LA GRANDE — The long-awaited hospital price transparency laws have taken effect on the national level, following a landmark bill by the Trump administration requiring hospitals to post their negotiated rates that insurers pay for typical procedures.

For Oregon, it’s too little too late. In 2015, the Oregon Senate passed a law requiring hospitals to post the prices they paid for procedures to the All Payers, All Claims Reporting Program. Analysts at the Oregon Health Authority used the data to make reports about the prices of common procedures.

The prices were all over the map.

Arthrocentesis — removal of fluid from a socket or joint — can range from $370 to $4,921 at Good Shepherd Medical Center in Hermiston and costs between $947 to $1,091 at Grande Ronde Hospital, La Grande.

Tonsil removal, another common procedure, costs between $8,018 and $10,281 at Grande Ronde, while an hour drive northwest to CHI St. Anthony Hospital in Pendleton the procedure runs from $6,740 to $7,295.

Hospitals argue that each patient is different, and the care they receive is indicative of the unique challenges diagnosing and treating patients.

“You might go in thinking that it’s a $20,000 inpatient surgical procedure and then you might get a bill for $40,000 because you have implantables, pharmacy, ultrasounds and the like,” said David Bittner, vice president and chief revenue officer at Trinity Health, which owns the St. Alphonsus chain of hospitals in Eastern Oregon and Idaho.

But even procedures that offer little variation in execution can have dramatic variations in price.

An MRI for the head and spine costs $217 at Good Shepherd in Hermiston, according to the All Payers, All Claims data. That same procedure would cost $2,306 at Grande Ronde Hospital.

“There appears to be no rhyme or reason behind how hospitals price their procedures,” said Jeremy Vandehey, director of Health Policy and Analytics at OHA. “A normal birth with no complications,” Vandehey continued, “can vary a lot; so one hospital may charge $5,000 while another charges $15,000.”

That remains true for several other procedures as well, and it’s especially true in Eastern Oregon, where Type A hospitals — hospitals that are more than 30 miles away from each other — are typically the only source of health care for rural residents.

“When you have several payers competing for one hospital, they become price takers,” Vandehey said.

Market power

The intended effect of price transparency was to introduce healthy competition to a marketplace that had long been shrouded in secrecy. But Rajiv Sharma, a health economics professor at Portland State University, said market power plays a big role in pricing.

“If insurance companies are faced with one or two big hospital chains, then they don’t have very much negotiating power,” she said. “That’s true in rural areas where there is only one hospital.”

And without that market power, hospitals have no incentive or need to lower their costs. But if price transparency doesn’t have the ability to lower prices, then what entity or law could?

“The way that health insurance has been lowered has been through negotiation with powerful entities, such as Medicare or Medicaid,” Sharma said.

For the average consumer, Sharma admitted, the ability to influence prices of health care is low, and the patients mostly rely on their physician to make choices for them regarding their health care.

“(Health care prices are) very inelastic because your life and your health is at stake,” Sharma said, “and because consumers rely on professionals rather than their own judgement to make choices.”

Succinctly, a patient who needs an appendectomy isn’t likely to spend their precious time deliberating over prices when their life is in danger — they’ll go to the nearest hospital and face the consequences of payment later.

But for other procedures, such as diagnostic testing, the outcome isn’t as clear; even less clear is the notion that consumers would use price transparency to their advantage.

“There is a lot of chatter about, ‘Oh, if I knew about the price I would actually price-shop,’” said Atul Gupta, an assistant professor of health care management at University of Pennsylvania during a university podcast on health care transparency. “The evidence suggests that a very small fraction of people who have that tool available to them actually use it.”

“Price transparency is a great concept in principle,” Sharma said, “but is incredibly hard to implement in practice.”

Following the laws

Most hospitals in Eastern Oregon follow the laws regarding price transparency — all hospitals in the region have price comparison tools readily available to patients on their web portals allowing them to compare prices between typical procedures. Compliance with the full extent of the law, however, is less than ideal.

Out of the seven hospitals that serve most of Eastern Oregon, only four follow the second requirement of the transparency laws, and completely forgo a machine-readable file.

And the consequences for ignoring the law are minor; the Centers for Medicare and Medicaid Services, which oversees the price transparency laws, is allowed to fine hospitals up to $300 per day for noncompliance. For a full year, this works out to just more than $100,000. CHI St. Anthony Hospital in Pendleton, in comparison, on its 2020 tax form reported revenue exceeding $18.7 million.

CMS officials are proposing to stiffen those fines to a minimum civil monetary penalty of $300 per day that would apply to smaller hospitals with a bed count of 30 or fewer, according to the center, and apply a penalty of $10 per bed per day for hospitals with a bed count greater than 30, not to exceed $5,500 per day.

That would raise the maximum penalty for noncompliance to just above $2 million. But even with a heavy fine, some hospitals are unsure about what that machine-readable file would entail, and whether or not that information would be of particular usefulness to analysts and app developers.

“The challenge with the machine-readable files is that the definitions of those are different depending on the hospital,” Bittner of Trinity Health said. “Without common definitions, then the comparability of that information is significantly lacking.”

Information overload

Further, Sharma contended that for the average health care consumer, price transparency is rendered nearly ineffective due to the volume of information required to make informed choices regarding care.

“The informational requirements on patients is enormous,” Sharma said. “Even if you had perfect price transparency, and even if that transparent price was incredibly well customized, there is still so much uncertainty regarding exactly what would be required, that it would be difficult to sort through these possibly hundreds of price combinations for the five or six hospitals that are reasonably available.”

Bittner said hospitals in the Trinity Health system, such as St. Alphonsus in Baker City, are working toward increasing price transparency across the board to help its members become better informed about the prices they pay for services.

Whether or not price transparency will help lower costs, however, remains the question.