Fortune Runs PRA Op-Ed on One-Year Anniversary of Hospital Price Transparency Rule

Cynthia A. Fisher, founder and chair of PRA, has an op-ed in Fortune discussing the one-year anniversary this month of the hospital price transparency rule. As Cynthia explains in the op-ed:

The rule clarifies an Obamacare provision requiring hospitals to publish their standard charges. It directs hospitals to post their actual prices, including their discounted cash and secret contracted rates, so patients can shop for the best quality care at the lowest possible prices.

Armed with real prices, healthcare consumers, including patients, employers, and unions, can enjoy much-needed savings and financial certainty. Unfortunately, the hospital price transparency rule has been marred by widespread hospital noncompliance.

According to a July study by PatientRightsAdvocate.org, only 5.6% of hospitals nationwide are fully following it. Hospitals routinely refuse to post their prices by insurance payer as required. They hide pricing information from consumers and search engines. And they violate the spirit, if not the letter, of the law by posting largely meaningless cost estimates in lieu of real prices. A forthcoming updated and expanded study in January will determine how many hospitals remain noncompliant one year after the rule's implementation.

Recent reporting by the Los Angeles Times demonstrates why hospital price transparency is needed now. Drawing on leaked hospital pricing practices, the Times shows how hospitals can automatically mark up their prices by 675% of the cost. This anecdotal evidence confirms recent research published in Axios revealing that hospitals mark up their prices by an average of seven times their cost of care. Given this rampant price gouging, it's no surprise that new government data shows that Americans spent more than $4 trillion on healthcare last year, 20% of GDP–and twice the developed-world average.

Hidden prices encourage erroneous and fraudulent hospital billing because consumers generally can't contest bills that arrive in the mail weeks and months after they receive care. According to one estimate, three out of every four medical bills include errors. Opaque prices also allow hospitals to engage in pervasive waste and administrative bloat because they can pass along these costs to powerless patients after treatment. A 2019 JAMA study attributes approximately 25 % of U.S. healthcare spending to waste.

This opaque status quo places an immense financial burden on patients, employers, and workers. Roughly one-third of Americans carry medical debt, and two-thirds avoid care each year for fear of financial ruin. Small businesses have cited the rising cost of employee health coverage as their biggest concern for 30 straight years. The Kaiser Family Foundation recently revealed that the average annual employer-sponsored family health premium in 2021 is $22,221–a 61% increase since 2010. Rising healthcare costs suppress employee wages because they are paid from the pool of funds employers devote to employee compensation.

Actual prices–not estimates–prevent overcharging by enabling consumers to identify and avoid price gouging providers in favor of less expensive alternatives. When consumers can compare these prices, a competitive healthcare market will emerge, spurring quality and efficiency improvements and reversing runaway cost trends.

Read the full op-ed in Fortune.