The Rule as it Stands Today:

The CMS rule for improving pricing transparency for patients, which was first announced in November of 2019, took effect January 1, 2021. The much-publicized rule, which survived a court challenge by the American Hospital Association, requires that health systems:

  • Disclose standard charges, including the gross charges, payer-specific negotiated rates, the amount the hospital is willing to accept in cash from a patient, and the minimum and maximum negotiated charges for 300 common shoppable services 
  • Display charges in a manner that is patient-friendly and update the information at least annually in a prominent online location
  • Make rates available in a comprehensive machine-readable file that includes common billing or accounting codes used by the health system, such as Healthcare Common Procedure Coding System (HCPCS) codes, and a description of the item or service to allow patients to compare standard charges from hospital to hospital

How Helpful is the Price Transparency Rule?

Price transparency and patient empowerment are worthy goals in medical economics. However, there remain long standing challenges for patients. Medical bills are filled with technical terminology, loads of confusing acronyms, and long strings of medical codes. 

Meanwhile, health insurance terms and benefits are not always clear to patients either. A patient’s true out-of-pocket cost is dependent on many factors. This includes the patient’s insurance coverage information, remaining annual deductible and out-of-pocket maximum. Yet, only 36% of Americans could correctly define what a copay, deductible and premium are, according to a recent survey by Policygenius. The survey also found that 13% of Americans were unsure if they had health insurance at all. 

Given the current state of financial literacy as it relates to healthcare expenses, how helpful is the price transparency rule for patients? 

Here are the challenges the current rule does not address:

1. Some patients may not know the new price transparency tools even exist or where to find them.

An anonymous physician identified only as Dr. Jayne writing on HIStalk – Healthcare IT News & Opinion – reported his recent experiment to test the new price transparency online tool at his local hospital’s website. 

The tool was considerably difficult to navigate to. 

“I first went to the hospital website. Of course there wasn’t any kind of notice about the availability of the new data, so I had to guess where it might be filed. Clicking on ‘Billing and Financial Assistance’ took me to a health system website, and after scrolling two full screens, I found an ‘Understanding Your Costs’ header.”

2. The standard prices listed on a hospital’s website don’t tell patients how much they actually could owe. 

A big disconnect for patients is that their insurance coverage, including their annual deductible and out-of-pocket maximum impact the patient’s true out-of-pocket cost. Yet, many patients do not know what these terms mean or how they impact the cost of their care. 

Another disconnect for patients is trying to understand what’s in-network and out-of-network. Let’s use knee replacement surgery as an example. A surgeon, anesthesiologist, and a hospital might be in-network, but a second physician brought in to assist – without the patient’s knowledge – will charge out-of-network, at least until the No Surprises Act, which aims to prevent surprise medical bills takes effect in 2022. Also, new pharmaceutical treatments can be expensive and are more frequently “carve-outs” with higher out-of-pocket costs to the patient. 

3. Prices vary widely, which could exacerbate cost concerns.

The price transparency rule has also revealed huge variations in prices across health systems for standard procedures and services. For example, the average price of an MRI can vary by more than $500. Patients are left wondering why prices are so variable and worsen their concerns about cost. Additionally, shopping for care based on price alone does not account for other relevant information, such as quality of care data, that may help a patient make a decision about their treatment.

Why Solving the Price Transparency Riddle Matters

The COVID-19 pandemic has severely impacted healthcare operations and finances. The American Hospital Association announced in a February 2021 report that 41% of patients skipped medical care during the pandemic. However, vaccines aren’t enough to get people back to hospitals for needed care. 

