By Rafi Kassamani, JHBL Staff Member
Price transparency in the U.S. healthcare system has always negatively impacted consumers.[1] For this reason, federal and state laws now require healthcare providers to be transparent about costs for their services.[2] Hospitals are now required to publish what they typically charge when it comes to services and items.[3] However, even though providers now have a legal obligation to be transparent about their prices, many providers still fail to comply with those requirements.[4] This puts each hospital that does not comply at risk of being penalized with a $2 million annual fine.[5]
Two rules govern price transparency: The Hospital Price Transparency Rule and the No Surprises Act.[6] The Hospital Price Transparency rule became effective on January 1, 2021, and it required hospitals to have pricing available to people seeking care.[7] The rule applies to all hospitals, requiring them to reveal prices for specific items and services.[8] To ensure compliance, actions will be taken against hospitals not adhering to the rules with warnings, forcing an offender to create a plan of action or even the imposition of civil fines being available tools for regulators.[9]
The No Surprises Act ensures that patients have a remedy in case they receive an unexpected medical bill.[10] The Act covers the insured, the uninsured, and people who opt to self-pay rather than use health insurance.[11] Current or prospective patients that are uninsured or choose to self-pay may ask for a good faith estimate regarding the services they are looking to receive.[12] If the bill ends up being at least $400 more than the estimate, the charges may be disputed if a claim is filed within 120 days of the date on the invoice.[13] Those who are covered by insurance are protected in cases of emergency care as well as from certain out-of-network charges, and providers are required to give patients notices to help them understand their billing.[14]
Centers for Medicare & Medicaid Services (“CMS”) enforces these regulations in three ways: (1) looking into complaints, (2) official investigations into an analysis of noncompliance and (3) through the internal audits of a hospital websites.[15] CMS prioritizes enforcing cases against hospitals with the most serious violations, and offenders are given 90 days to rectify the situation.[16] However, if after 90 days the provider is still out of compliance, CMS will issue a request for a Corrective Action Plan, which take on average 195 to 220 days to resolve.[17] As of April 2023, CMS has issued more than 700 warnings and more than 250 requests for action proposals.[18] To combat noncompliance, CMS now requires that Corrective Action Plans have a deadline, which in turn has led to expedited compliance assessments and automatic fines being issued as a part of updates to the enforcement process.[19]
Price transparency means giving patients the ability to see the costs of their treatment before receiving it.[20] One significant benefit of price transparency is that patients will be able to make a fully informed decision about their treatment.[21] However, patients would not be the only party to reap benefits since providers would also benefit from increased price transparency.[22] If providers are more transparent about their costs, they should experience more upfront payments for services, less bad debt, higher levels of patient loyalty, and higher numbers of new patient appointments.[23]
While price transparency is arguably needed in the health care system, there are many reasons why it may be difficult to implement.[24] One of the first difficulties that needs to be considered is that patients could become confused from the conflicting information they could come across.[25] First, services may not have a one-size-fits-all approach, and one service may have varying prices for different patients.[26] Patients may see variable prices and become confused from the conflicting information.[27] While there is a need to comply, it must also be noted that there is a large cost on the part of the providers so that they can be in line with regulations.[28] Providers will need to devote significant amounts of money along with personnel related investments to ensure compliance.[29] Lastly, these rules came into effect when COVID-19 was still a major issue; therefore, many hospitals were unable to devote time and resources to meeting these new regulations.[30]
Hospitals should fall in line with the new regulations, not only because it is mandated by the law, but also to ensure a more promising patient-provider relationship. Alignment with these regulations will ensure that patients have a better understanding of healthcare costs. Providers must make the necessary changes in a way that does not confuse patients. For example, providers could give all patients with a personalized bill prior to treatment that takes into consideration their specific scenario without taking payment until treatment is provided. Additionally, the tools providers create should be easily customizable so patients can get accurate information for their specific situation or scenario. Lastly, repeat offenders or providers who do not keep with regulations should be given fines that differ from first time offenders so that they are motivated to be in compliance as soon as possible. Compliance in these matters will not only benefit patients but will also create a better healthcare system that empowers patients to control their care while creating a better reputation for the healthcare industry as a whole.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHBL or Suffolk University Law School.
