Regulatory Affairs: Is Improved Price Transparency in Our Future?

Federal bills could mandate broader price disclosures to patients.

Unsatisfactory compliance with a major price-disclosure law that went into effect three years ago has resulted in multiple similar proposed laws that seek to improve on how well hospitals and other medical facilities provide patients advance notice on the cost of their treatments.

H.R. 5378

One bill called the Lower Costs, More Transparency Act passed the U.S. House in December, but still needs to pass the U.S. Senate. If eventually signed into law, H.R. 5378 would require hospitals and ASCs to list their prices for all standard services.

The bill is sponsored by U.S. Rep. Cathy McMorris Rogers, a Washington state Republican. It is similar to a measure introduced earlier in the year by Missouri Republican Jason Smith that never came to a vote. U.S. Rep. Smith supports Rep. Rogers’ proposal. “By requiring nearly every corner of our health system to publicly disclose their prices, the Lower Costs, More Transparency Act [would] empower patients and create incentives to lower prices across the board. Americans [would] no longer be left in the dark, struggling to understand the true price of their health care,” says Rep. Smith.

The successful House vote received bipartisan support. Advocates on both sides of the surgery aisle have expressed some reservations, however. The American Hospital Association (AHA), for example, wrote to Congressional leaders on Jan. 10 to express concern about a series of federal proposals that seek to improve how Medicaid dollars are spent, including H.R. 5378. “We … oppose proposed policies that would increase regulatory burdens on hospitals and health systems through changes to the Hospital Price Transparency Rule and changes to current billing practices to require the use of unique identifiers for off-campus hospital outpatient departments,” wrote AHA President and CEO Richard J. Pollack in the letter. “The unique identifier provision is duplicative and unnecessary since federal regulations already require hospitals to be transparent about the location of care delivery to patients.” ASC advocates, meanwhile, have said the reporting requirements in H.R. 5378 could be unduly burdensome for facilities while not providing customers with additional information that could actually help them make healthcare purchasing decisions.

Price Transparency Act 2.0

A bipartisan group of senators recently introduced yet another measure, which they’ve dubbed The Health Care Price Transparency Act 2.0. The proposal aims to improve on existing law by increasing fines for noncompliance, as well as expanding price transparency requirements that apply to ASCs, diagnostics labs and imaging centers.

Patient Rights Advocate, a nonprofit that works on price transparency issues, supports the new measure in the U.S. Senate, says Cynthia Fisher, the group’s founder and chairwoman, noting that the concept has been supported by both the Biden administration and former Trump administration.

“For too long healthcare consumers, including workers, employers and unions, have been subject to nonbinding estimates and overcharged medical bills because hospitals and health insurers take advantage of an opaque system that hides the true cost of care and coverage,” says Ms. Fisher. “Systemwide healthcare price transparency will improve health outcomes and lower the cost of coverage and care for all Americans. We encourage all senators to support this bill and stand up for patients against industry profiteering.”

Will intervention work?

Keith Smith, MD, founder of Surgery Center of Oklahoma in Oklahoma City, is a pioneer of the medical price transparency movement. The center has been posting its prices on its website since it opened in 1997. While he’s certainly happy that the concept is more well known that it was when he opened his ASC, he doesn’t think regulating providers will make price transparency the norm.

“I’m one of the biggest advocates for price transparency in the country, but I’m also a free market guy, so I’m very skeptical about these proposals,” says Dr. Smith. “In general, I think whenever the government shows up to help, disaster is right around the corner. I don’t think regulations should be in place to force the medical industry to be transparent while setting prices. I think the system should be such that the market will punish it if it doesn’t.”

Dr. Smith fears attempts to solve the issue via regulations will have negative consequences, even if the lawmakers’ proposed fixes were created with good intentions. Governmental mandates could redefine the term price transparency into something that won’t help patients, with its meaning going from the total price of an entire procedure or episode of care to simply a patient’s out-of-pocket expenses, he says. Or, he adds, Washington could sell indulgences that would allow big health systems to continue to be noncompliant because they’ll be able to afford the fines for violations, while smaller competitors could not. This could wind up being a tool for consolidation, with the large entities buying up and absorbing the smaller entities.

“The market is really demanding that price transparency happen,” says Dr. Smith. “Government is late to the party and my fear is that any enacted mandate will actually interfere with the natural market providing price transparency. I’m very leery that there will be something in each of those big bills that will make what I and others are actually already doing even harder.”

Dr. Smith says providers who want to craft their own transparent billing system can start by visiting his facility’s website (surgerycenterok.com) or the website of The Free Market Medical Association (fmma.org), a group of medical providers, third-party administrators and representatives from companies who self-fund their employees’ medical expenses. OSM