HealthcareStatewide NewsTexas Hospitals Lack Compliance with Federal Price Transparency Rule According to Survey

The analysis found the vast majority of hospitals across America were some degree of non-compliant with the new regulation.
July 21, 2021
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Half a year after losing an appeals court battle, many hospitals across the country are still not fully compliant with the federal government’s price transparency rule — including 23 of Texas’ largest hospitals.

An analysis by PatientsRightsAdvocate.org surveyed 500 hospitals across the nation from May to July estimates that 5.6 percent of the nation’s hospitals are fully compliant. The group took a random sample of America’s over 6,000 hospitals.

Issued during the Trump administration, the price transparency rule is a regulatory measure requiring hospitals to make available to customers their actual prices rather than mere ranges or estimates. It also requires hospitals to post those prices on a shoppable page on their website.

The regulatory price transparency rule took effect on January 1 after the American Hospital Association (AHA) lost its challenge in front of the D.C. circuit court in December.

The AHA argued the rule violated its members’ First Amendment rights and that listing prices before the post hoc negotiation with insurance companies would place an undue burden on the hospitals.

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To be compliant with the rule, there are a number of factors the hospital must list in its charge file for each service it offers such as the gross charge, discounted cash price, and the negotiated minimum and maximum.

They also must have either a “300 Shoppable Services List” or an online price estimator tool.

Until this rule, hospitals usually just made available their “chargemaster,” a list of preliminary prices that serve as starting points before negotiations are had between the hospital and the ratepayers, whether insurance companies or the individual patients themselves.

The push for price transparency, which has largely been spearheaded by PatientRightsAdvocate.org’s founder Cynthia Fisher, has for years aimed to put downward pressure on rising health care costs. Advocates argue that if customers are able to adequately shop around like they can almost any other service, then hospitals will have to become more competitive.

Competition not only breeds innovation but also efficiency, price transparency advocates assert.

And competition is something hospitals have largely been protected from, which the hospitals themselves believe is necessary.

CHRISTUS Health System — with numerous facilities throughout Texas including its Tyler location which was among those surveyed — justifies the non-compliance on its website, saying, “We haven’t invested our resources into this because it provides something that will only be useful for our competitors.”

“We aren’t in it for them. We are in it for you and believe you deserve to know what’s important to your personal situation. That’s why we remain dedicated to keeping prices low for you.”

Those competitors are largely direct care outfits that operate outside the insurance-based model and often provide services at a fraction of the cost hospitals do. For example, a hip replacement at an average hospital costs about $40,000 while the same surgery at Texas Free Market Surgery is roughly half that.

Part of the reason hospitals have largely ignored the rule is that the financial penalty — $300 per day of non-compliance — will not put an even minor dent in their wallets. Price transparency advocates say the penalty should be shifted to $300 per bed per day of non-compliance for hospitals — a much more prohibitive penalty.

David Balat, director of the Texas Public Policy Foundation’s Right on Healthcare initiative, told The Texan, “The majority of hospitals that continue to make their prices secret and difficult to access are the major systems throughout the state.”

“They are willfully and in some cases proudly flouting the law in spite of the fact that 90 percent of Texans want them to disclose their prices.”

This is something the state legislature implemented with its own hospital price transparency legislation this past session, but with a slight twist.

Rather than the flat $300-per-bed-per-day penalty, the legislature established a scaled set of categories for financial penalty. For hospitals that gross $100 million in annual revenue, the charge is $1,000 per day of non-compliance and drops to $100 or $10 for establishments that bring in less than that benchmark annually.

Senate Bill 1137 was signed by Governor Greg Abbott and becomes effective on September 1. To date, Texas hospitals have not yet felt the state’s financial penalties.

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Brad Johnson

Brad Johnson is 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.