Revisiting Federal Price Transparency Proposals as the End of Congress’ Session Nears
By Stacey Pogue and Nadia Stovicek
In recent years, Congress and federal agencies have taken several steps to increase transparency of health care prices, but price information is often still elusive. Health care price transparency is one of the rare areas of bipartisan agreement among policy makers. It enjoys strong public support too. The vast majority of Americans–95 percent–think it is important for Congress to make health care prices more transparent.
In the waning weeks of the 118th Congress, this blog post reviews existing federal price transparency rules and proposals in front of Congress to codify them, with a focus on how legislative proposals could make already-required price data more accessible and usable for employers, regulators, and policymakers seeking to hold down health care costs.
Federal price transparency rules
For the last few years, federal rules have required hospitals and health plans to post health care price information in two different formats: 1) a consumer-friendly format meant to help patients see costs upfront and shop for care, and 2) in machine-readable files (MRFs). Hospital Price Transparency rules took effect in January 2021. They require hospitals to publicly post payer-specific negotiated rates, gross charges, discounted cash prices, and minimum and maximum negotiated rates. Transparency in Coverage (TiC) rules took effect in July 2022. They require health insurers and group health plans to publicly post MRFs with prices for all covered items and services, including in-network negotiated rates, out-of-network allowed amounts and billed charges, and prescription drug negotiated rates and historical net prices.
Challenges with price transparency data
Machine-readable file requirements are meant to give researchers, analysts, and app developers ready access to raw data, allowing them to translate it into actionable insights for consumers, employers, regulators, and policymakers. Yet now, a few years down the road, this vision is still largely unrealized. Actionable information that could inform cost-containment efforts is not readily and widely available.
Health plan MRFs are unwieldy, inflated by irrelevant and redundant data, and inaccessible to all but a few users. Hospital files are often incomplete and, until very recently, not standardized. While several commercial data vendors specialize in ingesting and parsing this huge quantity of data, they reportedly charge hefty fees, limiting access to all but the best-resourced stakeholders.
Status of related bills in Congress
On the Congressional level, two bills work to codify and improve price transparency rules through stronger enforcement, standardization of data, and other strategies. In December 2023, the House overwhelmingly passed the bipartisan Lower Costs, More Transparency (LCMT) Act, which includes price transparency among many other provisions. Around the same time, Senator Mike Braun (R-IN) introduced the Health Care PRICE Transparency Act 2.0 (PRICE Act 2.0), with Chairman of the Senate Health, Education, Labor, and Pensions Committee Bernie Sanders (I-VT) and other bipartisan co-sponsors. While the Senate bill has not been heard in committee, it has continued to gain cosponsors. It is clear that bicameral and bipartisan support exists for making progress on health care price transparency.
Vetted, bipartisan transparency-related provisions from these bills were considered for inclusion in a March funding bill to avert a partial government shutdown, but ultimately they did not make the cut. Now, as Congress returns for a lame-duck session, it will presumably turn to items that it must pass before the end of the year. Supporters may try again to advance vetted transparency provisions on must-pass year-end bills. Given the level of both Congressional and public support for price transparency, if it is not ultimately taken up by this Congress, it may reemerge in the next one.
Legislation builds on existing rules
Relevant provisions of the House LCMT Act and Senate PRICE Act 2.0 codify rule requirements that hospitals and health plans post prices in both machine-readable files and a consumer-friendly format.
Both bills also build on existing price transparency requirements in somewhat different ways. A side-by-side summary of select provisions in federal rules and the House and Senate bills is available here.
Building on Transparency in Coverage rules
Beyond codifying TiC rules, both the LCMT Act and PRICE Act 2.0 require some changes recommended by experts to make data in TiC MRFs easier to access and use. Both bills direct relevant federal agencies to limit MRF file sizes, which are generally enormous today. On top of that, the House bill directs federal agencies to reduce data redundancy, and the Senate bill removes “ghost codes,” rates from providers who have not submitted any claims for a specific item or service (e.g. the rate for a cardiology code billed by a podiatrist, or vice versa).
The House bill requires health plans to take reasonable steps to put price transparency information in plain language and make it accessible to people with limited English proficiency or disabilities.
