More than 10 months after the Centers for Medicare and Medicaid Services required hospitals to provide the public with consumer-friendly information about prices for their medical services, the majority of hospitals in San Diego have failed to fully comply.
As of January 2021, hospitals and health care facilities operating in the United States are required to provide readable and comprehensive pricing information on their websites for at least 300 shoppable services. If a hospital offers fewer than 300 services, it must list as many shoppable services as it provides.
The rule was created in the hopes that price transparency would encourage consumers to compare prices of procedures before deciding where to seek treatment.
inewsource is an independent and nonprofit journalism organization in San Diego, and relies on grants and philanthropists to support its investigative content. Click here to learn more.
Much like consumers shop around for a car or airline ticket before purchasing, the price transparency regulations put agency into the hands of patients and decrease the likelihood of being blindsided by an unexpectedly high bill.
While the rule was adopted under the Trump administration, it has received bipartisan support with President Joe Biden vowing to ensure that all hospitals are compliant.
Despite widespread political support, Turquoise Health, an organization that reviews hospitals’ websites for compliance and aggregates the information into a database, has found that out of approximately 6,000 hospitals across the United States, only an estimated 3,300 hospitals have posted files so far.
inewsource reviewed a recent audit performed by Turquoise Health and was able to verify its findings that of 24 hospitals and health care facilities in San Diego County only four were fully compliant with the Centers for Medicare and Medicaid Services ruling.
The remaining 20 health care facilities had either failed to upload prices or had posted only partial information.
In order to be fully compliant with the law, health care providers must publish the cash price for each procedure, as well as all of the negotiated rates by every payer and every health plan that a given hospital accepts.
Fully compliant hospitals in Turquoise Health’s audit include Alvarado Hospital, Kaiser Foundation Hospital-San Diego Zion Medical Center, Rady Children’s Hospital of San Diego, and Sharp Mesa Vista Hospital. The government intends to audit a sample of hospitals and may impose significant fines for non-compliant facilities.
In a statement to inewsource, Rady Children’s Hospital’s Communications Project Manager, Ben Metcalf, expressed the hospital’s commitment to a transparent relationship between their patients and facility.
“We recognize how important it is for patients and families to have the information they need about the cost of care within our system. As part of this effort, we help patients and families understand the charges that they may see when visiting one of the Hospital’s departments, common inpatient and outpatient charges, and potential charges associated with all health care services,” Metcalf said.
The push for price transparency comes amid nationwide consumer panic over health care costs. In the wake of mass layoffs due to the COVID-19 pandemic, many have lost the health insurance coverage they once held through their employer.
In June, a study conducted by the Journal of American Medical Association illustrated that consumer panic was warranted. The journal found that Americans’ medical debts amount to $140 billion, making health care the country’s largest source of debt.
Reasons for Non-Compliance
According to Marcus Dorstel, head of operations at Turquoise Health, the organization has seen geographical trends in non-compliance since the law was first put into effect. Hospitals in a given area will often wait to see if their surrounding competitors upload first.
Some health care facilities worry that publishing prices first will attract public scrutiny and negative attention.
But Dorstel said this worry underlines the importance of hospitals understanding where they sit in the market and how their prices compare.
“Ultimately you can have higher prices,” Dorstel said, “but you need to justify those prices. Maybe you have the best doctors, the best surgeons and the best medical devices. Then there’s good reason you are charging 150% above what others are — but it’s all about controlling that narrative.”
The American Hospital Association acknowledges the importance of transparency in prices, but says that the pandemic has made compliance difficult for some hospitals.
In a statement to inewsource, a spokesperson for the association said, “For many hospitals, implementing the negotiated rate disclosure part of the price transparency rule requires significant staff resources that have needed to remain directed at the COVID-19 response.”
However, some are skeptical of what they view as excuses. “Quite frankly, it’s all about the money. Because they’re making so much money,” said Cynthia Fisher, founder of PatientRightsAdvocate.org.
The price transparency ruling represents a shift in power from the hospitals and insurance companies to the consumer — a power shift that health care providers fear will lower their profits, sources said.
Employers’ Unnecessary Overspending
Providing health care options for employees is one of the largest costs employers face.
Jim Jusko, founder of FireLight Health, an online health care price comparison tool, sees the lack of transparency in prices as highly detrimental to companies.
“I think the biggest problem in American health care is really the massive and unintentional overspending that employers have to do,” Jusko said.
The rising cost of health insurance has made it difficult for employers to offer substantial health benefits to employees. The price transparency ruling is intended to encourage employers to shop coverage options and choose the most appropriate plan based on their budget and employee’s needs.
But publishing the costs of health care has the potential to upset the relationship between hospitals and insurance companies.
“If a hospital is selling a hip or knee surgery to Humana at this price, but to United Health care at that price, you’d rather not have your two customers know what prices you’re selling these items for,” said Dorstel, “because one of them is getting a better deal than the other.”
Consumers Have Been Left in the Dark
But hospital and insurance company negotiations ultimately impact the consumer’s pockets.
“It comes out of our paychecks, our wages and our contributions to insurance premiums. The hospitals get away with it along with the insurance companies because they both make money on maximizing their profits,” said Fisher, of PatientRightsAdvocate.org.
Historically, the health care system has not encouraged or enabled a consumer mindset. Consumers are not often aware of the wide range in pricing among hospitals for the same procedures.
Sutter Medical Center in Sacramento came under fire earlier this year when it was discovered that a standard C-section procedure cost one woman $6,000.00 and another woman over $60,000.00.
Cynthia Fisher said that the price transparency ruling holds hospitals accountable for massive price discrepancies such as these.
“None of us would tolerate paying 10 times more for a gallon of milk at the grocery store than the person in front of us in line,” Fisher said.
“So when we see these prices, we will not tolerate being overcharged by 10 times the next person for the same service by the same providers.”
While compliance remains low, the Centers for Medicare and Medicaid Services is pushing to increase the penalty for non-compliance. According to a spokesperson for the agency, as of Sept. 1, it had issued approximately 256 warning notices to hospitals that have been determined to be out of compliance with Hospital Price Transparency regulations.
The agency has proposed higher penalties for non-compliant hospitals. Under their proposed approach, a full calendar year of non-compliance would result in a minimum penalty of $109,500 per hospital and a maximum penalty of more than $2 million per hospital. Penalty amounts would be determined by the size of the hospital.
If finalized, the penalty increase will become effective Jan. 1, 2022.
For now, the Centers for Medicare and Medicaid Services is holding off on issuing and raising penalties in the hopes that hospitals simply need more time to comply.