TROUBLED TRANSPARENCY
Hospitals are skirting government orders to reveal prices, leaving patients in the dark
With medical costs driving hundreds of thousands of consumers into bankruptcy each year, the federal government this year unveiled a game-changing rule with the goal to allow people to shop online for health care like buying a car or staying at a hotel by comparing prices.
The new rule could empower people to save thousands of dollars on some of the most critical medical procedures.
But nearly seven months after the federal “price transparency” rule went into effect — requiring every hospital in the nation to post the costs of their medical procedures — scores of some of the largest hospitals in Pennsylvania are still failing to abide by a measure that was created to help change health care in America, the Pittsburgh Post-Gazette found.
A review of Pennsylvania’s 163 acute care hospitals found that about three-quarters are failing to follow the rule, either in whole or in part, creating obstacles for consumers who have long waited to have a greater role in their own medical care.
“Most hospitals are not fully complying by a large percentage,” said Cynthia Fisher, a health care advocate credited with persuading former President Donald Trump to create the rule after she pitched it during a meeting at his New Jersey golf course in 2018. “The data is abysmal.”
For those hospitals that are failing to follow the new requirement, the reasons they give run the gamut: One hospital claimed that confidentiality agreements with insurers prevented them from revealing prices, and another claimed the federal rule required the
institution to list prices only if someone used that specific health care service in the prioryear.
The disclosures come after the largest hospital organization in the country waged a fierce legal battle last year in federal court to stop the provisions from being imposed but ultimately failed.
The Post-Gazette’s analysis of some of the price information divulged by the hospitals vividly highlights the stunning disparities in prices charged for the same medical procedures, sometimes by thousandsof dollars.
Take for instance the costs of procedures charged to insurance companies — information that’s crucial to consumers forced to pay part of those costs because of high deductibles.
The data shows that Aetna insurance will pay Allegheny General Hospital $9.45 for a standard blood test but will pay $225.90 for the same test to UPMC PresbyterianShady side.
Cigna insurance will pay Allegheny General Hospital $3,568.78 for a knee surgery, but just a few miles away at West Penn Hospital — part of the same health system, Allegheny Health Network — Cigna pays the hospital $5,859.96.
Even more remarkable, the data shows that if the patient paid the cash price for a procedure, it’s frequently cheaper than what the patient’s insurance company wouldpay.
Consider: UPMC Health Plan insurance pays St. Clair Hospital $1,900 for a brain scan — the highest of any insurer — with much of that potentially passed onto the consumer in the deductible. But if the patient paid cash for the scan at the hospital, it would be less than half of the cost.
“What you’ve found illustrates why we need price transparency to work,” said Ms. Fisher, a biotech entrepreneur who began pushing for the disclosures during the Obama administration. The rule “for the first time allows Americans to actually shop preventably and proactively and take care of their care rather than [risk] facing financial ruin.”
The Post-Gazette’s analysis also found what many health care experts have known for decades: UPMC’s eight hospitals in the region often have the most expensive care compared to the 21 other facilities in the area.
Of the 70 “shoppable” service prices the federal government deemed critical for hospitals to disclose, the Post-Gazette analysis found UPMC’s prices — including negotiated rates and cash prices — were typically higher than those of theircompetitors.
A Trivago for health care
When Ms. Fisher presented Mr. Trump with her idea for how price transparency would work in August 2018, it was not a new goal. Advocacy groups like hers had been trying for years to reel in health care costs.
Studies by Harvard and others have found that illness and medical billings were a major force in bankruptcies acrossthe country.
After failing to persuade Congress to proceed, Suzanne Delbanco said her group, The Catalyst for Payment Reform, began to focus on state efforts.
“Our perception was that it was very unlikely that something would happen at the federal level and some states had already made strides in working toward greater price transparency,” said, Ms. Delbanco, executive director of the nonprofit.
In Catalyst’s most recent report in 2020, the group gave 34 states — including Pennsylvania — F grades for failing to enact any meaningful reforms.
That made Ms. Fisher’s successall the more improbable when she approached then-President Trump and his administration to move forwardwith the idea.
But after listening to her pitch, Mr. Trump embraced it and “was really on board with this,” said Brian Blase, a former special assistant for economic policy at the National Economic Council who helped craft the executive order in 2019 that led to the sweeping new rule.
It also came down to politics, said Mr. Blase: “Surveys show 90% of people support price transparency. The politics of it are very good, and Republicans often struggle on good politics in health care.”
First, the White House had to find the legislative power to enact such a rule through an executive order. It would turn to the Affordable Care Act — the federal law that expanded health care coverage under Barack Obama’s presidency — to justify forcing hospitals to post their prices online.
