Hospitals Ignoring Price Transparency Rule; CMS Ignoring Hospitals’ Noncompliance

Prices in health care are often difficult to obtain and meaningless when you obtain them. There is not one price but dozens of prices depending on who the payer is. There are different prices for Blue Cross, Aetna, Cigna and UnitedHealth. There is the pricemaster (list) price that almost nobody pays. The chargemaster price is often the official cash price if you lack insurance coverage and don’t inquire prior to care. Then there is the cash price if you negotiate in advance of care, which is often lower than the list price. If you were to inquire about the price, assuming you were told a price at all, you would likely be given the pricemaster charge for a specific billing code without information about which billing codes belong together. You see, a knee surgery isn’t one code, it’s numerous codes so hospitals can bill for numerous services. The following are examples of knee surgery current procedural terminology (CPT) billing codes.

Knee joint arthroplasty includes cpt code 27437-27447, 27486, 27487.

27437 Arthroplasty, patella; without prosthesis
27438 with prosthesis
27440 Arthroplasty, knee, tibial plateau;
27441 with debridement and partial synovectomy
27442 Arthroplasty, femoral condyles or tibial plateau(s), knee;
27443 with debridement and partial synovectomy
27445 Arthroplasty, knee, hinge prosthesis (eg, Walldius type)
27446 Arthroplasty, knee, condyle and plateau; medial OR lateral compartment
27447 medial AND lateral compartments with or without patella resurfacing (total knee arthroplasty)

27486 Revision of total knee arthroplasty, with or without allograft; 1 component
27487 femoral and entire tibial component

In the event you receive knee surgery one of these codes would be accompanied by numerous other codes. Yet, bundled prices are not common like in other industries.

Hospitals were required to begin disclosing prices more than two years ago, but most have drug their feet. Here is what the Centers for Medicare and Medicaid Services (CMS) has to say:

Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it. Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways:

1. As a comprehensive machine-readable file with all items and services.
2. In a display of shoppable services in a consumer-friendly format.

This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.

Regulations that require transparent prices are popular with the public, enjoying support from nine-in-ten people. Seriously, it’s difficult to think of anyone who would oppose this. The remaining 10% must be hospital executives. The following is from Josh Archambault, Visiting Fellow, The James Madison Institute:

Price transparency is consistently the single most popular polled healthcare reform, regularly garnering 90 percent public support.1 Focusing on price transparency also makes sense from a policy perspective, as underlying price increases have accounted for upwards of two-thirds of total health care spending growth, which leads to higher health insurance premiums each year.

Industry efforts have been lackluster to date. Congress recent stepped into the fray due to public pressure since many hospitals are not complying with the requirement. Stat News found that CMS is glossing over the industry’s failure to comply:

Unfortunately, CMS’s new hospital compliance report gaslights American health care consumers by claiming that most hospitals are following the rule. Its survey of a mere 600 out of 6,000 U.S. hospitals showed that 70% are complying with two key rule requirements: a machine-readable file that computer systems can read and a consumer-friendly display.

This sunny conclusion is out of step with other reports.

The results of a review conducted by PatientRightsAdvocate.org, the organization I lead, showed that only 24.5% of the 2,000 hospitals surveyed in December 2022 and January 2023 were fully complying with the rule and posting complete price information. Some of the nation’s largest medical systems, including HCA Healthcare, Tenet Healthcare, Providence, Avera, UPMC, Bon Secours Mercy Health, Christus Health, and Mercy Health, had compliance rates of zero.

That’s depressing. The largest health care systems, which presumably includes some with the highest prices and most market power, didn’t get the memo. Or perhaps they got the memo and their lawyers told them they could throw it away. CMS did an analysis of compliance but admitting many hospitals are out of compliance doesn’t make their efforts look good. The organization, PatientRightsAdvocate.org, did their own analysis that was more rigorous and detailed than CMS.

CMS’s analysis, by contrast, provides a mere surface-level look at the existence of price files and doesn’t analyze whether insurance plan prices are correctly listed. Anything less than listing complete prices in dollars and cents is obfuscation. CMS’s study even admits that it “does not include all the requirements of the Hospital Price Transparency regulation.”

As I said earlier, there is not one price but dozens of prices depending on who is paying the bill. Millions of people have health insurance but have not met their deductible. These health plan members need easy-to-read information on what services cost and if there is some place cheaper than the hospital outpatient department next to the doctors’ office building. If they have no way of knowing the prices their insurance has negotiated for the services they need then the information they obtain is worthless.