INVESTIGATION: Hospitals Ignoring Price Transparency Rule Rack Up Billion-Dollar Profits

It’s like playing baseball with one side (patients) wearing blindfolds and the other side (hospitals) running up the score at will.

Topline

It was an historic, bipartisan healthcare reform. In 2020, President Donald Trump proposed and the Biden Administration finalized the transparency rule whereby hospitals were forced to open their books and post their prices for healthcare services online and in real time.

Blatantly, though, hospitals are refusing to comply. As of January 1, 86-percent of hospitals were not complying with the transparency rule according to an investigation by the organization Patient Rights Advocate.

One year after the rule went into effect, a staggering 857 out of the 1,000 hospitals surveyed refused to open their pricing books or were non-compliant.

In 2021, three of the largest hospital systems in the country – HCA Healthcare, CommonSpirit Health, and Ascension — made a collective $120 billion. Yet, those systems still weren’t posting their prices online by January 2022.

Even smaller “non-profit” hospital groups, like, UPMC in Pittsburgh, were non-compliant. However, in 2020, their CEO made $9 million; between 2016 and 2020, he was paid $34.7 million.

That’s like playing baseball with one side (patients) wearing blindfolds and the other side (hospitals) running up the score at will.

The Rule

The federal hospital price transparency rule took effect on January 1, 2021 as a part of the Affordable Care Act. It required hospitals to post all their prices online in a way that’s easily accessible to patients, without barriers like requiring that they submit personal identifying information.

Hospitals must provide the clear pricing information online “(a)s a comprehensive machine-readable file with all items and services” and “in a display of shoppable services in a consumer-friendly format,” according to Centers for Medicare & Medicaid Services (CMS).

Big number

There are 361 hospitals owned by the three large hospital systems and only two of those hospitals were posting their prices. According to the report:

• HCA Healthcare had $58.8 billion in revenue (2021) — none of 188 hospitals complied.

• CommonSpirit Health had $33.3 billion in revenue (2021) – only one of 88 hospitals complied.

• Ascension had $27.2 billion in revenue (2021) – only one out of 85 hospitals complied.

CommonSpirit Health and Ascension didn’t respond to requests for comment by our deadline.

Case study – HCA Healthcare

An HCA Healthcare spokesperson responded to our comment request and said the hospitals are compliant – but wouldn’t say exactly when they began posting the required information.

“Over the last year, we have worked diligently and have completed our implementation of these requirements,” the HCA spokesperson said.

“Our hospital websites have a consumer-friendly Patient Payment Estimator tool that provides relevant information to help patients understand what their out-of-pocket costs may be for hospital care, including those that are uninsured. In addition, we have posted contracted rates with third party payers using one of the machine-readable file formats listed in the regulations to provide the five types of ‘standard charges.’”

Certainly, it’s a good first step; however, more work needs to be done.

Our auditors at OpenTheBooks.com reviewed about a dozen of HCA Healthcare hospital’s websites and found information under “patient financial resources” or “patient payment estimator” tabs.

While HCA hospital websites all have downloadable files of standard charges, they all include disclaimers that the prices can vary in several ways from what is stated.

The HCA files all also have shorthand or abbreviated descriptions of the services, making it hard to understand some of the services.

HCA also includes a gross cost and a discounted cost of services but lack the required payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.

The hospital websites are also required to have a “display of at least 300 shoppable services.” In the absence of the shoppable services list, hospitals can display an internet-based price estimator tool that patients can access without having to submit personal identifying information.

The HCA websites have these patient payment estimators, where patients can search for a service. But the customer must add their information — their full name, date of birth and insurance. This appears to violate the rules.

Case study — UPMC

Susan Manko, vice president of public relations for UPMC and University of Pittsburgh, told OpenTheBooks that the Patient Rights Advocate report is inaccurate.

“The PRA website is (and has been for some time now) wrong,” she said. “PRA completely missed that the appropriate pricing information has been available to the public on these hospitals’ websites for more than the past year and that these hospitals are compliant with federal regulations regarding pricing transparency.”

She provided the links for UPMC Shadyside and UPMC Magee-Womens, which indeed have a price estimator tool and a machine-readable file of items and services on the websites.

Patient Rights Advocate argues that while UPMC’s machine readable file lists prices for services provided by three dozen insurance companies, it lacks specific plans, like HMO and PPO plans, making the list incomplete. The rule clearly requires that “each list of payer-specific negotiated charges must be clearly associated with the name of the third party payer and plan.”

Big potential penalties

Price transparency can revolutionize U.S. healthcare by introducing price competition in the industry. Price disclosure also helps to prevent gouging and surprise billing.

So, on January 1, CMS increased the penalty for hospitals that don’t comply with the transparency rule. The upper bound penalties for the three large healthcare groups with 361 hospitals could collectively exceed $724 million per year.

