How America’s Hospitals Are Hiding the Cost of Health Care

Overview

America’s health care system is built upon a lack of transparency.¹ In most states, it is nearly impossible for individuals and families to compare the cost of health care services and procedures like they would when shopping for gas, groceries, or housing. This intentional lack of transparency confuses consumers, hides true costs, and drives up prices.²

Building on successes at the state level, the Trump administration issued a new rule in 2019 focused on transparency for hospital services, designed to introduce accountability into America’s health care system.³ The rule has two basic requirements for hospitals: (1) to provide an easy-to-access file with both the charges and costs of all items and services, including gross charges, discounted cash prices, and charges negotiated with insurance companies, and (2) to display shoppable services in a consumer-friendly format.^4-5 The American Hospital Association challenged the new rule in federal court, losing both its initial challenge and then again on appeal.^6-7 The final rule took effect on January 1, 2021, in the final days of the Trump presidency.⁸

Although the rule has been in place for more than 18 months, many hospitals are ignoring these commonsense transparency requirements and keeping patients in the dark about their prices. A 2021 review of more than 3,500 hospitals found that 55 percent of hospitals were not compliant with the new rule and had not posted price information for commercial plans or had not posted any prices at all.⁹ Similarly, an August 2022 review of 2,000 hospitals found that just 16 percent were in compliance with all the new transparency requirements.¹⁰ The recent review revealed that nearly 84 percent of hospitals failed to post machine-readable files containing standard charges, and roughly 78 percent of hospitals did not provide a consumer-friendly shoppable services display.¹¹ Other reviews have found similar levels of non-compliance.^12-21

Meanwhile, even when data is technically provided, hospitals have tried to hide their pricing from search engine results through embedded coding on their websites.²² In some cases, hospitals have even intentionally removed pricing data after the rule was implemented.²³

By all standards, hospitals have been slow to comply with these requirements. New data obtained by the Foundation for Government Accountability (FGA) shines further light on hospitals’ widespread non-compliance.

Nearly two-thirds of hospitals are not complying with price transparency requirements

FGA’s independent review of more than 6,400 hospitals reveals widespread non-compliance with federal transparency requirements.²⁴ Altogether, more than 63 percent of hospitals are not complying with the transparency rule.²⁵ Some of these hospitals have refused to disclose cash prices, negotiated rates with private insurance plans, prices for some services, or even any prices at all.²⁶

Most hospitals are not complying with federal transparency requirements in 40 states and Washington, D.C., while no state has more than 65 percent compliance among its hospitals.²⁷ In some states, the lack of transparency is even more pronounced. In Maryland, for example, just five percent of reviewed hospitals are complying.²⁸

Several large hospitals and hospital systems are key violators

Some of the worst violators of the transparency rule are large hospitals and hospital systems. The largest reviewed hospitals were non-compliant with transparency requirements in a third of states.²⁹ In California, for example, four of the state’s five largest hospitals are not complying with transparency requirements, with at least one of those hospitals ignoring virtually every aspect of the rule.³⁰ Likewise, four of the five largest hospitals in Georgia, New Jersey, and Washington are not complying with these requirements.³¹ Worse yet, none of the five largest hospitals in Colorado or Maryland are in compliance with the transparency rule.³²

Indeed, some of the worst violators are among the largest health systems in America. Just eight percent of 193 reviewed hospitals owned by HCA Healthcare—the nation’s largest health system— are complying with transparency requirements.³³ Likewise, just seven percent of 58 reviewed hospitals owned by TrinityHealth are complying with the rule.³⁴ And just one of Providence Saint Joseph Health’s 53 reviewed hospitals are meeting these federal requirements.³⁵

The Biden administration has done little to enforce the hospital price transparency rule

Although the Biden administration nominally increased potential penalties for non-compliance, it has done little to actually enforce the rule or impose those penalties. Shortly after the 2020 elections, the American Hospital Association asked Chiquita Brooks-LaSure—a top Biden transition team member who was later appointed to serve as the administrator of the Centers for Medicare and Medicaid Services (CMS)—to use her “enforcement discretion” and not penalize hospitals who refused to comply with the rule.³⁶

Several months after the rule went into effect, CMS—which is charged with enforcing the federal rule—finally issued an initial set of “warning letters”—only to be followed by additional warnings.³⁷

