Hospitals must list the cash prices for services like X-rays or medical tests online, according to federal law. A new study finds the rule is largely ignored.
Few hospitals are posting the prices of their common procedures online, despite a federal law that went into effect more than a year ago.
But a study published Tuesday in the Journal of the American Medical Association added to mounting evidence that hospitals are largely ignoring the law.
The law requires hospitals to list the cash prices for procedures on their websites in two forms: one that is easily accessible for patients and that includes a cost estimator for the 300 most common services, and another that is machine-readable — essentially a spreadsheet. That allows patients to know exactly what they should expect to pay and lets them compare the reduced cash prices with the prices they would pay if they went through insurance.
The report analyzed 5,000 hospitals nationwide and found that just 300, or fewer than 6 percent, were fully compliant with the rule, meaning they had publicly published both machine-readable files and separate price estimators for shoppable items. Many hospitals were partly compliant, but 50 percent had neither of the two required components.
The researchers zeroed in on just over 2,700 acute care hospitals — eliminating outpatient surgery centers and rehabilitation facilities. They found that hospitals with less revenue, those in urban areas and those in places with few health care clinics or other hospitals were more likely to be transparent.
The new study illustrates a fundamental problem with a law meant to shield patients from opaque health care costs and unexpected medical bills. Hospitals and insurance companies set their own prices for different procedures, but patients largely have no idea what those costs are until they get the bill.
“Americans deserve not just to get good prices when they go into a hospital but to know what they’re going to pay,” Health and Human Services Secretary Xavier Becerra said in an earlier interview.
Under the hospital transparency rule, which took effect Jan. 1, 2021, Jason Dean of Dellrose, Tennessee, should have been able to search online for the price of six stitches when he cut his knee in May 2021. Dean, 50, went to a hospital emergency room nearly an hour from his home because nearby doctors’ offices were closed.
Dean asked what the procedure would cost. After hospital administrators told him the sutures would be covered by his insurance, Dean was stunned when he got a bill for $6,500.
“I thought it was a joke. It was unbelievable that I opened the bill for $6,500 for a 1-inch simple suture procedure,” said Dean, who works in construction. Insurance covered some of it, but Dean still owed more than $3,000 out of pocket.
A recent audit that included 1,000 randomly selected hospitals found that as of early 2022, 99.5 percent of hospitals owned by the three largest hospital systems in the country — HCA Healthcare, CommonSpirit Health and Ascension — aren’t abiding by the new law. No hospital with HCA Healthcare, the largest system in the country, was compliant by early 2022.
Some major hospital systems are posting prices, however. Spokespeople for Kaiser Permanente, the Cleveland Clinic and the Mayo Clinic said the hospital systems are all abiding by the law.
Many procedures done in hospitals are elective or scheduled ahead of time, which means patients have time to shop around and compare prices. Cynthia Fisher, the founder and chairman of PatientRightsAdvocate.org, the organization that conducted the audit, said the law is supposed to create competition, resulting in reduced cost of care for patients.
“Hospitals have been able to keep patients in the dark, blindsiding them with outrageously overcharged medical bills," Fisher said. “Hospital executives are putting profits over patients by being able to not comply with this rule.”
A spokesperson for the American Hospital Association said the federal Centers for Medicare and Medicaid Services is the sole arbiter of compliance.
“The AHA supports price transparency and believes patients deserve the best possible information about what they should expect to pay for a scheduled service,” Ariel Levin, the director of coverage policy for the American Hospital Association, said in a statement.
Hospitals found to be noncompliant are supposed to be subject to a minimum fine of $300 and a maximum of $5,500 per day.
Becerra noted that Health and Human Services has raised the penalty this year, but no hospital has been fined.
Instead, HHS has issued hundreds of warning letters to noncompliant hospitals. Becerra said the letters are required before the agency can issue fines.
“They’ve all taken steps to start to comply, but I have no doubt that we’re going to find that there are some hospitals that still haven’t gotten on board,” he said.
Becerra said some hospitals claim they didn’t realize they had to comply, while others cite cost as an obstacle.
The PatientRightsAdvocate.org report estimates the requirements would cost hospitals $12,000 to implement, which includes publishing price estimators and compiling machine-readable lists of procedure costs.
Becerra said the agency is relying on the public to report hospitals.
“We need people to report this to us so we know which are the facilities that aren’t complying with the law,” he said.
After his experience, Dean feels the system isn’t set up for patients to take action against hospitals that violate the law. He and his wife, DeeAnn Dean, took action against the hospital in small claims court but still face hefty medical bills.
"We have been told that we have no recourse, that even if they were in violation of the hospital transparency rule, we can’t do anything about it," he said.