Could enforcing price transparency bring NC health care costs down?
Image: Courtesy of White House
by David Larson
In 2021, the federal Centers for Medicare and Medicaid Service finalized a rule, initiated in 2019 by an executive order from then-President Donald Trump, that required all hospitals in the United States to list their prices for 300 common services. According to the rule,
“By disclosing hospital standard charges, we believe the public (including patients, employers, clinicians, and other third parties) will have the information necessary to make more informed decisions about their care. We believe the impact of these final policies will help to increase market competition, and ultimately drive down the cost of health care services, making them more affordable for all patients.”
But in the years since, there has been a lot of fighting over whether hospitals are ignoring the rule, whether regulators are properly enforcing it, and whether consumers will even use the information.
President Donald Trump, for his part, is pushing full-steam ahead to make sure the effort, which was initiated during his first term, is enforced.
In a new executive order, Trump “directs the Departments of the Treasury, Labor, and Health and Human Services to rapidly implement and enforce the Trump healthcare price transparency regulations, which were slow walked by the prior administration.”
The group Patient Rights Advocate has released a twice-annual report on compliance with the rule since 2021, and the latest report puts North Carolina at No. 8 for compliance. But with only 33% of the 49 hospitals reviewed complying, we’re only slightly ahead of the 21% average. Just over half (25 of 49 hospitals) at least provide sufficient pricing data, even if they are not fully compliant with the law, according to PRA’s analysis.
Compliance with the rule has been dropping nationally and in North Carolina. The new state treasurer, Brad Briner, told Carolina Public Press that “The regulations that came out of CMS some years ago were incredibly well-intended. Unfortunately, the penalties attached to them were insufficient to compel participation for a lot of people. These hospitals are multi-billion dollar enterprises, and can stand to pay a small fine.”
His predecessor, Dale Folwell, made a mission of trying to get hospitals to comply though, releasing a major report titled, “North Carolina Hospitals: Extreme Price Markups, Failures in Transparency for Shoppable Hospital Services,” in 2023, which stated:
“Too many North Carolina hospitals are violating federal rules to hide their prices from patients. The anti-competitive infractions thwart patients’ ability to make informed decisions about their health care. High prices, especially those charged
by hospitals, are the main reason why the United States spends far more on
health care than other developed countries, but there is little accountability and
less transparency to protect patients’ financial health.”
When it came to making prices clear to the public, the report found, “On average, only 51% of the 140 hospitals disclosed commercial insurance prices across 16 common shoppable services, and this disclosure rate dropped to 42% for cash prices across the 16 shoppable services. Just five hospitals disclosed commercial prices for every service.”
In terms of recommended action, Folwell’s report said, “Until the state acts to strengthen and enforce federal price transparency rules, patients have little recourse against crippling medical debt.”
On the transparency page of the NC Health Care Association, formerly known as the NC Hospital Association, they list the federal CMS regulation for price transparency reporting. For state-level price-transparency requirements, they also list a 2013 law and a NCDHHS rule that implements that law. These require hospitals to submit an annual report “to the certified statewide data processor,” laying out their prices for common services. But it’s unlikely the public sees the hospitals’ annual reports, let alone uses them to make in-the-moment health care decisions.
So, despite some laws and actions over the years, the public is not likely to have all the price information they need to shop for health services in North Carolina. In Trump’s executive order, he does say that within 90 days, his treasury, labor, and health secretaries should “issue guidance or proposed regulatory action updating enforcement policies designed to ensure compliance with the transparent reporting of complete, accurate, and meaningful data.”
So there may be some teeth coming to this price-transparency directive, but, as Folwell’s report said, the state could add its own compliance demands.
My hunch is that creating true price transparency is a big part of the puzzle of reducing costs, but that by itself, it wouldn’t solve the problem. Markets can “bend the cost curve down” with competition and consumer choice, but creating an effective market takes more than just transparent price information.
Candy prices at the movies are very transparent, conveniently displayed on a large board above the snack counter, but because of the theater’s monopoly on snack options, those prices are triple the price you’ll find at the gas station across the street. So there should also be some effort made in health care to reduce monopolies and increase competition (by eliminating CON and expanding practice authority for advanced-practice nurses)
But even if one knows the prices and there are no monopolies, if the health care consumer isn’t incentivized to care all that much about a few hundred dollars in saving here or there, it won’t matter. And in America’s indirect payment system, where third parties like insurance companies and CMS end up paying the bill, this is exactly how it goes. After I pay my premium and my co-pay, I may not be incentivized to care all that much what final price the hospital and my third-party payer work out (maybe after months of haggling with each other). We need to find new ways to side step third-party payers and get consumers to care about the final price.
So while price transparency is certainly a good start, by itself, it is not sufficient to keep prices down if providers don’t have enough competition and consumers aren’t incentivized to shop.
David Larson is opinion editor of Carolina Journal.
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