The Hospital Price Transparency Rule, which was implemented four years ago by the Department of Health and Human Services, mandates that U.S. hospitals disclose their charges, commercial negotiated prices, and cash prices. The aim is to ignite price competition and manage healthcare spending. But what have we actually discovered?

Unveiling the Potential of Hospital Price Transparency

Compliance Challenges and Enforcement Needs

As my coauthors and I delved into this topic in Health Affairs Forefront this week, we found that compliance with the rule is far from complete, and the agency's enforcement efforts need significant improvement. A November report from PatientRightsAdvocate.org indicated that only 21% of hospitals have fully adhered to the rule. This highlights the ongoing struggle in ensuring that hospitals fulfill their obligations.Moreover, despite these compliance issues, a recent analysis from Turquoise Health revealed that average commercial prices for common hospital services have actually decreased since the rule's implementation. This showcases the promising possibility of price transparency in curbing price hikes and promoting a more competitive healthcare market.

Disclosed Pricing Information and Disparities

The disclosed pricing information has shed light on important differences that can guide policy and practice. For instance, prices at physician-owned hospitals are one-third lower than those at competing hospitals in the same market. This indicates a significant disparity that could potentially lead to changes in the healthcare landscape.In addition, hospital prices for colonoscopies are more than 50% higher than those at ambulatory surgery centers within the same county. Such variations emphasize the need for a more standardized and transparent pricing system. Furthermore, cash prices are often lower than insurance-negotiated prices in the same hospital, even for services that are not typically shopped for, like trauma activation fees. This reveals an interesting aspect of the pricing dynamics within hospitals.

Insurance and Unregulated Services

It is worth noting that healthcare services and products not covered by insurance, such as plastic surgery and over-the-counter drugs, have their prices disclosed in a manner that is highly beneficial to patients without any government regulation. This shows that when there is no regulatory burden, providers are more inclined to be transparent with prices.If we truly want the price transparency rule to reach its full potential in containing prices, we must address the underlying reason that deters providers from voluntarily disclosing prices. The root cause is that many patients do not directly benefit from lower prices. When it's someone else's money being spent, there is no motivation to care. Providers take advantage of this lack of personal interest and hide and raise prices with ease. Therefore, reforming insurance regulations to enable patients to benefit from lower prices is the correct path forward.

The Provider Market and Anticompetitive Regulations

The uneven playing field in the provider market must be addressed to foster fair competition. Anticompetitive regulations, such as the 340B Drug Pricing Program, site-based payment policies, the ban on physician-owned hospitals, certificate of needs laws, certificate of public advantage laws, and the Stark Law, undermine physicians' competitiveness and lead to their acquisition by large systems.When policymakers intervene and favor certain players, the process becomes influenced by these large entities, which harms competition and patient welfare. In contrast, free competition, which empowers all patients to determine winners and losers, is the solution to high prices and low quality, both of which go against patients' best interests.Price transparency enjoys strong bipartisan support and wide appeal among voters as it is a logical and necessary step in transforming our healthcare system into a competitive, fair, and patient-centered one that utilizes American innovation to address unsustainable healthcare spending.Congress should take the initiative to codify price transparency by adopting the more effective and comprehensive version proposed in the Senate. Alongside these reforms, aligning patient incentives and creating a level playing field for providers will pave the way for a brighter and healthier America.