New Hospital Price Transparency Rule: Will It Really Help Healthcare Consumers?

The U.S. Department of Health and Human Services has instituted a new hospital price transparency rule.

In an effort to lower the costs of one of the major components of healthcare, the U.S. Department of Health and Human Services has instituted a new hospital price transparency rule. Expected to go into effect on Jan. 1, 2021, the rule will require all non-federal hospitals to post online information for 300 commonly offered services, including gross charges, discounted cash prices, and prices negotiated with specific payers. Failure to make the data available and to update it annually could result in fines.

Not surprisingly, the reaction from the hospital industry was swift and negative. In a joint statement, the Federation of American Hospitals, the American Hospital Association, the Association of American Medical Colleges, and the Children’s Hospital Association promised to file a lawsuit challenging the rule. “This rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers, and stymie innovations in value-based care delivery,” according to the statement.

Payers appear to be equally disenchanted with the proposal. Kaiser Health News quotes a statement from Scott Serota, president and CEO of the Blue Cross Blue Shield Association: “The rules… will not help consumers better understand what health services will cost them and may not advance the broader goal of lowering health care costs.”

So, is this a worthwhile attempt to help consumers better understand the cost of their healthcare, or is it a well-intended but misguided foray by the government into a system that would do better without yet another layer of regulation?

Paul Keckley, editor of The Keckley Report, a well-regarded weekly online newsletter focusing on health policy, addressed the issue in his Nov. 18 report. Keckley, who says he read the entire 331-page rule, believes that while HHS is to be commended for its efforts, its new rule has flaws. First, the rule applies to more than 6,000 non-federal hospitals without regard to an “individual hospital’s patient population, programs and services, and cost structure… Teaching hospitals, rural health providers, critical access hospitals, safety-net hospitals, and others operate differently.” The rule, Keckley argues, does not recognize the distinctions among hospitals.

Second, the cost to hospitals to implement the rule will be significant. Even HHS admits that “the total burden for hospitals to review and post their standard charges for the first year” will approach $12,000 per hospital, or more than $70 million for all 6,000 hospitals. Although HHS believes that costs will decrease after the first year, it still expects hospitals to incur a total cost north of $21 million each year.

But Keckley thinks these estimates are way off the mark. “The cost will be dramatically higher in most hospitals and duplicative in states like Florida, Maine, New Hampshire and others where hospital price transparency is already required,” he writes.

Furthermore, the way the rule is written continues to leave consumers in the dark when it comes to their true out-of-pocket costs. And that, he says, is what matters most to the public.

But there is hope. Keckley believes that as HHS has done previously, it could modify the new rule “to make it more useful to consumers and more impactful on competition among hospitals.”

The new hospital price transparency rule makes it imperative to reduce the cost of supplies and purchased services (such as linen services) that impact room and board charges, to be competitive. However, focusing on cost reduction is necessary but not sufficient by itself. To positively impact patient outcomes and total economic value, clinical perspectives must be integrated with the supply chain. TractManager’s technology-enabled value management solution brings together the necessary price benchmarking, spend, clinical evidence, safety, regulatory, recall, and contract data to evaluate capital equipment, med-surg supplies, and outsourced services, all in one place.

To learn more, download our Total Value Management white paper.


Staff Writer

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