It took nearly a year and a half after the rule became effective for CMS to issue the first fines.^38-39 But even these actions were little more than a minor slap on the wrist. The only fines issued so far have gone to two hospitals in Georgia’s Northside Hospital System.⁴⁰ However, the fine amounts levied after nearly 18 months of non-compliance totaled less than 0.1 percent of the hospital system’s annual gross revenue.^41-47 Put another way, these fines represented just 40 minutes of the hospital system’s annual revenue.⁴⁸

Worse yet, the Biden administration is stonewalling efforts to shine light on its lack of enforcement. In March 2022, FGA filed a Freedom of Information Act (FOIA) request with CMS seeking information on warnings, corrective action plans, fines, and other penalties issued in relation to the hospital price transparency rule. Although federal law gives agencies just 20 business days to respond to FOIA requests, the Biden administration has refused to produce any records associated with the rule more than five months later, despite repeated follow-up attempts.⁴⁹

Unfortunately, FGA was forced to file a lawsuit against the Biden administration on August 30, 2022 to obtain these critical documents. CMS has an obligation to be transparent in its enforcement against hospitals and has failed to live up to that responsibility. Now, it is in the hands of the courts to decide.

THE BOTTOM LINE: Policymakers must take price transparency into their own hands

Given the Biden administration’s slow and opaque approach to this important issue, Congress should hold CMS officials accountable and scrutinize the agency to ensure they are upholding the transparency rule. CMS should also further increase penalties for violations of the rule in order for the penalties to actually be meaningful to violators.

In the absence of federal action, state officials should work to pass their own price transparency laws that sanction hospitals in the event of non-compliance. States have the tools to act without waiting for Washington, D.C. to take the first step.

It is long past time for America’s hospitals to step up—and for CMS to follow suit—in ensuring the cost of health care services are transparent and accessible to all consumers.

REFERENCES

1. Joshua Cohen, “U.S. healthcare markets lack transparency; stakeholders want to keep it that way,” Forbes (2020), https://www.forbes.com/sites/joshuacohen/2020/12/07/us-healthcare-markets-lack-transparency-stakeholders-want.to-keep-it-that-way/?sh=4997be0262b2.

2. Ibid. 

3. Centers for Medicare and Medicaid Services, “Medicare and Medicaid programs: CY 2020 hospital outpatient PPS policy changes and payment rates; Ambulatory surgical center payment system policy changes and payment rates; Price transparency requirements for hospitals to make standard charges public,” Federal Register 84(229): 65,524 (2019), https://www.govinfo.gov/content/pkg/FR-2019-11-27/pdf/2019-24931.pdf.

4. The rule requires a comprehensive machine-readable listing all items and services. Ibid. 

5. Centers for Medicare and Medicaid Services, “Hospital price transparency,” U.S. Department of Health and Human Services (2022), https://www.cms.gov/hospital-price-transparency.

6. American Hospital Association v. Azar, 468 F. Supp. 3d 372 (D.D.C. 2020), https://scholar.google.com/scholar_case?case=18069046475700227215.

7. American Hospital Association v. Azar, 983 F. 3d 528 (D.C. Cir. 2020), https://scholar.google.com/scholar_case?case=16042793896152637368.

8. Centers for Medicare and Medicaid Services, “Hospital price transparency,” U.S. Department of Health and Human Services (2022), https://www.cms.gov/hospital-price-transparency/hospitals.

9. Approximately 55 percent of hospitals did not post a machine-readable file or did not include rates negotiated with commercial insurers in the file. The actual compliance rate may be much lower, as this analysis did not review all requirements of the price transparency rule. See, e.g., John Xuefeng Jiang et al., “Factors associated with compliance to the hospital price transparency final rule: A national landscape study,” Journal of General Internal Medicine (2021), https://link.springer.com/article/10.1007/s11606-021-07237-y.

10. Patients Rights Advocates, “Third semi-annual hospital transparency compliance report,” Patients Rights Advocates (2022), https://www.patientrightsadvocate.org/august-semi-annual-compliance-report-2022.

11. Ibid. 

12. A 2021 review of 470 hospitals found that just 24 percent of hospitals were compliant with the price transparency rule. See, e.g., Sayeh Nikpay et al., “Taking the pulse of hospitals’ response to the new price transparency rule,” Medical Care Research and Review (2022), https://journals.sagepub.com/doi/abs/10.1177/10775587211024786.

