U.S. hospitals slow to respond to new price transparency rule

On January 1, 2021, new federal price transparency regulations went into effect for U.S. hospitals. These regulations require hospitals to publish detailed information in machine-readable form on their websites about the prices they charge for inpatient and outpatient services, including negotiated rates with private insurers. Hospitals are also required to make available a list of prices for 300 ‘shoppable services’ in a consumer-friendly format, such as an interactive price estimator tool.

A new study by University of Minnesota School of Public Health (SPH) faculty Sayeh Nikpay, Ezra Golberstein, Hannah Neprash, Caitlin Carroll and Jean Abraham provides one of the first systematic investigation of hospitals’ responses to the Centers for Medicare and Medicaid Services’ Hospital Price Transparency Rule. Their findings were recently published in Medical Care Research and Review.

Using a nationally representative sample of 470 U.S. hospitals, the authors used an internet search to access pricing information and analyze whether such information met reporting requirements. Additionally, the authors evaluated the extent to which complete reporting differed by a hospital’s ownership status, system affiliation, number of beds or location in a metropolitan area.

The study found:

  • Only 1 in 4 sampled hospitals reported all required data elements in machine readable format, which would make it easier for researchers and policymakers to scan and analyze the information.
  • Payer-specific negotiated rates, which reveal the previously private prices for care hospitals agree to charge individual insurance companies, were the least likely to be disclosed.
  • 73.5% of hospitals reported data in a consumer-friendly format with the majority doing so through the availability of an online price estimator tool.
  • Non-profit hospitals (versus for-profit and public) and those affiliated with systems (versus independent) were more likely to report consumer-friendly information.

“This new regulation pushes healthcare price transparency efforts farther than ever before,” said senior author Jean Abraham, Wegmiller Professor of Healthcare Administration. “However, lots of questions remain as to how the disclosure of this information will affect consumer behavior, hospital competition, and insurer-provider relationships.”

The authors noted that lack of complete reporting by hospitals may reflect several factors: Many hospitals were overwhelmed in 2020 with COVID-19 and complying with these requirements was not a top priority; hospitals may have delayed taking action as legal challenges to the rule were underway; and hospitals may have simply made a cost-benefit calculation and chose not to fully report, given the relatively low $300 per day hospitals are charged for not complying with the rules.

Abraham said that while the findings of this study describe hospitals’ early responses to the new regulations, there is need for continued monitoring of hospitals’ actions and better understanding of what factors are contributing to organizational decision-making. Additionally, this new regulatory requirement opens the door for new studies to examine medical price variation and competition, and whether consumer-focused transparency efforts are an effective policy lever for addressing increases in medical care spending.

This study was supported by research assistance of SPH graduate students Emily Johnson, Rebecca Ruff and Nath Samaratunga.

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