Under the rule, hospitals in the state must update their chargemasters — a list of their products and services provided — with actual prices, not just ranges or estimates. Those prices must be posted on a free-to-access, publicly available, and searchable database.
If non-compliant, a hospital could be liable to pay fines in the hundreds of thousands of dollars. The fine scale separates hospitals into three categories based on their gross revenue in a year: $100 million or more, between $100 million and $10 million, and $10 million or less. It also levies fines per day of violation, which increases by one thousand dollars for each day of noncompliance.
A hospital in the top category that did not comply for 31 days would be charged $31,000 per day, totaling almost $500,000 after a month.
Rep. James Frank (R-Wichita Falls) said on Twitter, “It’s almost amazing that many hospitals had to be forced by law (instead of ethics) to post pricing info. And then even the law wasn’t enough unless penalties made it ‘worthwhile.’”
There’s also a federal price transparency rule on the books which carries a $10 per bed per day fine to any hospital with more than 30 beds. A full year of noncompliance would result in a maximum penalty of about $2 million.
A February report by PatientRightsAdvocate.org stated that 183 hospitals in Texas had not complied with the federal rule from the Centers for Medicare & Medicaid Services.
Due to the relatively low penalty scale, many hospitals decided not to comply and just pay the fine. But the scale within Texas’ law has a far steeper incline — reaching a quarter of the federal government’s maximum annual fine in less than a tenth of the time span.
That hospitals have not provided actual prices has led to customers receiving “balance bills” — a charge after the fact for the difference between what the provider charges and what the insurance company will cover.
After the patient receives treatment, their insurance company will haggle with the hospital over payment and then leave the customer with the bag of leftover debt. Depending on the procedure, it can be quite pricey. For example, an average hip replacement cost at a hospital is roughly $40,000 and the balance bill stemming from it can be costly.
Hospitals fought the implementation of the federal rule in court and advocated against Texas’ law, stating the rules were either unnecessary or burdensome to follow; more compliance required more staff, which would bleed into the prices hospitals charge that were invisible to the patient from the outset.
In a whitepaper, the Texas Hospital Association said, “To drive greater transparency in the market, hospitals support price transparency for all provider types. Today, only hospitals and health plans have requirements to post their prices. According to Turquoise Health, 75% of Texas hospitals are compliant or mostly compliant with the federal requirements for posting procedure prices — a higher percentage than many other states.”
The Texas Legislature’s law passed 31 to 0 in the Senate and 145 to 0 in the House.
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Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.