Minimum penalties start at $300 per day for smaller hospitals with 30 or fewer beds, and increase to $10 per bed per day for hospitals with more than 30 beds, up to $5,500 per day.

If hospitals aren’t in compliance for a full year, the minimum penalty is $109,500 per hospital, and the maximum penalty is more than $2 million per hospital.

Key background

Patient Rights Advocate reviewed the websites of 1,000 licensed hospitals – out of the 6,000 across America. The group analyzed whether the required pricing information was posted.

Hospitals are required to display the price of the 300 most common shoppable services, either in a standard charges list or a price estimator tool. But the report criticized the latter, saying “price estimator tools” give non-binding estimates (including price ranges) accompanied by disclaimers.

That’s far different from actual price disclosure, the report noted.

The report found most hospitals did not post all payer-specific and plan-specific negotiated rates.

For instance, there was incomplete or missing data fields, fields with zeros, N/As and asterisks for negotiated rates.

It also found that hospitals often listed many more “accepted insurance plans” on their websites away from where they listed their standard charges, implying that their standard charges didn’t include all accepted plans.

Our organization at OpenTheBooks.com was at the forefront of shaping the federal rule, encouraging the public in the fall of 2019, and beginning of 2020 to comment on the health care price transparency proposal put forth by the Trump Administration.

With that push, about 2,000 comments were sent to Health and Human Services (HHS) and the Biden Administration finalized the rule. A true bipartisan reform that forces transparency from a politically powerful group.

Noncompliant hospitals—a year later and no fines

As of March 2022, CMS, which enforces the rule, has issued approximately 345 warning notices to noncompliant hospitals, a spokesperson told OpenTheBooks.com on April 25.

The agency has also issued 136 corrective action plan requests “to hospitals that previously received warning notices but have not yet corrected deficiencies,” and 145 hospitals “have received case closure notices after having addressed previous citations,” the spokesperson said.

CMS hasn’t issued any penalties because “each hospital that has come under compliance review has resolved its deficiencies, or is in the process of doing so.”

OpenTheBooks.com filed a Freedom of Information Act request earlier in April, asking HHS to divulge which hospitals received noncompliance notices and corrective action plans and whether the general public has notified HHS of noncompliant hospitals.

While HHS has acknowledged the request, it has not yet provided the records.

But the spokesperson said, “specifics surrounding the compliance and status of hospitals are not publicly available. The Hospital Price Transparency final rule indicates that once CMS issues a civil monetary penalty, CMS will make public the name of the hospital on a CMS website; releasing this information prematurely could identify hospitals that have already taken corrective actions and come into compliance after issuance of a warning letter, given the relationship in timing of our reviews and the hospitals being at various stages addressing compliance requests.”

Crucial quote

Until CMS strongly enforces the rule, there is no reason for the remainder of the hospitals to comply, the Patient Rights Advocate report noted.

“We are now entering the second year since the hospital price transparency rule became law, and compliance remains at very low levels,” the report stated. “The largest hospital systems are effectively ignoring the law, with no consequences.”

Critics

The Wall Street Journal reported in December 2021 that some hospitals have posted pricing data on their websites but they “masked the information from online search results, using special code that blocks pricing data on their websites from the results of search engines,” noting the coding is illegal under new rules that take effect in 2022.

One hospital system, the North Oaks Health System, based in Hammond, La., posted some data early in 2021 but removed it two weeks later, as none of its competing hospitals had posted their rates.

“You get nervous about putting those negotiated rates out there,” the system’s chief financial officer, Mark Anderson, told The Journal. “You don’t know who will look at those rates and say, ‘I want to negotiate to the Medicare rates.’ We didn’t want to put ourselves at a competitive, strategic disadvantage.”

Additional Reading

An OpenTheBooks.com June 2019 report “Top 82 U.S. Non-Profit Hospitals: Quantifying Government Payments and Financial Assets” showed that hospitals with non-profit tax status and their CEOs are getting richer while the American people are getting healthcare poorer.

Our study published at Forbes showing the top 82 non-profit hospitals added billions of dollars to their bottom line, lavishly compensated their CEOs, and spent millions of dollars lobbying government to defend the status quo.

A $4,000 Covid Test In Oklahoma Resulted In A Debate On Healthcare Prices and Transparency, Forbes, published January 31, 2021.

New Documentary, InHospitable, Details The Big Profits In “Non-Profit” Healthcare, Forbes, published December 14, 2021.

Adam Andrzejewski (say: And-g-f-ski) is the CEO/Founder of OpenTheBooks.com. Last year we filed 47,000 FOIA requests and captured $12 trillion in government spending (2021). Work featured at The BBC, Good Morning America; ABC World News Tonight; USA Today; The Wall Street Journal; Forbes; and The New York Times. My presentation to the Hillsdale College National Leadership seminar posted on YouTube has 3.7+ million views. Learn more at OpenTheBooks.com.