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Smaller Hospitals More Likely to be Noncompliant with Price Transparency Rule

Analysis  |  By Jay Asser  
   September 14, 2022

New research finds a correlation between hospitals with fewer beds and lack of adherence to the price transparency mandate.

Hospitals across the board have so far struggled to meet CMS' price transparency requirements, but smaller facilities are more susceptible to noncompliance, according to a study by Northwestern University's Feinberg School of Medicine.

The research, published in ClinicoEconomics and Outcomes Research, identified characteristics of 6,214 hospitals using data from the American Hospital Association Annual Survey, as well as cash prices of commonly performed procedures and visits from Turquoise Health.

While price transparency compliance ranged from 13% to 49% of hospitals studied, the findings revealed that facilities with fewer beds were less likely to be compliant with the rule. Additionally, hospitals located in the South and the West were also associated with less transparency.

Since going into effect on January 1, 2021, the mandate requires hospitals to disclose gross charges online through a comprehensive machine-readable file with all items and services they provide, as well as through a display of shoppable services in a consumer-friendly format.

"The findings of this study shine light on the poor state of price transparency for healthcare services throughout various specialties in hospitals across the US and elucidate pertinent relationships between hospital characteristics and price transparency," the researchers stated.

The study notes that It's unclear if the lower rate of price transparency in smaller hospitals can be attributed to a lack of resources or a reduced penalty for noncompliance on CMS' sliding scale based on hospital bed count.

The rate of price transparency based on region, meanwhile, could be due to less competition in the area, resulting in decreased motivation for hospitals to disclose prices as patients don't have much ability to shop around, the researchers suggest.

However, this reasoning runs counter to the recent JAMA study which found hospitals in less competitive markets and those with greater market shares have higher price transparency compliance rates.

Authors of that study noted that higher compliance rates in less competitive markets were in line with the idea that hospitals safeguard their prices when facing more competition.

Related: Only 16% of Hospitals Complying with Price Transparency Rule

It's one thing for hospitals to comply with pricing requirements—it's another for them to do so in a patient-friendly manner.

In the Feinberg School of Medicine study, 62% (3,873) of hospitals reported prices for at least one of the 14 billable healthcare services, which were chosen due to their high volume of usage and representation across medical fields.

Researchers said it was a "tedious task" to obtain list prices from hospital chargemasters, which involves navigating multiple hospital websites, finding the correct chargemaster listed, and understanding billing terminology.

So even if a hospital is being transparent with its pricing, the complexity of the process to find the prices means patients may not end up benefitting anyways.

"Thus, the current CMS legislation’s efforts at price transparency fall short of its aim to provide patients with the necessary information to make informed care decisions," the researchers stated.

Jay Asser is an associate editor for HealthLeaders.


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