A new University of Minnesota study finds that hospitals have been slow to fully comply with a new federal rule that was designed to bring more price transparency to health care.
Beginning in January, hospitals were required to publish detailed information online about the rates they charge for services that reflect differences in negotiated rates with different private insurers.
The analysis from U researchers found that only 1 in 4 of all hospitals surveyed reported all required data in a machine-readable format that makes it easy for researchers and policymakers to analyze the information. The study looked at a nationally representative sample of 470 hospitals across the U.S.
While the results suggest limited utility in the early data for consumers and researchers, it’s possible that reporting could improve over time, said Jean Abraham, a professor of health care administration at the U’s school of public health.
“It is very difficult for consumers to know what price they will face when they seek care from a hospital,” Abraham said in a Wednesday interview. The goal of the requirement is “empowering consumers to make more informed choices about their health care using price information.”
Published in the journal Medical Care Research and Review, the study found that while relatively few hospitals reported their negotiated rates with insurers, nearly three-quarters published a subset of prices in a consumer-friendly format.
Hospitals might have opted against reporting negotiated rates because they were busy handling the COVID-19 pandemic in 2020, researchers wrote, and because the hospital industry was challenging the rule in court. Plus, enforcement of reporting is relatively weak, Abraham said, including a $300-per-day penalty that’s small relative to overall revenue at most hospitals.
Hospitals are worried about consumer reactions, she said, if the price data shows that their medical center is “the highest-priced provider in the market.”
The study looked at reporting during the first few weeks of 2021, so it could be that more hospitals now are reporting full data online, Abraham said. She pointed to another federal requirement coming in January 2022 that is intended to bring even more detailed information via price transparency from health insurers.
“That’s an order of magnitude more complicated,” Abraham said. “If it’s upheld and actually comes to fruition, that’s going to put an awful lot of information out there and I think will … the question: Why do we have so much price variation?”
Roughly three-in-five Americans are covered by private health insurance. Spending on the privately insured has increased 50% in the past decade, researchers wrote, driven in large part by increases in the prices for services charged by health care providers.
Prices are set through negotiations between insurers and hospitals, resulting in dramatic variations.
“If fully leveraged, the hospital price transparency rule has the potential to create a powerful tool to assess the role of insurer and provider market power as well as other local market conditions as drivers of medical price variation and ultimately health care spending,” researchers wrote. “Moreover, the rule provides a valuable opportunity to assess whether consumer-focused transparency efforts are an effective policy lever for mitigating medical care spending growth.”
“Whether price transparency can reduce health care spending,” they added, “is an open empirical question.”