Hospitals must include financial strategies in their response because:

  • Medical bills are a source of extreme stress. Healthcare expenses are especially concerning for those who have lost their income and insurance due to the COVID-19 pandemic. A recent Pew Research Center survey finds that, overall, 1 in 4 adults say they or someone in their household was laid off or lost their job because of the coronavirus outbreak. Meanwhile, nearly 15 million Americans have lost their health insurance as of October. 
  • A better patient financial experience gives hospitals a competitive advantage. A 2018 industry study found that when patients are satisfied with their billing experience, they will pay their bills 75% of the time compared to only 50% when they have a bad experience with the business office. Hospitals can increase their revenue by solving billing and payment dissatisfaction. A better financial experience also enhances patient satisfaction and loyalty. Furthermore, it increases the likelihood a patient will return to their provider, rather than seeking a new one, next time they need care. 


 A 2019 study concluded that: 

Strong financial performance is associated with improved patient reported experience of care, the strongest component distinguishing quality and safety.” 

Offering greater price transparency is crucial to get patients back in for care. It will also help jumpstart the healthcare industry’s recovery from the COVID-19 pandemic. However, this recovery requires surpassing basic compliance requirements and instead, taking a truly patient-centric approach to price transparency.

How to Close the Gap Between Patient Expectations & Today’s Price Transparency Rule

Health systems should consider the following opportunities to address the gap between patient expectations and the price transparency rule as it stands today. 

Challenge #1:

Patients are often unaware of existing price transparency tools or do not use them.

Opportunity #1:

Hospitals have the power to address this by engaging with patients in a more proactive and personalized way, rather than waiting for the patient to figure it out. With Patientco, a health system can deliver pre-service price estimates to patients through the channels they prefer, including through email or text message, using empathetic, easy-to-understand language. For health systems that send appointment reminders, Patientco can integrate price estimates with reminders. This integration allows patients to receive one message with all the information they need upfront. As a result, patients don’t have to search through chargemaster prices on their hospital’s website to calculate their out-of-pocket cost. 

Challenge #2:

The price of a procedure listed on the hospital’s chargemaster is often different from the patient’s actual out-of-pocket cost. 

Opportunity #2:

Price estimates should be tailored to the patient. Patients often do not feel qualified to calculate their costs using a chargemaster and their insurance coverage information. Instead, true price transparency requires tailored price estimates that explain what patients owe and why they owe that amount. Patientco’s pre-service features support this and makes it easy for the patient to understand their financial responsibility. To illustrate, Patientco embeds patient-friendly definitions for terms like co-pay, deductible and more so that patients truly understand their estimate, how their insurance fits in, and why they owe what they owe. 

Challenge #3:

Prices are all over the place, which can create added cost concerns. One analysis found as much as a 297% variation in gross charges for the same procedure nationally. 

Opportunity #3:

Embed affordable, self-service payment options within price estimates. This can help alleviate patients’ cost concerns upfront so they don’t delay or skip care. Most patients want to pay their medical bills, but they need more flexible payment options, as deductibles have skyrocketed over the last decade.

With Patientco, health systems can allow their patients to sign up for a payment plan with monthly payments that work for their unique financial situation. In addition to payment plans, patients can make a down payment on their estimated bill balance and get billed for the remaining balance after treatment. These features empower patients to easily plan their budget and set up payment arrangements before receiving care. 

Looking Ahead

As patients become more accustomed to greater price transparency in healthcare, health systems should consider differentiators, beyond price, to stay ahead of the competition and earn patients’ loyalty. 

For instance, providers should consider ways to link outcomes quality data with their pricing. In an extreme life and death example, a 2016 study found that heart attack patients would drive almost two miles further to a hospital with a higher risk-adjusted survival rate.

Health systems can enhance price transparency efforts by coupling pricing information with quality-of-care data. After all, healthcare is not simply about who can provide the cheapest treatment, but rather, who can provide the highest quality treatment at the best value. 

Those Who Bridge the Price Transparency Gap Will Emerge as Market Leaders

By addressing the challenges that the current price transparency rule doesn’t solve, healthcare organizations can:

  • Drive greater patient loyalty across their enterprise, increase revenue, and lower collection costs. 
  • Empower patients in making informed healthcare decisions, which also increases patient satisfaction and loyalty.
  • Deliver on the promise to care for the community they serve. Finances should not be a barrier to patients seeking and receiving the care they need.