Both bills also seek to improve compliance. They require health plans to attest that information is accurate and complete. The House bill also directs the Government Accountability Office (GAO) to report on TiC compliance and enforcement efforts. The Senate has more rigorous oversight. It requires the Department of Health and Human Services and Department of Labor to audit MRFs from at least 20 issuers and 200 group health plans, respectively, and report findings to Congress annually.
Building on Hospital Price Transparency rules
Beyond codifying Hospital Price Transparency rules, both the House and Senate bills direct further data standardization. They both require the Centers for Medicare and Medicaid Services (CMS) to establish uniform methods and formats for both consumer-facing information and MRFs that ensure accessibility and usability. They require CMS to determine how hospitals must report prices for bundled services and alternative payment arrangements. They also both require prices to be expressed in dollar amounts, even when they are set as a percentage of charges, for example.
The Senate bill requires hospitals to update price information monthly, as opposed to annually. The Senate bill also explicitly prohibits a current rule provision that deems hospitals compliant with posting prices of shoppable services if they provide a web-based “price estimator tool” instead.
Both the House and Senate bills seek to give self-pay patients more useful information. Today, if a hospital does not offer a discounted cash price, it must instead post the gross charge. The House bill directs these hospitals to post the median amount charged to self-pay patients, while the Senate bill directs them to post the minimum amount accepted from self-pay patients. The Senate bill requires hospitals to accept their discounted cash price as payment in full from any patient that chooses to pay in cash, regardless of whether they have coverage. The House bill directs hospitals to take reasonable steps to make price information accessible to people with limited English proficiency.
Both the House and Senate bills include more rigorous monitoring and enforcement actions to increase hospital compliance. They both require CMS to review hospital compliance, annually in the Senate bill and every three years in the House bill. They also both significantly increase financial penalties for noncompliance. Currently, a hospital with 550 beds that is out-of-compliance for a full year could face a $2 million penalty. The same hospital under the House and Senate bills could face a $5 million penalty and could be subject to an additional $5-$10 million in penalties if CMS determines that the hospital was knowingly and willfully noncompliant multiple times during the year.
Both the House and Senate bills extend certain price transparency requirements to ambulatory surgical centers (ASCs), labs, and imaging centers. ASC posting requirements generally mirror those of hospitals, including prices in both a consumer-friendly format and a MRF. Labs and imaging centers must post certain prices for CMS-specified shoppable services. CMS can levy penalties for noncompliance of up to $300 per day.
Looking ahead
While price transparency is a relatively weak cost-containment strategy, it is nonetheless important. It gives basic and long-overdue information to consumers who must navigate a fractured health care system and shoulder increasing out-of-pocket costs. It can also allow employers, researchers, regulators, and policymakers to identify the drivers of health care cost growth and better target solutions.
Federal price transparency rules have withstood legal challenges and been embraced by both the Trump and Biden administrations. While it’s possible that industry stakeholders could try to leverage the Supreme Court’s recent ruling overturning the Chevron doctrine to mount new legal challenges against price transparency rules, it is not clear that any potential challenger stands to benefit from that ruling. Even if these rules do not appear at particular risk today, enshrining them into law increases certainty and consistency for stakeholders. Perhaps even more valuable are bill provisions that would make already-required data more accessible and usable for payers and policymakers.
CMS has strengthened the Hospital Price Transparency rules over time to improve data standardization and hospital compliance, but room for improvement still exists. The TiC rules have followed a different trajectory. They have not been refined over time. The TiC rules required far more standardization at the outset, and payers appear to have complied more readily, though oversight is challenging. To date, TiC data have been largely a missed opportunity, inaccessible to all but the best-resourced health care stakeholders.
The price transparency provisions in the LCMT Act and PRICE Act 2.0 continue and strengthen existing efforts. They are not groundbreaking, as initial federal price transparency rules were, but neither are they a mere codification of existing rules. Both bills contain a commitment to, and needed direction for, making price data even more accessible and usable to a wide range of audiences. The bills would take the next step in an iterative process to increase transparency in ways that could ultimately be better leveraged by employers, policymakers, regulators, and consumers to help contain health care prices.
