HealthcareTexas Agency Issues Hospital Price Transparency Guidance, Accused of Not Following the Law

A hospital must post its chargemaster, a list of standard charges for services, on a shoppable online webpage that is free to access and readily available. It must be accessible through a searhch engine, provide a search function for the price list, and be reachable without having to create an account.

The prices must include maximum and minimum negotiated prices, payer-specific negotiated charges, and the discounted cash price for each of the 70 shoppable services listed by the Centers for Medicare & Medicaid Services. The hospital may list more if it so chooses.

Senate Bill (SB) 1137 was passed in the same spirit as the Trump administration’s regulatory rule issued and validated by a court in 2020. It tasks the HHSC with enforcement that amounts to $10 per day for hospitals with $10 million or less in annual gross revenue, $100 per day for hospitals with between $10 million and $100 million in gross revenue, or $1,000 per day for hospitals with $100 million or more in gross revenue.

Statute specifies explicitly, “Each day a violation continues is considered a separate violation.”

David Balat with the conservative Texas Public Policy Foundation’s Right on Healthcare Project contends this is not reflected in the guidance. The memo omits that subsection.

“The rules are still meager on the application of the law as compared with the reading and intent of the law,” Balat told The Texan. Without that specification, he says, the penalties levied on hospitals for noncompliance will be less than the legislature intended.

The legislature went with a fine system based on days of violation, while the federal rule’s enforcement tacks on fines per bed per day of violation.

Rep. Tom Oliverson (R-Cypress), SB 1137’s House sponsor, echoed Balat’s assessment, telling The Texan, “I’m disappointed with the way the HHSC wrote the rule.”

“It’s fair to say HHSC is not following the law based on the law as written, this is clearly not what the law actually says,” he added. Oliverson said the guidance must start back on square one to ensure it’s adherence to the law, and that he will convey his assessment to the agency.

An analysis conducted from May to July last year estimated that only 5.6 percent of the nation’s hospitals were fully compliant, including 23 of Texas’ largest hospitals.

Many hospitals simply paid the fines for noncompliance. Some framed the requirement to provide patients with their actual prices as detrimental to their ability to reduce costs — that are already drastically higher than free market competitors.

The cost of a hip replacement at a hospital averages around $40,000 while the same surgery at Texas Free Market Surgery is half the price.

Those in favor of the requirement say the transparency will drive prices down as patients can shop competitively, while the hospitals contend it is too costly to build the webpage and that the competitiveness inhibits affordability.

“When HHSC determines a hospital is noncompliant with any of HSC Chapter 327’s provisions, HHSC will issue a Statement of Deficiency (SOD) and require a Plan of Correction (POC) from the hospital,” the agency’s guidance reads.

The memo signals movement toward implementation of the legislature’s directive, but hospitals are still dragging their feet.

“While the guidance letter does not speak to the specific penalty calculation outlined in the legislation, each day a violation exists will be considered a separate violation as stated in statute,” a spokesman for the HHSC told The Texan.

A proposed rule has been posted for public comment.

Editor’s Note: This article has been updated to include comments from Rep. Oliverson and the HHSC.