out of 100 hospitals were non-compliant with at least one major requirement. Just about one-third of the hospitals reported payer-specific negotiated rates and 40 reported discounted cash prices in a machine-readable format.

Hospitals with price estimator tools were slightly more likely to publish payer-specific negotiated rates compared to hospitals without the tools. For example, 44 percent of randomly sampled hospitals with a price estimator tool published payer-specific negotiated rates in a machine-readable format and the same was true for 39 percent of the largest grossing hospitals.

Hospitals can use price estimator tools to comply with the price transparency rule. The tool must be internet-based and provide estimates for at least 300 shoppable services with consumers having to register or establish an account or password. CMS also requires the tool to be prominently displayed on the hospital’s website and allow all healthcare consumers to obtain an estimate of the amount they must pay for the service at the time they use the tool.

However, researchers suggested that the use of price estimator tools for price transparency rule compliance may be a breach of power.

“Because patient-oriented price estimator tools make prices visible only for a given patient and insurance plan and not to payers or the public, selective compliance may fail to expose abuses of market power, affect price negotiations, or support broad analysis of price variation to the extent intended by the transparency initiative,” they wrote in the study.

“Policy makers could consider several strategies to improve compliance, including stiffer penalties, technical assistance, and public reporting of noncompliance.”

The hospital price transparency rule has required all US hospitals to provide “clear, accessible pricing information online about the items and service they provide,” CMS states on its website. The pricing information includes gross charges, discounted price prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges. These items must be posted online in a machine-readable format and hospitals must provide a consumer-friendly format for 300 “shoppable services.”

Hospital groups have challenged the new price transparency rule, arguing that it oversteps HHS’ authority. The groups have also told the courts that the rule will decrease competition among hospitals, leading to higher prices for consumers. The case was later thrown out by an appeals court.

Hospitals have been struggling to comply with the price transparency rule since January.

The latest research confirms that hospital price transparency rule compliance is still a challenge despite warnings from CMS that it will audit hospitals and impose fines of up to $300 per day for non-compliance.