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Friday, July 1, 2022

It’s time for hospitals to be transparent about their prices 

More than a year after the Centers for Medicare and Medicaid Services enacted a rule requiring hospitals to disclose prices for routine procedures, most still aren’t complying.

That’s according to a recent study from the Johns Hopkins Bloomberg School of Public Health.2 As of December 2021, CMS had issued 335 warnings to hospitals for failing to follow the rule. Not one has been fined yet. 

It’s time for hospitals to comply with the rule— or pay a steep price.

Hospitals have long used opaque pricing schemes as an excuse to charge wildly different rates to different patients for the same service. In 2020, a study by the research firm Crowe found that the cost difference between the highest and lowest prices for common procedures varied an average of nearly 300 percent. 

For example, suppose you’re an expectant mother in the second or third trimester living in Baltimore. You need a routine ultrasound— and can schedule it at either Good Samaritan Hospital or Franklin Square Medical Center. The two hospitals are about eight miles away from one another and are both operated by MedStar Health.

According to data made public by the two hospitals, Good Samaritan charges $100 more than its corporate cousin Franklin Square. That kind of information can be incredibly useful to a person covering the cost of the procedure out of pocket.

Or consider a middle-aged Boston man with employer-sponsored health insurance through Blue Cross Blue Shield of Massachusetts. An urgent but not life-threatening visit to the emergency room at Massachusetts General Hospital will run him $946. If he’d headed to Boston Medical Center, the bill would be $577.

Mass General may have good reason for charging more. But consumers and health plans can’t evaluate those reasons without knowing the difference in prices in the first place.

Even the hospitals that are complying with the CMS rule aren’t making it easy for people to access their pricing data. People looking to comparison shop may need expertise in Microsoft Excel and a thorough understanding of medical jargon and tens of thousands of billing codes to parse pricing spreadsheets from different hospitals.

When the price transparency rule took effect, some hospitals began employing subversive coding on their websites to prevent search engines from recognizing price lists. CMS has since banned this practice.

This opacity does not fly in other sectors of our economy. And it shouldn’t in the healthcare market, either.

Eliminating willful price obfuscation from hospitals could trim healthcare costs substantially. A recent study from the RAND Corporation found that price transparency could reduce hospital spending by more than $26 billion a year.

CMS has the enforcement authority it needs to hold hospitals accountable. Fines for noncompliance are capped at $5,500 per day, a total of more than $2 million a year.

If hospitals won’t do right by their patients by being up front with them about their prices, then CMS should put that authority to use.

Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes..  

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