Hospitals move to hike prices by 15% and Team Biden does nothing to stop it
Many of America’s biggest hospitals are looking to raise prices by as much as 15%, far exceeding already-soaring inflation rates. The Trump administration issued a hospital price-transparency rule in 2019 to help families fight such hikes and find high-value care — yet the Biden team isn’t enforcing this long-overdue policy. Millions of families will soon be stuck with bigger bills when they should be empowered to drive health-care prices down.
That’s the conclusion of a new Foundation for Government Accountability report. We analyzed how more than 6,400 hospitals have complied with the Trump rule, which went into effect January 2021.
It requires that every hospital provide a complete and easily accessible file of prices, including rates insurance companies negotiated, as well as a menu of services in a customer-friendly format. With this information in hand, families can shop around for the most affordable care, which has the added benefit of incentivizing hospitals to lower costs further to attract more patients.
So it’s concerning that barely one out of three hospitals — 37% — offers price transparency. In Maryland, just 5% of hospitals abide by the rule, while in 12 states and DC, fewer than 30% do. That includes New York, where only 28% of hospitals comply. No state has more than 64% compliance — a dubious honor for Rhode Island.
Our findings are conservative; the real percentage of transparent hospitals is likely even lower. We only reviewed whether hospitals had complete pricing files, but many hospitals with pricing files may not be meeting other requirements of the transparency rule. And large numbers of hospitals that technically comply with the rule are also using special website coding that deliberately blocks patients from finding their supposedly “public” price lists, the Wall Street Journal found.
Either way, the continued and widespread lack of transparency makes it much harder, if not impossible, for families to find the most affordable care.
Why are so many hospitals steadfastly refusing to be transparent? For the same reason the American Hospital Association lobbied so strongly against the rule and tried to block its implementation. Hospitals are worried posting their prices will cut into their profits. Yet the long-running lack of publicly available information makes health care an unacceptable anomaly.
No one would accept gas stations that give the per-gallon price after a fill-up or real-estate agents who disclose home purchase prices after closing. If even a fraction of gas stations or realtors did that, Americans would rightly be furious. Yet there’s no such uproar in health care because transparency is still being stifled.
Tellingly, many of the worst offenders are the country’s biggest hospital systems. From California to Washington to New Jersey, these hospitals likely don’t mind getting a failing grade on transparency because they have the most to lose if patients find cheaper care elsewhere. With size comes market power, along with a strong incentive to keep prices hidden and profits high.
Yet no hospital, big or small, should get away with noncompliance. The only reason any does is a near-total lack of federal enforcement.
While the Centers for Medicare and Medicaid Services has sent warning letters to various hospitals, with the threat of more warnings, it took the agency until June of this year to issue its first fines. It went after two Georgia hospitals in the same system — nearly a year and a half after the rule went into effect.
Even then, the fines were hardly enough to make the hospital system sorry. The $1.1 million penalty is less than 0.1% of its annual revenue, and under the latest CMS guidelines, the maximum penalty for a full year of noncompliance is as little as $109,500 for a small hospital to just over $2 million for a large one.
While that may seem substantial, it’s not. Hospitals that make billions of dollars a year can probably make more money keeping prices hidden and artificially high than they’d lose from noncompliance fines.
The Foundation for Government Accountability filed Freedom of Information Act requests with CMS in March requesting details on its enforcement measures. The agency has repeatedly stonewalled our requests — so this week, we’re filing a federal lawsuit.
The courts should force the Biden administration to disclose what it’s doing, what it’s not doing and why. Americans deserve price transparency from hospitals, especially as health-care costs look set to soar well beyond inflation.
Jonathan Ingram is the vice president of policy and research at the Foundation for Government Accountability, where Hayden Dublois is the data and analytics director.