Over four months after the CMS price transparency rule went into effect on January 1, most hospitals are still not fully compliant. Under the rule (45 CFR §180.50), hospitals are required to publicly list negotiated rates and cash prices for 300 shoppable services online in a consumer-friendly format and a machine-readable file.
Given the variability in compliance, we wondered what factors were associated with the decision of hospitals to comply. We investigated 324 short-term acute care hospitals from 26 metropolitan statistical areas (MSAs), which were chosen based on differences in hospital and insurer market concentration.
Compliance was evaluated based on if cash prices and negotiated rates were released in the machine-readable files. While this sample is only a small slice of all hospitals in the United States, this group collectively represents metropolitan areas with over 50 million residents in 25 states. No two healthcare markets are the same, but the hospitals in this group represent a breadth of markets.
After working with the hospital price transparency data for several months, we have made six notable observations based on our experience so far:
- Hospital competition is associated with more compliance. Hospitals in markets with more beds per capita were more likely to comply with the price transparency rule. For instance, in Jackson, Mississippi, which has 4.42 beds per thousand residents, nearly every hospital has released price transparency data.
- Insurer competition is associated with less compliance. Put another way, hospitals in markets with a dominant insurer were more likely to be compliant. Both Montgomery, Alabama, and Columbia, South Carolina, where Blue Cross Blue Shield owns significantly more than 50% of market share, demonstrated high rates of compliance.
- Tax status and hospital size did not play a role in compliance. We hypothesized that these factors may be predictive of compliance, as it is possible that larger hospitals may have more resources, or that tax status might reflect certain organizational objectives. We found no associations between these factors and compliance.
- Compliance was not associated with financial performance. We looked at a variety of financial performance indicators such as operating margin and EBIDTAR, and these metrics were not associated with hospital compliance.
- Existing state policy did not play a role in compliance. Several states—including Florida and Maine—had existing price transparency tools before the federal rule was put into place. Despite these laws, hospitals in these states were not more likely to be compliant.
- Compliance ultimately appears to be a cultural decision. Despite our findings in observations (1) and (2), these associations were weak. There does not appear to be a set of readily observable dominant factors associated with compliance with the price transparency rule. One implication from our review is that the rule did not appear to selectively disadvantage any particular set of hospitals. Compliance spanned a wide range of hospitals: from big to small, nonprofit to for-profit, and independent to corporate-owned.
We have also developed some qualitative insights after spending several months working with the price transparency data. Several hospitals were exemplary: color-coded files that were easy to locate and read. Other hospitals made it difficult to find and use the machine-readable files. We found that some hospitals hid machine-readable files in fine print behind long disclaimers. One hospital website even made visitors watch a two-minute video explaining that the prices in the file do not reflect what a patient would pay. These differences support the conclusion that price transparency compliance is a cultural decision.
This study was conducted by students and faculty within the Owen Graduate School of Management at Vanderbilt University. Click here to to learn more about the Vanderbilt Master of Management in Health Care (MMHC).