13. A 2021 review of 100 hospitals found that just 17 percent were compliant with the price transparency rule. See, e.g., Suhas Gondi et al., “Early hospital compliance with federal requirements for price transparency,” JAMA Internal Medicine (2021), https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2781019.

14. A 2021 review of 400 hospitals found that just 32 percent of hospitals were compliant with the price transparency rule. See, e.g., Robert J Burkhart et al., “Less than one-third of hospitals provide compliant price transparency information for total joint arthroplasty procedures,” Clinical Orthopaedics and Related Research (2022), https://journals.lww.com/clinorthop/Fulltext/9900/Less_Than_One_third_of_Hospitals_Provide_Compliant.781.aspx.  

15. A 2021 review of 104 hospitals found that just 27 percent of hospitals were compliant with the price transparency rule. See, e.g., Noel Fahed Ayoub and Karthik Balakrishnan, “Price transparency and compliance with federal regulation for pediatric tonsillectomy,” Otolaryngology: Head and Neck Surgery (2021), https://journals.sagepub.com/doi/10.1177/01945998211047146.

16. A 2021 review of 20 hospitals found that none were compliant with the price transparency rule. See, e.g., Peter Cram et al., “Availability of prices for shoppable services on hospital internet sites,” American Journal of Managed Care (2021), https://www.ajmc.com/view/availability-of-prices-for-shoppable-services-on-hospital-internet-sites.

17. A 2021 review of more than 5,200 hospitals found that just six percent of hospitals were compliant with the price transparency rule. See, e.g., Waqas Haque et al., “Adherence to a federal hospital price transparency rule and associated financial and marketplace factors,” JAMA (2022), https://jamanetwork.com/journals/jama/article.abstract/2792987.  

18. A 2021 review of 63 NCI-designated cancer centers found only 21 percent were compliant with the price transparency rule. See, e.g., Fumiko Chino et al., “Compliance with price transparency rules at US National Cancer Institute-designated cancer centers,” JAMA Oncology (2021), https://jamanetwork.com/journals/jamaoncology/article-abstract/2785679.

19. A 2022 review of 63 NCI-designated cancer centers found only 19 percent were compliant with the price transparency rule. See, e.g., Angelin Tresa Mathew et al., “Assessment of compliance with Centers for Medicare and Medicaid Services price transparency final rule,” JAMA Oncology (2022), https://jamanetwork.com/journals/jamaoncology/article-abstract/2793344.

20. A 2021 review of 101 hospitals found that just 20 percent were compliant with the price transparency rule. See, e.g., Taylor D’Amore et al., “Do new hospital price transparency regulations reflect value in arthroplasty?” ournal of the American Academy of Orthopaedic Surgeons (2022), https://journals.lww.com/jaaos/Abstract/2022/04150/Do_New_Hospital_Price_Transparency_Regulations.9.aspx.

21. A 2021 review of 89 children’s hospitals found that just 39 percent were compliant with the price transparency rule. See, e.g., Shireen E. Hayatghaibi et al., “Transparency and variability in pricing for pediatric outpatient imaging in U.S. children’s hospitals,” JAMA Network Open (2022), https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2789574.

22. Tom McGinty et al., “Hospitals hide pricing data from search results,” Wall Street Journal (2021), https://www.wsj.com/articles/hospitals-hide-pricing-data-from-search-results-11616405402.

23. Centers for Medicare and Medicaid Services, “Hospital price transparency notice of imposition of a civil monetary penalty: Unique case number 2022HPT001,” U.S. Department of Health and Human Services (2022), https://www.cms.gov/files/document/notice-imposition-cmp-northside-hospital-atlanta-6-7-22finalredacted.pdf.

24. The Foundation for Government Accountability obtained transparency compliance data on 6,431 hospitals in all 50 states and the District of Columbia from a data services company that collects hospitals’ price information. Hospitals that post a complete machine-readable file with negotiated rates, including both cash prices and private plan negotiated rates, are considered compliant for this analysis. This may overstate the number of hospitals that are compliant with the transparency rule as it does not consider whether hospitals have posted a consumer tool for shoppable services. Data was accessed in August 2022. 

25. Authors’ calculations based upon data provided by a data services company on the number of hospitals meeting specific transparency requirements.