Rafi Kassamani is currently a second-year law student with an interest in corporate law. He graduated from Northeastern University in 2018 with a Bachelor of Science in Business Administration with a concentration in Finance and a minor in Law and Public Policy. In 2021, he received a Master of Business Administration degree with a concentration in Corporate Renewal also from Northeastern University.
[1] Meena Seshamani and Douglas Jacobs, Hospital Price Transparency: Progress And Commitment To Achieving Its Potential, HealthAffairs Forefront (Feb. 14, 2023), https://www.healthaffairs.org/content/forefront/hospital-price-transparency-progress-and-commitment-achieving-its-potential (last visited Feb. 2, 2024) (highlighting that there has been a lack of transparency for pricing in healthcare).
[2] Fact Sheet: Hospital Price Transparency, Amer. Hospital Ass’n (Feb. 2023), https://www.aha.org/system/files/media/file/2023/02/Fact-Sheet-Hospital-Price-Transparency-20230224.pdf [https://perma.cc/EUR5-69DW] (showing that there are federal and state laws that require pricing transparency).
[3] See id. The requirement is to ensure that hospitals are clear about what their standard charge is for items and services that they render to patients. Id.
[4] See id. As of 2022, only 70% of providers complied with all legal requirements. Id.
[5] See id. Hospitals that do not comply risk being subjected to a $2 million annual fine. Id.
[6] See id. (showing the two rules encompassing price transparency).
[7] See Hospital Price Transparency, HHS Off. of Inspector General, https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000728.asp [https://perma.cc/7VR4-XVPN] (outlining the different aspects of The Hospital Price Transparency Rule).
[8] See id.
[9] See id. Centers for Medicare & Medicaid Services has a few different ways to ensure compliance and even has the ability to impose fines. Id.
[10] See No Surprises: Understand your rights against surprise medical bills, CMS.gov (Jan. 3, 2022) (summarizing how the No Surprises Act can benefit certain groups of people).
[11] See id.
[12] See id. (noting that people who self-pay or are uninsured are entitled to a good faith estimate).
[13] See id.
[14] See id. (describing the protections that people with insurance are entitled to).
[15] See Hospital Price Transparency Enforcement Updates, CMS.gov (April 26, 2023), https://www.cms.gov/newsroom/fact-sheets/hospital-price-transparency-enforcement-updates [https://perma.cc/EX77-Z5FD] (highlighting the three ways investigations are done).
[16] See id. One of the most serious offenses is not publishing costs via a machine-readable file and this would make a provider prioritized for the sake of an enforcement case. Id.
[17] See id. If compliance is not achieved at this point, a civil monetary fine will be issued. Id.
[18] See id.
[19] See id. The CMS is looking to increase compliance by updating their enforcement in three ways. Id.
[20] Rex H., Benefits of Price Transparency in Healthcare: How Patients & Providers win, MD CLARITY, https://www.mdclarity.com/blog/benefits-of-price-transparency-in-healthcare [https://perma.cc/B3RK-HPK3] (showing what having price transparency means).
[21] See id. Price transparency would allow patients to have more power when it comes to making an informed decision about their treatment. Id.
[22] See id. There are also benefits that providers can experience from price transparency. Id.
[23] See id. (showing the many benefits that providers would experience).
[24] Fact Sheet: Hospital Price Transparency, supra note 2 (showing the numerous considerations that need to be considered regarding the implementation of price transparency).
[25] See id. There are various sets of prices that patients may come across due to prices being derived from different sources. Id. It is also problematic that there is an overabundance of tools that consumers may use to find pricing information and because the sources are not complements, it could mislead patients about their price to pay. Id.
[26] See id. Prices are dependent on the specifics of a patient’s case, therefore the rate for a service will differ from patient to patient. Id. Additionally, unexpected issues may arise in the course of treatment, thereby changing the total cost to be billed. Id.
[27] See id. It is possible that patients may find conflicting information about prices and therefore may become confused about the price they would be charged. Id.
[28] See id. Hospitals need to spend substantial time and money so that they can be compliant with the regulations. Id. Creating tools that patients can use costs money and requires substantial investment on the part of the hospital. Id.
[29] See id. There will need to be money spent as well as investments in their personnel to comply with new regulations. Id.
[30] See id.