The irony that the Trump administration used a law that it had fought so hard to overturn in order to authorize a presidential executive order was not lost on those who worked on the rule, said Steve Parente, a senior economist for the Council of Economic Advisers during the Trumpadministration.
The executive order in June 2019 spelled out the two key requirements that hospitals were supposed to have on theirwebsites by Jan. 1, 2021:
• A consumer-friendly online tool that patients could search to find prices for 300 “shoppable” services — services that could be scheduled in advance, such as a CT scan or a blood test.
• A more expansive online machine-readable file of every negotiated price paid to the hospital by every insurer it had a contract with for in-network care, plus the list price, cash price, and the high and lowprices for those services.
From the beginning, the idea of requiring hospitals to display a machine-readable file with every price paid by every insurer “was intended to be transformative,” said Mr. Blase, now CEO of Blase Policy Strategies.
The goal was to entice Silicon Valley to pull together all the data to either resell or to make apps that could reach millions of consumers to find moreaffordable health care.
One of those firms is Turquoise Health, a company formed in October 2020 that has been downloading data from hospitals since the rule went into effect in January.
Because health care doesn’t currently have open price competition, “our hope is this really drives the market to market-based rates,” said Marcus Dorstel, Turquoise’s head of operations.
“You really can’t have one hospital across the street from another charging five times more. I mean, they can, but you have to back that up withsomething. If you’re best in class, higher quality, all that, sure that makes sense; you can charge that. But [price transparency] is really going to shine a light on a lot of that.”
‘Don’t want to put that out there’
Despite the new law, hospitals across Pennsylvania haven’t made it easy to shine a light on their prices.
In a review of the state’s 163 general acute care hospitals, the Post-Gazette found that 125 failed to comply, either in full or in part, with the new rule because either there is no data list, or they do not show all the prices, all the insurers or, in some cases, the list is simply undecipherable.
The worst compliance was by 23 of the hospitals that failed to provide one of the two critical online mandates: a consumer-friendly tool or a machine-readable file with negotiated prices.
Thirteen of those hospitals were among the smallest in the state, housing 50 or fewer beds, and four were categorized as “critical access” rural hospitals that get additional federal money to help keepthem open.
One of those facilities, Bucktail Medical Center in Clinton County, is working with a vendor to pull the data together, but, “It just becomes a daunting amount of
information to try to get through,” said administrator TimReeves.
“It’s an unfunded mandate,” he said, referring to the factthat the government does not provide any extra money, even for critical access rural hospitals, to display their numbers.
Still, he said: “Our intent is tofully comply.”
Bucktail is perhaps the state’s most isolated hospital, with no other such facility closer than 35 miles. With just 16 hospital beds, and an attached 43-bed nursing home, it provides the most basic care a hospital can provide and still be considered a hospital.
“Mymost advanced digital imaging equipment here is an X-ray machine. We’re in the process of getting a CT scanner,”Mr. Reeves said.
But other hospitals on the list of those who did not comply with the new mandate were not nearly as small or as financially challenged as Bucktail.
Lehigh Valley Health Network,which has six hospitals in the state, took in $3 billion and had $87 million in operating income last year, still has not posted machine-readable files with negotiated rates for services with insurers for its hospitals.
Its spokesman, Brian Downs, would not make someone available to answer questions but wrote in an email that “details about costs for patients are negotiated in long-term contracts with insurers that include confidentiality agreements that need to be addressed before we post this information.”
The Post-Gazette has spoken with health systems representing at least half the hospitals in the state about compliance issues, and Lehigh Valley was the only one to cite confidentiality pacts as a reason for not obeying the rule.
Experts said that any such concerns were eliminated when the American Hospital Association lost its federal lawsuit last year challenging theprice transparency rule.
After the AHA lawsuit failed, confidentiality clauses were no longer a viable defense, “which is why you see all those prices out there” fromother hospitals, said Mr. Dorstel,of Turquoise Health.
Asked in an email why the confidentiality agreements prevented data from going into the machine-readable files in wake of the failed AHA lawsuit, Mr. Downs did notrespond.
In other cases, the data posted by hospitals was close to useless.
One of those was Evangelical Community Hospital, a 132-bed hospital in Lewisburg,Union County.
While the Post-Gazette found that the single most common failure by hospitals was failing to list all or any insurers’ prices, Evangelical didthe opposite.
The hospital system created an unwieldy data dump of services provided last year instead of providing a clean list of rates that could be converted into a price list for everyday consumers or Silicon Valleyapp developers.
