For decades hospitals have been increasingly incentivized to inflate the total gross prices reflected in their chargemaster lists as a means to negotiate higher payments from their in-network insurance providers. These gross rates rarely reflect the actual, end-of-day cost for consumers who, even in the case of the uninsured, will often benefit from “cash discounts” in lieu of being billed for the full gross chargemaster rate.

The new rule received significant pushback from the American Hospital Association (AHA) which, among a consortium of various other hospital associations and medical providers, lost on appeal of a district court decision against their legal challenges to the rule. The challenges raised by the plaintiffs varied in merit, but one prominent issue raised by the AHA is their concern that due to the complexity of medical billing information, further transparency as prescribed by the rule would “confuse and frustrate” consumers, and potentially cause more delay and avoidance of necessary care, which may result in poorer health outcomes and lead to higher healthcare costs over time rather than reducing them.

However, this assertion is belied by the prevailing view of economists that price transparency and otherwise empowering consumers to take cost more into consideration while shopping for services, leads to increased price competition for services and depresses or controls healthcare costs over time.

For instance, areas of medical care in which consumers have historically not qualified for health insurance, thereby leaving consumers more directly responsible for their medical bills, such as medically unnecessary elective procedures, have observed much more modest price inflation relative to the overall healthcare market.

Although, among such heavily regulated industries, there is always substantial uncertainty regarding potential unintended consequences of any new regulation. Affected companies often find compensatory ways to neutralize or even capitalize on a new rule in a way that is contrary to its intended purpose. Until further compliance can be achieved, how more price transparency may ultimately effect or reshape the healthcare landscape remains open to conjecture.

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