26. Ibid. 

27. Ibid. 

28. Ibid. 

29. Ibid. 

30. Ibid. 

31. Ibid. 

32. Ibid. 

33. Ibid. 

34. Ibid. 

35. Ibid. 

36. Richard J. Pollack, “December 21 letter to Chiquita Brooks-LaSure,” American Hospital Association (2020), https://www.aha.org/system/files/media/file/2020/12/aha-letter-to-biden-harris-transition-team-price-transparency.rule-letter-12-21-20.pdf.

37. Dave Muoio, “CMS sent out warnings to hospitals failing at price transparency. Some still aren’t sure where they land,” Fierce Healthcare (2021), https://www.fiercehealthcare.com/hospitals/cms-sent-out-its-first-wave-warnings.to-hospitals-noncompliant-its-new-price-transparency.

38. Dave Muoio, “After months of warnings, CMS hands out its first fines to hospitals failing on price transparency,” Fierce Healthcare (2022), https://www.fiercehealthcare.com/providers/after-months-warnings-cms-begins-handing.out-fines-hospitals-failing-price-transparency.

39. Centers for Medicare and Medicaid Services, “Enforcement actions,” U.S. Department of Health and Human Services (2022), https://www.cms.gov/hospital-price-transparency/enforcement-actions.

40. Ibid. 

41. Authors’ calculations based upon data provided by the U.S. Department of Health and Human Services on the civil monetary penalty for Northside Hospital Atlanta and Northside Hospital Cherokee for non-compliance with the price transparency rule and the annual gross revenue of each hospital in the Northside Hospital System.

42. Northside Hospital Atlanta was fined $883,180 for non-compliance with the price transparency rule. See, e.g., Centers for Medicare and Medicaid Services, “Hospital price transparency notice of imposition of a civil monetary penalty: Unique case number 2022HPT001,” U.S. Department of Health and Human Services (2022), https://www.cms.gov/files/document/notice-imposition-cmp-northside-hospital-atlanta-6-7-22finalredacted.pdf.

43. Northside Hospital Atlanta has annual gross revenues of more than $7.6 billion. See, e.g., Centers for Medicare and Medicaid Services, “Hospital provider cost report: 2018,” U.S. Department of Health and Human Services (2022), https://data.cms.gov/provider-compliance/cost-report/hospital-provider-cost-report/data.

44. Northside Hospital Cherokee was fined $214,320 for non-compliance with the price transparency rule. See, e.g., Centers for Medicare and Medicaid Services, “Hospital price transparency notice of imposition of a civil monetary penalty: Unique case number 2022HPT002,” U.S. Department of Health and Human Services (2022), https://www.cms.gov/files/document/notice-imposition-cmp-northside-hospital-cherokee-6-7-22finalredacted.pdf.

45. Northside Hospital Cherokee has annual gross revenues of nearly $1.5 billion. See, e.g., Centers for Medicare and Medicaid Services, “Hospital provider cost report: 2018,” U.S. Department of Health and Human Services (2022), https://data.cms.gov/provider-compliance/cost-report/hospital-provider-cost-report/data.

46. The Northside Hospital System also owns Northside Hospital Forsyth, with annual gross revenues of more than $2.2 billion, and Northside Hospital Gwinnett, with annual gross revenues of more than $2.9 billion. It also owns Northside Hospital Duluth, but annual gross revenues from that hospital are not available. See, e.g., Centers for Medicare and Medicaid Services, “Hospital provider cost report: 2018,” U.S. Department of Health and Human Services (2022), https://data.cms.gov/provider-compliance/cost-report/hospital-provider-cost-report/data.

47. The Northside Hospital System was fined a combined $1,097,500 for non-compliance with the hospital transparency rule. Total annual gross revenue among four of its member hospitals amounts to more than $14.2 billion. These fines represent less than 0.008 percent of annual gross revenue for the entire hospital system.

48. Authors’ calculations based upon data provided by the U.S. Department of Health and Human Services on the civil monetary penalty for Northside Hospital Atlanta and Northside Hospital Cherokee for non-compliance with the price transparency rule and the annual gross revenue of each hospital in the Northside Hospital System.

49. 29 C.F.R. § 2201.6 (2021), https://www.govinfo.gov/content/pkg/CFR-2021-title29-vol9/pdf/CFR-2021-title29.vol9-sec2201-6.pdf.