The Centers for Medicare & Medicaid Services has listened to healthcare consumers and patient advocates who have pointed out the need for more robust application of a widely-flouted federal hospital price transparency rule that took effect on January 1, 2021. The agency recently strengthened rule enforcement, including faster and automatic financial penalties on noncompliant hospitals.
These actions will encourage more hospitals to post their actual prices, enabling patients to avoid widespread overcharging and exploitation by hospitals. Upfront prices protect patients from hospital debt and lawsuits by providing financial certainty and easy recourse if they're overbilled. Price transparency empowers healthcare consumers, including employers and unions, to substantially lower their healthcare costs through choice and competition.
According to a recent study by PatientRightsAdvocate.org, only 24.5% of hospitals nationwide are fully complying with the price transparency rule by clearly posting their discounted cash prices and all health insurance rates by plan. A recent CMS website review, which only takes a surface-level look at hospital compliance, suggests 70% of hospitals are following the rule.
Even by CMS's incomplete standard, approximately 1,800 hospitals out of 6,000 nationwide are violating the rule. Yet the agency has only fined four hospitals in the more than two years since the rule took effect. The stronger new CMS enforcement guidelines are a step toward making the price transparency rule a reality.
Yet alone, these actions are not enough to usher in full hospital compliance. To compel even more hospitals to comply, CMS should also increase its hospital audit rate, immediately fine all those not in compliance, and clarify that hospital price disclosure files with non-pricing information such as N/As, hyphens, and percentages will be considered noncompliant.
When all hospitals post their actual prices, consumers can defeat America's predatory healthcare system, where patients are blinded to prices then blindsided by massive bills that arrive in the mail weeks and months later. This unfair billing dynamic gives hospitals and health insurers a blank check to price gouge and financially devastate ordinary Americans.
As a result, 100 million Americans have medical debt, and 13% face financial ruin from medical debt in collections.
Hidden prices also cause wide price fluctuations for the same care, even at the same hospital. At one hospital in California, the price of a C-Section ranges from $6,200 to $60,600. Across hospitals, the cash price of prostate surgery varies from $1,476 to $47,445. When prices are known, no patient will pay 10 or 20 times more for the same treatment.
Hospitals extort patients by demanding they sign paperwork upon admittance requiring them to personally guarantee all ensuing charges without offering any financial certainty. Such your-money-or-your-life billing practices received under duress are unconscionable and potentially even illegal. Prices can put a stop to this extortion.
As President Biden points out, "Capitalism without competition is exploitation." And without clear prices, there is no competition. American healthcare is, therefore, exploitation.
Actual, upfront prices can usher in a functional, competitive healthcare marketplace that reverses runaway costs. Aided by tech innovators that aggregate price disclosures in easy-to-use web shopping applications, patients can choose the highest quality care at the lowest possible prices. Price-gouging hospitals and health insurers will lose consumers to those offering care at fair market rates.
When patients have financial certainty and can choose affordable care, healthcare access and equity will improve. No longer will hospitals and health insurers be able to work in cahoots to profiteer on patients' misery. It's no surprise that new polling by SocialSphere, led by Harvard University pollster John Della Volpe, finds that an overwhelming bipartisan supermajority of 89% of Americans support systemwide healthcare price transparency.
Through rapid and robust enforcement of the hospital price transparency rule, the Biden administration can unleash a pro-consumer healthcare revolution that ends hospital overcharging, exploitation, and extortion burdening so many Americans.
Cynthia A. Fisher is the founder and chairman of PatientRightsAdvocate.org.
