Biden administration’s opportunity to usher in healthcare price transparency

America’s broken healthcare system rarely makes it to the top of the 24-hour news cycle even though it’s a top problem facing the country. Two-thirds of Americans avoid care each year for fear of financial ruin, and one-third carry medical debt. This is a national disgrace.

The Biden administration currently has an opportunity to meaningfully fix U.S. healthcare by strengthening price transparency requirements in its forthcoming hospital outpatient prospective payment system (OPPS) final rule. This rule, whose public comment period ends Sept. 17, can usher in actual, upfront hospital prices that finally allow consumers to shop for the highest quality care at the lowest possible price. Such consumer choice will unleash a competitive, functional healthcare marketplace that protects patients from predatory billing and reverses runaway costs.

At the beginning of the year, the Trump administration implemented a hospital price transparency rule that requires hospitals to post their discounted cash prices and contracted rates by plan and payer. Armed with this information, consumers can avoid price gouging providers in favor of those that offer the best value. They can enjoy financial certainty that hospital procedures won’t result in financial ruin. Unsurprisingly, a bipartisan supermajority of about 90 percent of Americans supports this reform.

Unfortunately, the hospital price transparency rule has been marred by widespread noncompliance. Recent research from our organization indicates that just 5.6 percent of hospitals nationwide are fully following all its provisions. This finding is in line with several other studies showing that the vast majority of hospitals are in violation of the rule. Even when prices exist, hospitals often make them difficult to access and interpret.

In July, President Biden signed a pro-competition executive order calling on HHS to support the price transparency rule. The subsequent OPPS proposal seeks to address three of the biggest impediments to actual, upfront prices: inadequate enforcement of the price transparency rule, barriers to access real prices, and meaningless price estimator tools. If the final rule can overcome these price transparency roadblocks, consumers will finally be able to shop for healthcare like they do for other goods and services in the rest of the economy.

The OPPS rule proposes to significantly increase the current token penalties on noncompliant hospitals to more than $2 million per year. Such fines would encourage more hospitals to follow the price transparency rule and disclose their actual prices. To compel all hospitals — even the biggest and most profitable — to comply, HHS can increase its penalties in the final OPPS rule even further. Numerous patient rights groups, including Families USA, recommend fining violating hospitals $300 per licensed bed per day. Recent polling by Harvard pollster John Della Volpe suggests more than three-quarters of Americans support this penalty.

The OPPS proposal also addresses the numerous current barriers hospitals have erected preventing patients from accessing prices. Consumers often must scour hospital websites, download massive files in varying formats, and interpret confusing spreadsheets to obtain price information. HHS can overcome these barriers by issuing clear disclosure standards that allow patients to easily access and understand prices. These measures must also clarify price disclosure formats so that third-party tech innovators can easily aggregate prices in consumer-friendly apps like Kayak or Expedia, allowing consumers to shop for care as they currently do for flights and hotels.

Finally, the OPPS proposal seeks to clarify hospitals’ use of price estimators, which many hospitals use in lieu of actual prices. Price estimates are faux transparency, and they skirt the spirit if not the letter of the price transparency rule. They don’t protect patients from well-documented wild hospital price deviations. The Wall Street Journal recently reported that prices can vary by ten times within the same hospital depending on the payer. An estimate that’s the midpoint of such price variation provides patients with no financial certainty regarding their final bill and makes shopping impossible.

Price estimators are just more pricing games from hospitals desperate to keep their real prices hidden so they can continue profiteering by keeping patients in the dark. In its final rule, HHS can ban their use and reiterate that only actual and complete prices are meaningful, can unleash a competitive market, and hold hospitals accountable by offering patients recourse if overbilled.

Despite the lack of attention, HHS quietly has the opportunity to dramatically improve the U.S. healthcare system by making the price transparency rule a reality. By increasing penalties on noncompliant hospitals, implementing clear price disclosure standards, and eliminating meaningless price estimators, the Biden administration can revolutionize healthcare for generations to come.

Cynthia A. Fisher is founder and chair of PatientRightsAdvocate.org.