Hospitals continue to flout price transparency requirement rules

(Bloomberg) –The majority of surveyed U.S. hospitals are ignoring a federal order to publicly post their prices, a new report by an advocacy group found, raising questions about how strongly the Biden administration is enforcing a Trump-era measure.

A review of 1,000 hospitals by Patient Rights Advocate, which supports the price transparency measure, found that only 14% were fully complying with the rule. Others obeyed the pricing rules, but not the other required measures, while a majority did not post sufficient rates.

Related: Why the flawed hospital price transparency requirements miss the mark

It’s the latest sign of a sluggish liftoff for a policy that hospitals and health care providers failed to head off in court. It was introduced by the Trump administration and Biden’s team has carried it on, though advocates are calling on them to do more.

The $300-a-day fine the Trump administration threatened didn’t offer larger hospitals much of a financial incentive to follow the new rule, but posed a larger burden on rural hospitals. The Biden administration raised the penalty for hospitals with more than 30 beds to $10 a bed per day — at most $5,500 a day. The yearly penalty for noncompliance now ranges from $109,500 for small hospitals to a maximum of $2,007,500.

“We believe the only way we will see a marked difference is for your administration to take significant steps to further enforce the rule,” Cynthia Fisher, founder of Patient Rights Advocate, wrote in a letter to President Joe Biden this week. “We encourage you to boldly enforce the current hospital price transparency rule and refuse any additional delays.”

Hospitals have been required to disclose their standard charges for items and services since the rule took effect Jan. 1, 2021, a few weeks before Biden was sworn in. Several early studies found widespread noncompliance with the rule, which could be seen as both an administrative burden and a competitive disadvantage for hospitals swamped with Covid-19 cases.

“The penalties may not have been set at a level adequate to fully incentivize compliance,” the report from the advocacy group says.

The report surveyed 1,000 of the more than 6,000 U.S. hospitals in January, one year after the rule took effect, and found that 14% of hospitals met the requirement. A total of 38% of the surveyed hospitals, including the fully compliant group, posted at least sufficient price information, but some lacked data such as rates broken down by insurer and plan. More than 60% did not post sufficient rate information.

A similar review conducted in July by the same group found 5.6% of surveyed hospitals were meeting the standard of the order, signaling that compliance is growing, albeit slowly.

“These rules empower consumers to reduce their healthcare costs,” Arthur Laffer — an economist and prominent advocate for tax cuts and supply-side economics favored by conservatives — wrote in a letter to Biden dated Wednesday. Enforcing the transparency measure, assuming it succeeds in lower costs, would amount to a massive stimulus by effectively increasing disposable income of workers, he said.

“Please seize this opportunity to bring system-wide price transparency to the American health care system and cement your legacy as the person responsible for revolutionizing American health care,” he wrote.

The requirement created when Donald Trump was president sparked litigation from major hospital groups, led by the American Hospital Association. The final rule survived claims that the Medicare agency overstepped its authority.

The AHA said to take the survey results with a grain of salt. “As the sole arbiter of compliance, only CMS’ review should be taken into consideration when determining whether and how hospitals are complying,” said Senior Associate Director of Policy Ariel Levin. Several studies “have misrepresented hospital compliance” by assessing them in a different manner than the CMS would, Levin said.

The Centers for Medicare & Medicaid Services hasn’t issued any monetary penalties to date, but the agency has issued almost 350 hospitals warning letters. “Each hospital that has come under compliance review has resolved its deficiencies, or are in the process of doing so. Therefore, it has not been necessary for CMS to issue any penalties,” a spokesperson for the agency said. The White House declined to comment.

Some hospitals may not be breaking the rules on purpose. “No one wants to be in violation of CMS,” said Robert Gilbert, senior manager of the health care advisory practice and accounting firm Baker Newman Noyes LLC. Many health care facilities may “want to be compliant but don’t know how.”

Complying is also harder on smaller hospitals, which generally have to contract with outside firms or vendors to put together the machine-readable files the rule requires.

The CMS “has been sensitive to the fact that we are in the middle of a pandemic,” said Kelly Arduino, industry leader of the health care practice at consulting firm Wipfli LLP.

The pandemic has overwhelmed hospitals with administrative tasks on top of managing skyrocketing patient caseloads. “This was a tough time for such a big ask,” Arduino said.

Read more: 

• Transparency regulations falling short of making pricing information more accessible
• Hospitals using computer coding to skirt transparency rules, WSJ investigation finds
• Can regulating hospital prices increase competition?

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