A federal rule requiring hospitals to post prices online took effect a year and a half ago, but spotty data and noncompliance have meant the rule has yet to live up to its promise of lowering health care costs, employers and researchers say. 

Many hospitals still aren’t fully following the rule, and the federal government, despite threatening larger monetary penalties for noncompliance, still hasn’t issued any fines. 

In all, thousands of hospitals are estimated to not be fully complying with a part of the rule requiring that they post troves of data online that include information on cash prices for services, rates negotiated with payers and other information that can be helpful to researchers and people and businesses paying for health care. 

The data, which some had hoped would help drive down health care costs, has often been incomplete and difficult to decipher and compare to data from other hospitals. 

Among the common deficiencies are blank or missing data fields, not listing rates for all insurers or cash rates paid by the uninsured, providing inaccurate prices or listing payer names and not the associated plan names. 

“All of our members and many employers have been trying to make use of this and were looking forward to having this information,” said Bill Kramer, executive director for health policy at the Purchaser Business Group on Health, which advocates for private and public employers that buy health care. 

“But at this point, there are very, very few examples of success,” he said. 

The so-called “price transparency” rule, which took effect in January 2021 under the Trump administration, was intended to help consumers shop for care, increase competition and drive down prices, especially in heavily consolidated hospital markets. 

Partial compliance, but no fines yet

While most hospitals have been willing to follow parts of the rule — namely, a requirement that they post user-friendly lists or tools to help patients shop for services — they have been less compliant with a requirement that they post “machine readable” files of standard charges — data that experts say would be far more useful in driving down costs.

It’s not clear how many of the 6,000 hospitals across the U.S. are following the rules. The Centers for Medicare and Medicaid Services, which enforces the rule, has been auditing a sample of hospitals since January 2021 and told CQ Roll Call that as of this month, it has issued about 352 warning notices for noncompliance. 

CMS has also issued 157 corrective action plan requests to hospitals that previously received warning notices but have not yet corrected deficiencies. Nearly 170 hospitals have received case closure notices after addressing previous citations. 

CMS has yet to issue any fines. 

“To date, each hospital that has come under compliance review has resolved its deficiencies, or is in the process of doing so,” said a CMS spokesperson in a statement. “Therefore, it has not been necessary for CMS to issue any penalties.” 

A series of studies of sampled hospitals has demonstrated the low compliance. For example, a March study of 89 children’s hospitals showed 51 percent omitted payer negotiated rates from their machine-readable files, and 40 percent did not include cash rates, which are typically paid by the uninsured. About 98 percent of the sampled children’s hospitals were compliant with the “shoppable” services requirement, which critics say provides little value to consumers because it may not represent what patients end up paying.

“It’s against their financial interest to disclose the data. That’s why there’s such low compliance,” said Sophia Tripoli, director of health care innovation at Families USA, a consumer advocacy group that is calling for increased fines and enforcement. 

Hospitals with more than 30 beds can be penalized a maximum of $2 million annually for noncompliance, which isn’t enough of a fine to motivate providers “flush with cash,” she said.

Hospital leaders have expressed concerns that releasing data on what various payers are paying for services could give insurers more leverage in negotiations. 

Competition concerns

Turquoise Health, which was formed at the end of 2020 to analyze data and help providers and payers become compliant with the rules, has found that about 4,500 of the nation’s 6,093 hospitals have posted data files. 

Marcus Dorstel, vice president of operations for Turquoise Health, said there isn’t a pattern showing larger hospitals are less likely to comply. But there are geographic patterns of noncompliance, indicating some hospitals may be reluctant to post data before their competitors do. 

In all, about 70 percent of those 4,500 hospitals have received ratings of four or five stars (out of five) from Turquoise Health for having complete data files.

Eventually, Dorstel said, he hopes the data can be used to standardize prices across markets. 

“So in a certain region, generally, a specific service should cost within a certain range, versus the wild variation that we’re seeing today,” he said. 

Texas 2036, a nonprofit research organization, has built a dashboard analyzing price transparency compliance among the state’s 644 hospitals, specifically with the machine-readable file requirements. Preliminary data from April shows 33 percent of the state’s hospitals are compliant, a slight increase from 27 percent in August. 

The dashboard hasn’t launched yet, but the eventual goal is for employers to be able to use the data to get lower rates, said Charles Miller, senior policy adviser for the group. 

The data that has been made available by hospitals in some cases has been difficult to analyze.

CMS does not require that hospitals post data in any specific formats other than machine-readable, making it difficult for researchers to compare files released by different hospitals. 

“I don’t know why you wouldn’t tell people how to do it. You have different hospitals using different formats to essentially say the same thing. It doesn’t make sense,” said Gary Claxton, director of Kaiser Family Foundation’s program on the health care marketplace. 

Files that are released by hospitals are often missing data, according to a Patient Rights Advocate analysis of 1,000 hospital websites from Dec. 7 through Jan. 28.

The report estimated that 86 percent of the 1,000 hospitals did not post a complete machine-readable file of standard charges. 

A similar rule for insurers takes effect July 1, and Cynthia Fisher, founder and chairman of Patient Rights Advocate, expects that data to be more useful. Most group health plans and issuers of group or individual health insurance will have to post machine-readable files containing in-network rates and out-of-network payments, price comparison tools to help customers understand cost-sharing responsibilities. 

“This is the year that data gets unleashed,” Fisher said.