System affiliated and private, not-for-profit hospitals were more likely to provide data in a consumer-friendly format than independent and public hospitals. For profit-hospitals were more likely to comply with the rule than public hospitals.
Payer-specific negotiated rates, which are the prices hospitals agree to charge individual insurance companies for patient care, were the least likely to be publicly disclosed by hospitals in the study.
“That’s not so surprising. That’s by far the most sensitive information [and] the product of a negotiation between an insurer and a hospital,” Abraham said. “[It] has typically been closely guarded and private until now.”
The industry fought the rule from going into effect.
Lovisa Gustaffson, vice president for controlling healthcare costs at Commonwealth Fund said hospitals wanted to protect pricing rates from patients, employers, researchers and other members of the public, possibly to give themselves a competitive advantage.
While transparency is government-mandated, Rick Kes, a healthcare partner at RSM US consulting firm, said many hospitals understand it is mainly driven by consumer interest.
“You hear a lot of people say, ‘When I go into a restaurant, they don’t tell me what the price of a steak is after I eat it, they tell me before I eat it,'” Kes said. “‘Why is that not happening in healthcare?'”
He said given the layers of complexity of payment and how healthcare’s financial model has worked for years it is not as easy as it seems to switch over to a model of price transparency.
Due to the pandemic and other administrative burdens, Kes said some healthcare systems chose to become compliant with the rule later in the year so as to not jeopardize their operations.
“It wasn’t necessarily that they didn’t want to comply with price transparency … it just wasn’t on the top of their list to comply with, given that the penalty if assessed wasn’t really that significant,” he said.
In an email, a CMS spokesperson said the agency is conducting audits of hospital websites, reviewing complaints and issuing warning letters to hospitals not in compliance with requirements, which it began in April.
Upon receiving a warning letter, hospitals have 90 days to address its findings of noncompliance. If noncompliance has not been addressed in the 90-day window, the hospital may be sent a second warning letter or a request for a corrective action plan.
The federal rule also states that hospitals found not in compliance may be fined $300 daily, up to around $100,000 a year. In total, only around 5% of hospitals were missing all regulation requirements Abraham said.
Generally, hospitals seem more inclined to provide pricing on nonurgent services, like an MRI or therapy appointment, where consumers would have time to look at prices, she said.
“CMS, I think, wants to encourage reporting,” Abraham said. “They seem willing right now to partner with hospitals and [give] them the opportunity to make a plan for how they’re going to produce the data and put it online.”
“I hope the government stays the course of pushing this agenda,” said Dr. John Cherf, Lumere’s chief medical officer. “It’s one of the better opportunities to control healthcare costs.”
Cherf said price transparency will likely affect different institutions in both positive and negative ways and help providers better understand their cost structure.
Big hospitals will take on the most risk with price transparency, he said, while private practice and ambulatory settings will be considered “winners” in this scenario.
Eventually, he would like to see more price transparency on a physician level and in freestanding outpatient facilities like imaging facilities or ambulatory surgery centers, and procedure centers.