News: Cash prices for hospital services often lower than payer-negotiated rates, study shows

A study published by the Journal of the American Medical Association (JAMA) Network Open found that discounted cash prices for common hospital services were often lower than the payer-negotiated rates for the same services. Authors of the study noted they expected the cash price to be more costly than negotiated commercial prices, yet the findings contradicted their expectations.

The study found that 38.4% of hospitals had cash prices below their median negotiated commercial prices for liver function tests. Similarly, 68.5% of hospitals in the study set cash prices below their median negotiated commercial price for cesarean delivery.

Hospitals that set their cash price below all of their commercial negotiated prices ranged from 7.1% (for manual urinalysis test with examination using a microscope) to 25% (for routine obstetric care for cesarean delivery), making a mean of 13.7%.

For procedures, between 0.6% and 4.3% of hospitals set their cash price exactly equal to their lowest commercial negotiated price for a mean of 2.7%.

Though the study was released to reflect the Price Transparency Final Rule effective on January 1, 2021, it was found that compliance remains inconsistent. Only 922 of the 5,395 hospitals reviews disclosed both their cash and commercial negotiated prices for the 70 CMS-specified services. The study notes that “more expensive services were less likely to be disclosed, which might suggest strategic disclosing decisions. Some hospitals set their cash price comparable to or lower than their commercial negotiated price.”

According to the study, “to the extent that more hospitals will disclose prices to comply with the Hospital Price Transparency Final Rule, the cross-hospital variation of cash prices will likely increase.” Authors state that the study was unable to identify factors or outcomes associated with the cash price variation, and because the results of the study were limited to the 70 CMS-specified services, findings should not be generalizable to all hospital services.

Editor’s note: The Journal of the American Medical Association (JAMA) Network Open study can be found here. More ACDIS coverage of the Hospital Price Transparency ruling can be found here.