Health systems and insurers are bracing for tougher enforcement of price transparency regulations.
President Donald Trump last week issued an executive order to bolster oversight of price transparency requirements enacted in 2021. Regulators have given too much leeway to hospitals and insurers, limiting the potential price-easing benefits of the law as healthcare companies have been slow to meet the requirements, Trump said in the order. Still, hospitals and industry observers question whether transparency regulations will actually lead to lower prices and, ultimately, costs for patients.
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Trump gave the administration 90 days to issue new rules or guidance to ensure pricing data is easily comparable across health systems and insurers, require estimates of services be replaced with actual prices and strengthen enforcement for noncompliance.
If the directives come to fruition, health systems will need to spend more and dedicate more resources to compile price transparency data, advisers said.
The order serves as a warning to healthcare organizations that aren’t fully compliant with the law, signaling the possibility of higher fines and more scrutiny. It also stirred anxiety across health systems and insurers that use pricing estimates to meet the law’s requirements.
“The language in the order is causing a lot of heartburn,” Kristen O’Brien, a principal at consultancy McDermott+. “Using actual prices and not estimates is not how the current regulations work at all.”
The Trump administration first implemented hospital price transparency regulations in 2019. Under those requirements, hospitals and insurers must post machine-readable files with data on prices they negotiated with payers, gross charges and discounted cash prices for 300 services. The services range from MRI scans to spinal fusion surgeries. Hospitals were supposed to be fully compliant by 2021.
But hospitals have been relatively slow to meet the requirements. Hospital compliance has improved, though slowly, and it's still not at critical mass.
Hospital compliance has also been quantified in several different ways by policymakers, hospitals and researchers, said Mark Miller, executive vice president of healthcare for the think tank Arnold Ventures.
Researchers estimate roughly 75% of hospitals have posted prices they negotiated with commercial insurers. That’s about a three-fold increase since 2021, when some hospitals argued the associated cost to compile the data, as well as the competitive disadvantage of posting the data, outweighed potential penalties. The sentiment has faded, lawyers said.
However, experts and advisers who represent hospitals said CMS' ambiguous language — for instance, about how a machine-readable file should be structured and what data it should contain — continues to impede compliance.
Hospitals reported information in different ways because of a lack of clarity under the first policies, which makes their files difficult to cross-compare, said Gary Claxton, a senior vice president at KFF and director of its program on the healthcare marketplace. While it's difficult to know what guidance or regulation stemming from this order will contain, Claxton said clarifying the directions for submitting information could help hospitals report data more consistently.
Oversight also doesn’t fall to any one agency, industry observers said. CMS oversees hospital data, while states enforce insurer disclosures.
“There’s no real authority on compliance for payer data,” Chris Severn, CEO of data analytics and transparency tracker Turquoise Health, said.
A fragmented oversight process is, in part, why comparing provider and insurer pricing data has been difficult, experts said. It’s hard to bring down prices, as the regulation intends, without being able to make apples-to-apples comparisons, Morgan Henderson, principal data scientist at The Hilltop Institute at the University of Maryland, Baltimore County, who studies the price transparency law, said.
“The trillion-dollar question is whether the administration’s commitment to price transparency in health will lead to lower prices — or at least, reduce spending growth — for the group that ultimately pays the bills: individuals,” Henderson said.
Policymakers need to take several actions to ensure price transparency requirements are meaningfully met, Miller said. For starters, regulators could levy more frequent penalties for violating regulations that are already on the books, he said.
Experts expect more frequent penalties is where the order could lead.
“This order hints at a quicker time to enforcement, where the last administration was pretty conservative, and an uptick in corrective actions," Severn said.
In response to noncompliance issues, the Centers for Medicare and Medicaid Services increased the maximum yearly fine in 2022 to more than $2 million for larger hospitals that didn't comply, up from $110,000 a year. CMS also shortened the length of time hospitals have to fix their compliance issues in the hospital outpatient pay rule for 2024.
Despite strengthening the policies on paper, the agency has fined less than two dozen hospitals that have not corrected price transparency shortcomings. Penalties range from about $50,000 to close to $1 million.
If the executive order and subsequent regulation don't go far enough, lawmakers could also step in to aid in the push for stronger price transparency. Congress could consider legislation that would require hospitals post the full price of a service, rather than the cost of that service after cost-sharing with an insurer, Miller suggested. This would give the policy the full force of law rather than limiting it to an executive order or a regulation, which can be rescinded by future administrations.
Hospitals are wary of the idea.
“We continue to urge caution against stripping patients of the option to review both the rates negotiated between their health plan and providers and a more comprehensive estimate that in many cases will more accurately reflect how services are bundled and the cost-sharing imposed by their health plan,” Ariel Levin, director of policy at the American Hospital Association, said in an email.
Adding transparency to healthcare pricing is a worthwhile cause, Baylor Scott & White Health CEO Peter McCanna said. But healthcare organizations, rather than the government, are best equipped to meet that aim, he said.
“Posting what the chargemasters are of the thousands of individual items is not helpful,” McCanna said. “Posting the managed care rates might be helpful for the employers who pay for the care, but it doesn't answer what the patient's going to pay and it doesn't answer what it actually costs everybody for care. It’s a step in the right direction, but it’s not the solution.”
Longer-term solutions could include enacting hospital ownership data requirements and hospital site-neutral payment policies, which would help identify when hospitals acquire physician practices and reduce cost increases for outpatient care, Miller said. Those changes would need to be done statutorily, and site neutral-policy momentum seems to be building on Capitol Hill.
