Few hospitals complying with federal price transparency law: Study

Most hospitals and health systems aren’t adhering to federal regulations aimed at promoting price transparency, according to a new study.

Only 6% of U.S. hospitals are fully complying with the federal law, according to the study, published June 7 by the Journal of the American Medical Association.

“Adherence to the final rule price transparency mandate 6 to 9 months after its effective date was low,” the authors wrote. “Acute care hospitals with lesser revenue per patient-day, within unconcentrated health care markets, and in urban areas were more likely to be transparent.”

The study’s findings echoes other research that shows many health systems aren’t complying with the law.

The Hospital Price Transparency rule, which compels hospitals to publicly disclose the payer-specific prices for drugs and other services, took effect in January 2021. The new study examined data from hospitals between July 1 and September 30, 2021.

Hospitals are required to post information on different price types (including gross charges, discounts and payer-negotiated prices) in a machine-readable file. The federal regulation also directs health systems and hospitals to have separate price estimators or accessible displays for at least 300 shoppable items, the authors note.

Some key findings, according to the study:

• Among 5,239 hospitals, 729 facilities (13.9%) had a machine-readable file of different price types, but didn’t provide a shoppable display.
• Conversely, 1,542 hospitals (29.4%) had an adherent shoppable display but no machine-readable file on price types.
• Only 300 hospitals (5.7%) had both a readable file of price types and a display of shoppable items. The authors noted hospitals had to comply with both elements to be considered fully adherent to the rule.
• More than half of the hospitals - 2,668 facilities, or 50.9% - did not have a machine-readable file of price types or a price estimator for shoppable items.

The size of the hospital, the ownership of the hospital and the emergency service capabilities of the facilities had no effect on compliance with the regulation, the authors wrote.

In January 2022, the Centers for Medicare and Medicaid Services announced plans to raise the penalties for hospitals and health systems that aren’t complying with price disclosure regulations.

Initially, the fee was $300 per day for all hospitals, but CMS has raised the penalty to a maximum of $5,500 per day. Over the course of a year, hospitals could be fined up to $2 million.

Since the study focused on a three-month period in 2021, the authors acknowledged the prospect of higher penalties from CMS could produce more compliance.

“Longer-term trends in hospital adherence and whether changes in penalties beginning in 2022 may lead to greater adherence remain to be elucidated,” the authors wrote.

A previous study in April found that less than half of 61 National Cancer Institute-designated cancer centers were releasing prices for commonly used cancer therapies.

Researchers from Brighman and Women’s Hospital found 27 of the 61 centers (44%) disclosed private-payer specific prices for at least one top-selling cancer drug as required by federal regulations. The study was published April 18 in JAMA Internal Medicine.

Roy Xiao, the lead author of the April study, told Chief Healthcare Executive that he hopes the cancer center study would lead to a greater discussion about the need to disclose prices. “We had one primary take home message: A minority of cancer centers were disclosing their negotiated prices,” Xiao said.

In the cancer center study, the facilities that did disclose their prices indicated they were marking up prices well above their acquisition costs for those with private insurance.

The possibility of higher federal penalties should prod more hospitals and health systems to disclose their pricing information, Xiao told Chief Healthcare Executive last month.

“I think the increased penalty will lead to greater compliance,” Xiao said. “Hopefully we get to the point where the vast majority of hospitals are complying.”

Another recent study examined 20 hospitals and found nearly half didn’t disclose negotiated drug prices.

The authors of the new study acknowledged that since it only covered a three-month period, it could have underestimated the full compliance of hospitals.

Waqas Haque of New York University Langone was the lead author of the new study, along with Muzzammil Ahmadzada of Johns Hopkins University, Sanjana Janumpally of Kansas City University of Medicine and Biosciences, and several other researchers from other institutions.