Healthcare legislation must codify hospital price transparency rule

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The House Ways and Means Committee introduced healthcare reform legislation last week just in time for the summer recess. Unfortunately, the bill doesn’t have the same potential impact as competing legislation from the House Energy and Commerce Committee called the Patient Act.

Where does this new bill fall short? It doesn't include the same robust price transparency measures that can lead to substantial savings for individuals and employers. It doesn’t require hospitals to post all their negotiated rates with health insurers as demanded by an existing hospital price transparency rule that the Patient Act codifies and strengthens.

Employers and all patients need access to these actual health plan rates to know what they are expected to pay. This information allows employers to spot wide and unsubstantiated price differences for the same care, compare their plan with others, and prevent overcharges.

We’ve seen how access to all health plan prices is needed to dramatically reduce healthcare costs. In 2014, Marilyn was hired to direct Montana's insolvent State Health Plan, which covers approximately 30,000 state employees, retirees, and their families. An analysis of the plan's medical claims data revealed Montana hospitals were charging up to six times the Medicare rate for services.

To overcome this egregious and highly variable hospital pricing, the plan contracted with hospitals in the state to pay rates slightly more than twice Medicare rates. This move increased plan reserves from a projected deficit of $9 million to a surplus of $112 million in three years, protecting the plan from insolvency without cost-shifting or decreasing benefit levels.

Chris, who was formerly at the helm of New Jersey’s 800,000 life public sector health plan, likewise saw vast price variation in health claims. These discrepancies have led to ongoing investigations into the practices of some of the state’s largest healthcare vendors.

When all prices for all health plans are disclosed, innovation and patient empowerment can revolutionize healthcare like Expedia and Travelocity reshaped the travel industry. Once a healthcare price marketplace is established, competition will put further downward pressure on costs. Employers will be able to easily steer their employees to the highest quality care at the lowest possible prices and share ensuing savings in the form of lower healthcare premiums and higher wages.

A new study by PatientRightsAdvocate.org demonstrates why robust price transparency legislation is needed: Only 36% of hospitals are fully following the current hospital price transparency rule.

PRA found that many of the nation's largest hospital systems, including HCA Healthcare, Tenet Healthcare, Providence, Avera Health, UPMC, Baylor Scott & White Health, and Mercy, have a compliance rate of zero.

HCA Healthcare, the country's biggest hospital network, made $60.2 billion in revenue and $5.6 billion in profit in 2022. When prices are hidden, hospitals have a blank check to profiteer.

Healthcare costs have skyrocketed, putting 100 million Americans in medical debt and scaring nearly two-thirds from getting needed care. Rapidly rising employee coverage costs are responsible for stagnant worker wages and suppressed business earnings.

Under the opaque status quo, employers and unions such as Ford, Kraft Heinz, Owens & Minor Inc., and Bricklayers and Sheet Metal Workers unions have had to sue their health plan administrators to access the price information needed to lower costs. They have uncovered billions of dollars in overcharges and anti-competitive practices. Sunlight on hospital and health insurers’ negotiated rates is needed to disinfect these inflationary pricing schemes.

Congress can usher in a competitive, pro-patient healthcare system by codifying and strengthening the hospital price transparency rule, including the requirement that hospitals publish all health plan rates. The Patient Act does this, but the alternative bill proposed by the Ways and Means Committee does not. The healthcare reform choice for employers and legislators is clear.

Marilyn Bartlett, CPA, CMA, CFM, CGMA, is the former administrator of the State of Montana Employee Health Plan. Christin Deacon is the former Director of Health Benefits Operations and Policy and Planning for New Jersey.