U of M study shows hospitals slow to post price transparency data

A new University of Minnesota study finds that U.S. hospitals have been slow to fully comply with a new federal rule that was designed to bring more price transparency to health care.

Beginning in January, hospitals were required to publish detailed information online about the rates they charge for services, including the different negotiated rates paid by various private health insurers.

The analysis from U researchers found that only 1 in 4 hospitals surveyed reported all required data in a machine-readable format that makes it easy for researchers and policymakers to analyze the information. The study looked at a nationally representative sample of 470 hospitals across the U.S.

Officials at the Minnesota Hospital Association say that all hospitals here have been fully compliant with the federal requirement.

While the study results suggest limited utility in the early data for consumers and researchers, it's possible that reporting could improve over time, said Jean Abraham, a professor of health care administration at the U's school of public health.

"It is very difficult for consumers to know what price they will face when they seek care from a hospital," Abraham said in a Wednesday interview. The goal of the requirement is "empowering consumers to make more informed choices about their health care using price information."

Published in the journal Medical Care Research and Review, the study found that while relatively few hospitals reported their negotiated rates with insurers, nearly three-quarters published a subset of prices in a consumer-friendly format.

Hospitals might have opted against reporting negotiated rates because they were busy handling the COVID-19 pandemic in 2020, researchers wrote, and because the hospital industry was challenging the rule in court. Plus, enforcement of reporting is relatively weak, Abraham said, including a $300-per-day penalty that's small relative to overall revenue at most hospitals.

Hospitals are worried about consumer reactions, she said, if the price data show that their medical center is "the highest-priced provider in the market."

The study looked at reporting during the first few weeks of 2021, so it could be that more hospitals now are reporting full data online, Abraham said. She pointed to another federal requirement coming in January 2022 that is intended to bring even more detailed information via price transparency from health insurers.

"That's an order of magnitude more complicated," Abraham said. "If it's upheld and actually comes to fruition, that's going to put an awful lot of information out there and I think will ... [highlight] the question: Why do we have so much price variation?"

In Minnesota, hospitals were compliant with the reporting requirement since it went into effect, said Dr. Rahul Koranne, chief executive of the Minnesota Hospital Association. The trade group has been meeting with hospital leaders on the issue for more than a year, Koranne said, adding that the state's health systems support the goal of price transparency.

Hospitals aren't sure if many consumers will find the very large spreadsheets of data very user-friendly, he added, but the hospital association audited the websites of members to make sure the machine-readable files were posted along with more consumer-friendly information.

"This has not been an easy venture," Koranne said. "This has taken a lot of information technology resources and work at the very same time that our hospitals and health care systems were in the midst of a global pandemic."

Roughly 3 in 5 Americans are covered by private health insurance. Spending on the privately insured has increased 50% in the past decade, researchers wrote, driven in large part by increases in the prices for services charged by health care providers.

Prices are set through negotiations between insurers and hospitals, resulting in dramatic variations.

"If fully leveraged, the hospital price transparency rule has the potential to create a powerful tool to assess the role of insurer and provider market power as well as other local market conditions as drivers of medical price variation and ultimately health care spending," researchers wrote. "Moreover, the rule provides a valuable opportunity to assess whether consumer-focused transparency efforts are an effective policy lever for mitigating medical care spending growth."

"Whether price transparency can reduce health care spending," they added, "is an open empirical question."