For example, there are 361 columnsdisplayed for various versions of just Aetna’s insurance plans and each one’s minimum, maximum and average allowable — a complicated format that makes it nearly impossible for consumersto compare rates.
Chuck Martin, Evangelical’s director of managed care, who oversaw the hospital’s price transparency efforts, said it decided to show a price for a service only if a specific insurance contract paid out a claim on that procedure in 2020, leaving all the othersblank.
“Our understanding was that [the federal government] wanted the exact amount paid,” Mr. Martin said. “That’s [the interpretation] wegot from all the vendors.”
However, the new federal rule says that hospitals should post all “negotiated rates” — not just those paid ina given year.
Evangelical’s insurance prices are typically based on a percentage of what Medicare would pay for those same services, but Mr. Martin but would not disclose how he ultimately reaches theamounts charged.
“I can’t get into what our contractedrates are,” he said. “I don’t want to put that out there.”
$300 a day?
The Centers for Medicare and Medicaid Services has released guidelines on how to complywith the rule.
But some experts say the government may have left too much to interpretation about exactly what and how datashould be posted.
For instance, there is no clear directive on where the hospital systems are supposed to post prices on their websites, which codes to use so the price of procedures can be compared and limited guidance on how the hospitals are supposed to specifically display their information.
“We’re trying to get CMS to make a standard file format and clarify with more guidelines in place for those files, so we can get some better data out there,” said Mr. Dorstel,of Turquoise Health.
Many hospitals would also like to see the rule be more explicit in what data should be posted, so they can show that they compete well with other hospitals on price and quality.
“To me that is the vision, what we are trying to get to. This is step one,” said NicholasBarcellona, chief financial officer for Temple University Health System in Philadelphia. “But the data out there needs to have more apples-toapples. It needs to evolve.”
While the hospitals are required to update the data on their websites once a year, a second step in the rule that goes into effect on Jan. 1, 2022, will require all insurers to post data monthly on what they pay hospitals for procedures.
Advocates say that for the new portion of the rule to work, there must be a stiffer punishment for those hospitals that fail to comply with the measure, rather than the current $300-a-day fine.
“The penalty is probably the most disappointing thing about” the rule, said Justin Leader, president of Benefits DNA, a health and welfare benefits advisory firm and an advocate for price transparency. “It’s kind of pathetic, just $300 a day. That’s only $109,000 a year. That is [the equivalent of] just two egregiously priced knee replacements.”
“I don’t think [compliance with the rule] is going to change unless the penalty is increased10 times,” he said.
Lobbying for more
Consumers First, a health care cost advocacy group made up of labor and health groups, along with Ms. Fisher’s group, Patient Rights Advocate, have lobbied the Biden administrationto change the penalty.
They would like to see it raised from $300 a day to $300 a day per bed, which would be a bigger hit to large health systems that have thousands ofbeds and millions of dollars in annual profits.
Both Mr. Parente and Mr. Blase said that since the rule was first conceptualized, hospitalshave fought its creation andnow its implementation.
“It’s clearly not something they advocated for, and they’d just assume it went away,” Mr. Parente said. Too many hospitals, including prominent ones, “are saying there’s a [$300-a-day] fine for noncompliance, and we’ll just pay the fine.”
Though it wasn’t officially included in the language, many advocates say that one other enforcement tool the rule had built into it was “shame.” If the $300-a-day penalty is so low that hospitals ignore it, said Mr. Blase, “I think at that point it’s really more at that point public shame that comes on hospitalsthat refuse to comply.”
Martin Gaynor, a professor of economics and public policy at Carnegie Mellon University who is an expert on health economics, said that pressure could come not just from news stories about who is failing to comply but also employers and local governments.
“There could be a sunshine effect that once it becomes public, that there’s public pressure on them,” he said.
The Post-Gazette has already seen some of that impact in the course of its reporting. While checking with every Pennsylvania hospital where the newspaper found compliance breakdowns, at least 22 either made changes to their data immediately or told the Post-Gazette they woulddo so in the near future.
“When does your survey go out, and what if I was to say we are going to change it and put the whole thing out there?” Johanna Weller, vice president of revenue cycle for Main Line Health system, asked after the newspaper pointed out the hospitals’ machine-readable file was virtually impossible to download.
Though the four Main Line hospitals have posted lists of how much insurers pay them for services, the data can only be downloaded one page at a time, showing 50 medical procedures. That means it would take nearly 8,700 separate downloads to gather the prices that all the insurers would pay for the thousands of services provided at all four hospitals.
