Transparency rules may even out hospital prices
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Federal price transparency rules are showing signs of stoking more hospital competition and making prices more reflective of the cost of care, a new review found.
Why it matters: There's still limited understanding of how the rules are affecting market dynamics, and experts acknowledge they haven't yet translated to lower across-the-board patient costs.
The health pricing platform Turquoise Health examined more than 390,000 rates that health systems negotiated with insurers for 37 common services in the 10 biggest U.S. metro areas.
- "We're still in the early days, but we see encouraging signs that price transparency is helping make progress" rebuilding health care competition and lowering some prices, said Forrest Xiao, the company's director of quantitative research.
Yes, but: Private health insurance on average pays hospitals 2.5 times what Medicare does for the same services, with some states seeing relative prices of more than 3 times greater, a RAND report concluded this spring.
- There's also concern that private equity firms are buying up more and more facilities and posting higher charges than non-private equity facilities.
Catch up quick: Hospitals have been required to post their insurer-negotiated rates for common health services online since 2021, following a Trump administration push to make health care prices more transparent.
- But the industry has been slow to comply.
What they found: Top-tier rates above the 75th percentile are declining by 6.3% annually, while rates in a middle band are decreasing by about 1%.
- The lowest rates, at or below the 25th percentile, are increasing by 3.4% each year.
- A trend showing prices moving to the middle and becoming more uniform in theory means they're becoming more reflective of the true cost of care, the report said.
Zoom in: Transparent pricing has affected prices for outpatient services more than inpatient care, per the analysis, with radiology and lab services prices converging the most.
- One potential reason is that patients can shop for outpatient services more easily than for acute care.
- The review covered rates posted between December 2021 and June 2024.
The intrigue: Prices started to converge in more than 80% of the markets Turquoise Health examined in its analysis.
- But in places where they didn't, rates actually decreased across all market segments, with lowest prices showing the most change.
