Remember that hospital price transparency rule from three years ago that said starting January 1, 2021, every US hospital had to start posting prices for all its items and services in a way consumers could understand and in a machine-readable file format?
Well, good news, it’s totally working! Except when hospitals don’t follow it. Which, it turns out, has reportedly happened quite frequently.
In a random sampling of 100 hospitals nationwide, 34 didn’t publish comprehensive, machine-readable files with their pricing, and 14 didn’t follow all the steps necessary to display their prices in a way that the average patient could understand, according to a November 8 report from the US Department of Health and Human Services (HHS) Office of Inspector General. Both are required to be considered compliant.
The report estimates that 46% of the 5,879 hospitals with Medicare inpatient claims between January 2021 and June 2022 didn’t comply with one or more of the rule’s requirements.
“The bottom line: Hospitals’ opaque pricing and billing practices continue to harm Americans’ access to affordable care,” James Swann, spokesperson for the political advocacy and trade group America’s Health Insurance Plans, wrote in a press release on November 13.
What happened?
The law aimed to help patients avoid surprise bills and shop around, ideally to “drive down the cost of healthcare services,” according to the Centers for Medicare and Medicaid Services (CMS). In 2017, about one in five US households had a median medical debt of $2,000, the US Census Bureau said in 2021.
As the New York Times also reported in 2021, this debt may be in part because hospitals sometimes charge drastically different prices for the same service depending on the rates negotiated with insurance companies. For instance, the Times reported, an MRI at Mass General in Boston was $1,019 with Cigna, $3,101 with Aetna, and $3,809 with Humana.
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But according to the HHS report, CMS told HHS that the agency didn’t have enough staff to check and enforce the rule. Leaders of noncompliant hospitals also told HHS that they needed more assistance and clarity on how to comply.
CMS cleans up its act
HHS recommended at the conclusion of its report that CMS review and penalize noncompliant hospitals, provide more guidance on how to follow the rule, and do better internally—including staffing more people to review compliance.
The report noted that CMS has already made some changes to improve its procedures. The agency started reviewing more hospitals and fining more violators between September 2022 and February 2024 when this data was collected for the report.
Prior to HHS’s analysis, CMS had only fined two hospitals, totaling $1.1 million. By the end of the analysis, it had fined 14, totaling $4 million, according to the report.
What’s more, CMS gave hospitals more resources, like an online validator tool to check if their files were compliant, and a template for creating machine-readable files.
“Importantly, CMS was taking steps, even over the course of our audit, to improve upon these procedures and thereby strengthen its controls,” the report read.