Nobody’s enforcing that law,’ says Fat Joe in a TV ad about hospital price transparency requirements. KHN fact-checked the claim.
Rapper Fat Joe takes on hospital industry executives in an advertisement, contending that many hospitals are disobeying a law that requires them to publicly post the prices they charge cash-paying patients and insurance companies for every service they offer.
The ad, paid for by a group called Power to the Patients, states, correctly, that hospitals must list their negotiated prices and asserts that the rule helps patients by making it harder for them to be overcharged. The ad also blames politicians and regulators because the price information is still not necessarily available.
“Nobody’s enforcing that law,” Joe alleges in the foreboding commercial, which began running on television and social media in April and is still airing.
The ad reflects a desire for accountability as policymakers increasingly view price transparency as a tool to bring down health care costs. And because the law requiring the posting of prices went into effect more than a year ago, we decided to take a look: Is anyone enforcing it?
Turns out there is some enforcement, although the process is more complicated and slower-moving than some observers would like.
Some Background on Transparency
Under rules that took effect in January 2021, the nation’s more than 6,000 hospitals must post online the rates they’ve negotiated with every insurer for every service, from appendectomies to X-rays, as well as the prices they charge cash-paying patients.
The requirement, which the hospital industry unsuccessfully went to court to stop, stems from the Affordable Care Act and an executive order from the Trump administration. Failure to post the required price information can result in fines of $300 a day, recently increased by the Biden administration to as much as $5,500 a day for the largest hospitals.
The idea behind the rule is that consumers, including employers who pay a large chunk of the health insurance bills in the U.S., can use the information to shop for less expensive hospital care, which, in turn, might slow spending or reduce prices. At a minimum, the thinking goes, it will help patients know in advance what to expect. In July, even broader rules went into effect for health insurers, which must post almost all the prices they’ve negotiated — not only with hospitals but also with every other kind of medical facility they contract with, as well as doctors.
Hospitals have dragged their feet, and compliance is spotty. Studies have found that many hospitals have posted at least some data but that large shares of the facilities have failed to post everything required.
What About Power to the Patients?
The website of Power to the Patients, which is behind the ad and a broader campaign about health care costs, refers questions to an associated organization, Patient Rights Advocate. It is a nonprofit started by businessperson Cynthia Fisher, who founded two companies and serves on the board of the Boston Beer Co. According to Fisher, she is also the primary funder of Power to the Patients, which she described as a communications organization that has applied to the IRS for nonprofit charity status.
In an interview, she cited no specific sources for the claim that no one is enforcing the law, but Patient Rights Advocate has released two related reports, the most recent of which said only 14.3% of 1,000 hospitals it reviewed had posted all the prices the law requires.
She praised both the Trump and Biden administrations for focusing on price transparency, but she said the Centers for Medicare & Medicaid Services had not evaluated enough hospitals or moved fast enough to sanction those that have not complied.
What About Enforcement?
When the ads began running in April, 15 months after the requirement went into effect, regulators had not fined any hospitals.
In early June, CMS issued penalty fines of about $1.1 million against two Georgia hospitals — Northside Hospital Atlanta and Northside Hospital Cherokee — that are owned by the same company. Those were the first fines issued under the new rules.
As of late July, the agency had sent 368 warning notices to hospitals and issued 188 corrective action plan requests to hospitals that had previously received warning notices but had not yet corrected deficiencies, according to a statement from Dr. Meena Seshamani, deputy administrator and director of the Center for Medicare.
“CMS is actively enforcing these rules to ensure people know what a hospital charges for items and services,” Seshamani said in the statement.
But enforcement is neither a quick nor an easy proposition. Each step in the process gives both sides time to work out the details, said Ariel Levin, director of coverage policy at the American Hospital Association.
The first step is the warning letter, which outlines the suspected violation, such as not having an accessible file on the website or not including negotiated prices or cash rates.
Hospitals have 90 days to respond. For example, Levin said, a hospital might explain that its files have some blank spots because it has not negotiated rates for a particular service with a particular insurer.
“If CMS deems the response appropriate, the case is closed,” she said. “If CMS wants more information or doesn’t think it’s right, that’s when the corrective action plan comes in.”
Fines are usually the last step.
The nearly year and a half that went by before the first fines were issued wasn’t that long, Levin said, considering that both hospitals and regulators faced a learning curve as far as what the files should contain, that hospitals were given time to resolve technological problems and challenges related to posting the pricing information, and that hospitals were stretched thin because of the covid-19 pandemic.
Still, the lag triggered impatience.
“Some stakeholders have been frustrated by the slow pace of the enforcement,” said Katie Keith, director of the Health Policy and the Law Initiative at Georgetown University Law Center.
Even so, “I don’t think it’s fair to say no one is enforcing” the law, Keith said. CMS has “issued monetary penalties against the two hospitals in Georgia, which they don’t do very often, and there have been hundreds of warning letters notifying hospitals that they have to fulfill their obligations.”
Warning letters are a good step but “need to be followed with meaningful enforcement,” said Elizabeth Mitchell, president and CEO of the Purchaser Business Group on Health, which represents large employers that offer health insurance and has long sought more easily accessible price information.
And with more than 300 warning letters issued, Mitchell expects “there will likely be additional fines because we’re not seeing a readiness to comply.”
Does Price Transparency Matter?
Power to the Patients has thrown its resources into the campaign — Fisher said the ad “cost millions,” for instance — because they expect price data to unleash more competition in health care. Consumers will “have choice, save money, and make their own health decisions based upon knowing prices,” Fisher said.
But that’s not a given, say policy experts, noting that price data alone may not sway patients, who often seek care from providers their doctors recommend and mostly don’t use the shopping tools already available. And until the enormous data files from the hospitals and, more recently, the insurers go from simply being publicly available to being accessible in consumer-friendly formats, they will be difficult for the average patient to use, Keith and other experts said.
“This idea that it will unleash a consumer revolution has not yet come to pass,” Keith said.
Hospitals have taken their time in posting the required price information. Many still need to provide some, or even all, of what is required. And the enforcement process has proved to be time-intensive and bureaucratic.
However, the transparency directive is a first-of-its-kind rule, so a learning curve was to be expected, for both hospitals and regulators, as they figured out the types of data required and the format in which the information was to be posted.
Although it is correct to say that the enforcement has been slow and spotty, experts maintain that ramping it up takes time. And when the ad first aired this spring, enforcement was especially lackluster. However, the ad continues to run unaltered, even as enforcement efforts have started to show signs of gaining steam. In other words, the statement is partly accurate but leaves out important context. We rate this Half True.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.
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