The Centers for Medicare & Medicaid Services (CMS) recently issued a final rule requiring hospitals to release pricing information before providing services. Under the rule, hospitals must list standard prices for 300 “shoppable services” as well as the lowest prices they will accept from cash-paying consumers. According to CMS Administrator Seema Verma, the new price transparency rule will help patients by boosting quality and cutting costs.
With this move, the Trump administration is committing to the theory that cost transparency will lower health care costs by enabling consumers to “shop and compare” hospital services. In our view, the new price transparency rule is a superficial and naive approach to health care reform. Arguably, hospitals will have to put more energy into complying with the rule than taking constructive actions to improve quality and access while reducing costs.
In this article, we analyze the main problem with price transparency in health care, explore how it will impact the existing health care system and spell out nine effects to expect from the new rule.