Survey Finds Spotty Compliance Among Hospitals with Federal Price-transparency Law

BOSTON — A 2019 federal law requires hospitals to make prices for 300 shoppable services available online in a “consumer-friendly format,” but a Pioneer Institute survey of 19 hospitals finds that information on discounted cash prices — the price most likely to be charged to consumers paying out of pocket — was unavailable at seven of those hospitals.

Of the 300 services for which prices are required to be made available online, 70 are dictated by the Centers for Medicare & Medicaid Services. The survey, “Massachusetts Hospitals: Uneven Compliance with New Federal Price Transparency Law,” prepared by Pioneer Senior Fellow Barbara Anthony and Research Associate Serena Hajjar, looked at 35 of the 70 services at the 19 hospitals, and found that compliance rates ranged from 60% (Emerson Hospital) to 97% (Mass General).

“Our earlier work found disappointing compliance with Massachusetts’ 2012 healthcare price-transparency law, and now we find that compliance with the federal law isn’t much better,” Pioneer Executive Director Jim Stergios said. “We are not insensitive to the challenges providers are facing, but it is disappointing that compliance with the law has not budged much since 2017, when Pioneer began monitoring hospital price-transparency efforts.”

Seven hospitals that didn’t provide discounted cash prices online Boston Children’s, Falmouth, Holyoke Medical Center, MetroWest Medical Center, Mount Auburn, New England Baptist, and St. Vincent’s.

Among the 12 hospitals that did make at least some discounted cash prices available, there continue to be vast pricing disparities. For example, an MRI of a brain scan before and after contrast was nearly $5,300 at UMass Memorial Hospital in Worcester, but less than $1,500 at Carney in Boston. An abdominal ultrasound was $1,663 at Tufts New England Medical Center, but just $374 at Signature Health Brockton. Finally, an MRI of a leg joint was more than $3,400 at Mass General and Brigham and Women’s, but $775 less than 10 miles away at Carney.

“The disparities we observe strongly suggest a market dominated by the systems that are able to maintain prices above competitive norms,” report author Barbara Anthony said. “This is why it’s crucial that consumers, employers, benefit managers, and insurers have ready access to provider prices.”

Lack of transparency drives up healthcare costs. A 2019 Pioneer survey found that 70 percent of respondents wanted to know the price of a procedure before receiving it. Of Massachusetts residents with health insurance, 11% have deductibles of $3,000 or more.

The new federal law (the Public Health Service Act, passed in 2019 and effective in January 2021) also requires that hospitals make all their prices available in machine-readable formats (MRF) for the benefit of employers, competitors, insurers, governments, and researchers. This format is not intended for consumers.

Massachusetts hospitals do well when it comes to providing prices in the MRF format. Only two hospitals in the sample of 19 do not make this data available in MRF style. While a number of national surveys have been critical of this requirement and the massive amount of data it produces in an unorganized fashion, it does offer an opportunity for large purchasers of healthcare services to harness and utilize such data to their advantage.

The report recommends that:

• Hospitals designate a single administrator to be in charge of price transparency;

• The federal government provide specific guidance to hospitals regarding how to make websites “consumer friendly”;

• The federal government step up compliance action; and

• Massachusetts state government create incentives for hospitals to comply with state and federal price transparency laws.

“While some of these recommendations are similar to others we have made regarding compliance with state transparency laws, we hope that this new federal law will encourage a real commitment to consumer price transparency,” Anthony said. “Pioneer would be pleased to collaborate with providers on such endeavors.”