NYT Slams Hospital Price Variation After Price Transparency Rule

August 23, 2021 - Hospital price variation is widespread and much more noticeable now that CMS has enforced a price transparency rule, according to a recent report published in The New York Times.

The national news publication partnered with two University of Maryland-Baltimore County researchers to dig into hospital prices available on the internet under the new rule. The resulting report turned files into a database that showed the costs for basic medical care at 60 major hospitals.

A major takeaway from the database was just how much prices can vary even within the same hospital, long-time healthcare reporter Sarah Kliff and Josh Katz wrote.

Their report, for example, showed that an MRI at Boston, Massachusetts-based Mass General was $1,019 for patients covered by a Cigna plan. But that price shot up to $3,101 for patients covered by an Aetna plan and $3,809 for those covered by a Humana plan.

Furthermore, some patients covered by private insurance plans paid more for services and procedures than those with no insurance at all, the report stated. For instance, the report found that a colonoscopy at the University of Mississippi Medical Center had a cash price of $782, while the same procedure cost $1,463 with a Cigna plan and $2,144 with an Aetna plan.

The report has put hospital price variation on center stage thanks to price transparency requirements that mandate public disclosure of key pricing information at hospitals, including payer-specific negotiated rates and cash discount costs. However, industry stakeholders have been well aware of variation even prior to the rule.

A 2018 analysis conducted by the Health Care Pricing Project revealed hospital cost variation across the country, across markets, and even within individual hospitals. The analysis used insurance claims from three of the largest commercial payers at the time—Aetna, Humana, and UnitedHealth.

An earlier report from the Health Care Cost Institute (HCCI) and Robert Wood Johnson Foundation highlighted how hospital price variation has been a persistent challenge for local stakeholders hoping to create policies that drive higher-value value.

CMS is aiming for the price transparency rule to empower the individual to shop around for higher-value care, or at least the best deal according to their insurance plan. But hospital groups have disagreed.

“These rate sheets are not helpful to anyone,” Molly Smith, vice president for public policy at the American Hospital Association (AHA), told The New York Times for its report. “It’s really hard to say that when a lot of hospitals are putting in a lot of effort to comply with the rule, but I would set them aside and avoid them.”

But research has consistently shown that the majority of hospitals subject to the price transparency rule has not complied with all requirements since the rule went into effect January 1, 2021. Many hospitals have cited resource constraints, especially considering the impact the ongoing COVID-19 pandemic has had on facilities and the industry at large.

Additionally, leading hospital industry groups have found the price transparency rule as it stands now to be detrimental to consumers.

“America’s hospitals and health systems stand with patients and are dedicated to ensuring they have the information needed to make informed health care decisions, including what their expected out-of-pocket costs will be. Instead of giving patients relevant information about costs, this rule will lead to widespread confusion and even more consolidation in the commercial health insurance industry,” Rick Pollack, president and CEO of the AHA, said in a 2019 statement following the group’s legal challenge of the rule. The legal challenge was later dismissed by a federal judge.

Price transparency is seemingly here to stay despite protests from hospitals. The Trump-era regulation has earned support from the Biden-Harris Administration, which recently proposed increasing penalties against hospitals that fail to comply with the rule’s requirements.

Reports like the one from NYT are also spotlighting hospital prices following the rule even though consumers have yet to seek out the pricing information on their own when available.