“No one is enforcing that law.”
Rapper Fat Joe, in a TV ad that began airing this spring about the need for hospital price transparency
Rapper Fat Joe took on hospital industry officials in an ad, claiming that many hospitals are flouting a law that requires them to publicly disclose prices to cash-paying patients and insurance companies for every service they offer.
The ad, from a group called Power to Patients, correctly states that hospitals must list their negotiated prices and insists that the rule makes it difficult to overcharge patients. The ad also blames politicians and regulators because price information is still not available as needed.
“No one is enforcing that law,” Joe complained in the foreboding ad, which ran on television and social media in April and is still airing.
The ad reflects a desire for accountability as policymakers increasingly look to price transparency as a tool to lower health care costs. And since the law requiring price posting went into effect more than a year ago, we decided to take a look: Is anyone enforcing it?
Although the process is more complicated and slower than some observers would like, some have been implemented.
Some background on transparency
Under the rules, which take effect in January 2021, the nation’s more than 6,000 hospitals must post online the prices they have negotiated with every insurer for every service, from appendectomies to X-rays, as well as for cash-paying patients.
The requirement, which the hospital industry unsuccessfully went to court to stop, stems from the Affordable Care Act and an executive order from the Trump administration. Failure to post required cost information can result in fines of $300 a day, recently increased by the Biden administration to $5,500 a day for the largest hospitals.
The idea behind the rule is that consumers, including employers who pay a large portion of health insurance bills in the United States, can use the information to shop for less expensive hospital care, which may result in lower costs or lower prices. At the very least, presumably, it would help patients know in advance what to expect. In July, even broader rules went into effect for health insurers, which must post nearly all of the prices they negotiate — not just with hospitals, but with doctors as well.
Hospitals have dragged their feet, and compliance is spotty. The study found that many hospitals posted at least some data but large shares of facilities failed to post everything required.
What about patients’ abilities?
The Power to the Patients website, which is behind the ad and a broader campaign about health care costs, referred questions to a related organization, Patient Rights Advocates. It is a nonprofit started by businesswoman Cynthia Fisher, who founded two companies and serves on the board of Boston Beer Co. According to Fisher, he was also the primary funder of Power for Patients, which he described as a communications company that applied to the IRS for nonprofit charitable status.
In an interview, he cited no specific source for the claim that no one is enforcing the law, but patients’ rights advocates released two related reports, the most recent of which said only 14.3% of 1,000 hospitals posted all prices. Law required.
He praised both the Trump and Biden administrations for focusing on price transparency, but he said the Centers for Medicare and Medicaid Services has moved too quickly to approve hospitals that have not adequately evaluated or are not in compliance.
What about enforcement?
When the ads began running in April, 15 months after the requirement went into effect, regulators had not fined any hospitals.
In early June, CMS issued nearly $1.1 million in fines against two Georgia hospitals — Northside Hospital Atlanta and Northside Hospital Cherokee — that are owned by the same company. The first penalty issued under the new rules.
As of the end of July, the agency had sent 368 warning notices and issued 188 corrective action plan requests to hospitals that had previously received warning notices but had not yet corrected the deficiencies, according to a statement from Dr. Meena Seshamani, deputy administrator and director of the Centers for Medicare.
“CMS is proactively enforcing these rules so people know what a hospital charges for items and services,” Seshamani said in the statement.
But it’s not a quick or easy proposition to implement. Each step of the process gives both sides time to work out the details, says Ariel Levin, director of coverage policy for the American Hospital Association.
The first step is the warning letter, which outlines the suspected violation, such as not having an accessible file on the website or not including the negotiated price or cash rate.
Hospitals have 90 days to respond. For example, Levin says, a hospital might explain that there are some blank spaces in its files because it hasn’t set a rate for a particular service with a particular insurer.
“If CMS deems the response appropriate, the case is closed,” he said. “If CMS wants more information or doesn’t think it’s right, that’s when the corrective action plan comes in.”
Fines are usually the last step.
In the nearly year and a half that passed before the first fine was issued, Levin said, both hospitals and regulators faced a learning curve about what should be in the files, which hospitals were given time to address. Technical issues and challenges related to posting cost information, and hospitals stretched thin due to the Covid-19 pandemic.
Still, the gap breeds impatience.
“Some stakeholders are frustrated by the slow pace of implementation,” said Katie Keith, director of the Georgetown University Law Center’s Health Policy and Law Initiative.
Even so, “I don’t think it’s fair to say that no one is enforcing” the law, Keith said. CMS “issued financial penalties against two Georgia hospitals, which they often do not, and hundreds of warning letters telling hospitals to meet their obligations.”
The warning letters are a good step but “need to be followed up with meaningful enforcement,” said Elizabeth Mitchell, president and CEO of the Health Buyers Business Group, which represents large employers that offer health insurance and has long called for more easily accessible pricing information.
And with more than 300 warning letters issued, Mitchell expects “there will likely be additional fines because we’re not prepared to comply.”
Does price transparency matter?
Energy has thrown its resources into advertising for patients — Fisher said the ad cost “millions” — as they hope the price data will spark more competition in health care. Consumers will “have choices, save money and make their own health decisions based on knowing the value,” Fisher said.
But it’s not a given, policy experts say, that price data alone can’t sway patients, who often refer to their doctors and mostly don’t use the shopping tools already available. And until more data files come from hospitals and, more recently, insurers have moved from being only publicly available to being accessible in consumer-friendly formats, they will be difficult for the average patient to use, Keith and other experts said.
“The idea that this will bring about a consumer revolution hasn’t really worked out yet,” says Keith.
Hospitals have taken their time to post the necessary price information. Many still have to provide some or even all of what they need. And the enforcement process has proven to be time-consuming and bureaucratic.
However, the Transparency Directive is a first-of-its-kind regulation, so a learning curve was expected for both hospitals and regulators, as they figured out the types of data and the format of information required. Post.
While it is fair to say that enforcement has been slow and spotty, experts feel that it takes time to improve. And when the ad first aired this spring, enforcement was particularly weak However, the ad continues unabated, even as enforcement efforts begin to show signs of gaining steam. In other words, the statement is partially correct but leaves out important context. We rate this half true.
Patient Power Advertisement featuring Fat Joe, accessed July 28, 2022
Phone Interview, Cynthia Fisher, Founder, Patient Rights Advocate, July 28, 2022
Phone Interview, Elizabeth Mitchell, President and CEO, Purchaser Business Group on Health, July 29, 2022
Phone Interview, Katie Keith, Director of Health Policy and Law Initiatives, Georgetown University Law Center, August 1, 2022
Email interview, Dr. Meena Seshamani, Deputy Administrator and Director, Centers for Medicare, August 1, 2022
JAMA Network Open, “Price Transparency and Variability for Pediatric Outpatient Imaging in US Children’s Hospitals,” March 2, 2022
Healthcare Dive, “Most Hospitals Not Complying With Price Transparency Rules: JAMA,” June 15, 2021
Patient Rights Advocate, “Semi-Annual Hospital Price Transparency Compliance Report,” February 2022
Centers for Medicare and Medicaid Services, “Enforcement Actions,” accessed July 28, 2022.
Guidestar, Patient Rights Advocate IRS Form 990, accessed July 28, 2022
American Hospital Association, “Hospitals and health systems work to implement price transparency policies and help patients understand costs,” June 16, 2022
Roll Call, “Many Hospitals Not Fully Complying With Price Transparency Rules,” June 2, 2022
Patient Rights Advocate website, accessed July 28, 2022