The hospital did not want to make the data easily downloadable, Ms. Weller admitted, because of concerns that insurers would see each other’s prices and it would impact the hospital. She said on Tuesday that Main Line would make the change to be able to download each hospital’s file with one download byWednesday, which it did.
“It is a simple, and I mean a simple, switch to get the whole file downloaded as opposed to a page at a time,” Ms. Weller said. “We need to recognize that we need to be nimble and make modifications.”
In the cases where hospitals updated their information after being contacted by the Post-Gazette, they gave a range of reasons the information was not initially available. Guthrie Health System, which has three hospitals in northeastern Pennsylvania, added a full range of prices to its website just two days after the Post-Gazette asked about the omission, saying that “our team has implemented thisrequirement in phases.”
Penn State Health, which has three hospitals in central Pennsylvania, added prices for a number of insurance companies after the Post-Gazette inquired, saying that “it’s possible that some of the functionality … was not available while our vendor was performing maintenance the system.”
‘We embraced it’
Not every hospital saw the price transparency rule as a negative.
Among the 29 hospitals in the eight counties of southwestern Pennsylvania, all but one — Highlands Hospital in Connellsville — have partially complied, even though the two largest health systems in the region — Allegheny Health Network and UPMC — have yet to release pricing data for every contracted insurer.
Excela Health System, which has three hospitals in Westmoreland County, has viewed the price transparency rule as a chance to compete against its much larger rivals,UPMC and AHN.
“Excela Health has long believed prices should be public,” said Tom Albanesi, Excela Health’s chief financial officer. Once the rule was approved,“We embraced it.”
A big part of why Excela so willingly posted its pricing data, said Excela CEO John Sphon, goes to the goal of the rule.
“We think if you look at Excela’s pricing, it will help us [compete with other hospitals] when you look at the prices and our quality,” he said.
The Post-Gazette’s analysisof data in the region shows that Excela may have a case tomake with its customers.
In a review of the prices paid by insurers for the 70 shoppable services that each provider in the region posted online, 62% of Excela’s prices were lower than the median pricein the region.
By comparison, only 34% of UPMC’s prices were below the median, and 58% of AHN’s prices. Only Heritage Valley’s three hospitals, with 66%, and Advanced Surgical, with 71%, had more prices below the median in the Pittsburgh area.
Data first, then decisions
The big question about the new price disclosures: Will consumers or businesses use this information in the Pittsburgh area to make decisions ontheir health care?
There is some compelling evidence that organizations will turn to the new data to makethose decisions.
The Allegheny County Schools Health Insurance Consortium formed in the 1990s in the county to save money on health care. It has since grown beyond Allegheny County into surrounding counties and now has 70 school districts with 59,000 employeesand dependents as members.
The core of the consortium’s effort to save money has been to collect data on its own members’ health care bills at local hospitals, merge that with quality data on those facilities, and steer its members to the lowest-cost, high-quality option available in the region — the same goal that the price transparency rulewas created to reach.
“I love the idea that [price data] is now going to be available to the general public,” said Doug McCausland, finance director at Bethel Park School District and secretary of the trustees board for the consortium.
Five years ago the consortium said it found in its research that UPMC had significantly higher costs, and not significantly better quality, than other hospitals.
The most current data examined by the Post-Gazette shows a similar parallel in prices: Of the 29 hospitals in the region, UPMC is still typically more expensive than other facilities.
Among the 70 shoppable services — including blood tests, CAT scans and psychiatric services — UPMC regularly has the highest or one of the highest prices, whether it’s the list price, cash price or the negotiated price with an insurer.
Of the 56 services it had in common with other hospitals, UPMC had the highest negotiated price for 24 of those services, and one of the three highest prices for 39.
UPMC would not make anyone available to interview about its prices but wrote in an email, in part: “Charges are reflective of the total cost of providing clinical services at each hospital. This includes not only the direct costs associated with the procedure but also indirect organizational costs such as capital investments, teaching expense associated with an academic medical center, and staffing levels needed to support patient care.”
But will knowing any of this pricing data bring health care costs down in the Pittsburgh region, or anywhere?
Mr. McCausland, of the schools consortium, believes it will help everyday people.
“I think it’s highly likely that it will [bring prices down] just because in the Pittsburgh region we have these two very competitive systems within a close geographic area,” he said. “I just think with competition, when people become aware of what they’re purchasing [either as individuals or a group] it will force hospitals to be a little more competitive in the market.”
“Having that information is not a bad thing,” he said. “Everything we do today, every decision is data driven. And having that data at our disposal is really going to make us that much more educated and be able to hold those organizations accountable for the prices they’re charging.”