Many California hospitals are failing to fully comply with a state price transparency law, according to a RAND study published Tuesday, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 12/2).
The survey aimed to evaluate compliance with a 2006 state law (AB 1045) that requires hospitals to provide inquiring consumers with a written estimate of charges that an uninsured patient would incur based on services provided and length of stay.
Survey Details
For the study, RAND researchers sent letters to 353 hospitals across California posing as uninsured consumers. The letters asked for price quotes for a gall bladder removal surgery, a hysterectomy or a routine colonoscopy (Calvan, Sacramento Bee, 12/2).
Ninety-eight hospitals, or about 28% of those surveyed, responded to the RAND letters. Of the hospitals that responded:
- 55 provided partial estimates that covered hospital services but not physician payments;
- 18 hospitals did not specify what services their estimates would cover;
- 10 provided estimates for hospital charges and physician fees; and
- 15 of the responding hospitals did not provide any price estimates and instead asked for billing codes or other information (Clark, HealthLeaders Media, 12/2).
RAND did not release information about which hospitals provided price estimates. However, researchers noted that not-for-profit hospitals responded to the letters at higher rates than for-profit hospitals.
Price Disparities
In addition to evaluating price transparency, the RAND survey also attempted to check whether hospitals were complying with a state law (AB 774) that caps the amount they can charge low-income individuals for medical services.
The researchers found a wide variation in the amount hospitals quoted for various procedures. Many of the estimates were significantly higher than the mandated price caps.
However, the researchers noted that their inquiry letters did not include information about the fictitious patient's income.
CHA Response
Jan Emerson, spokesperson for the California Hospital Association, said RAND's failure to include income data in the hospital letters suggests that the study has major flaws (Sacramento Bee, 12/2).
For example, Emerson said that it was unfair to criticize responding hospitals for not including physician fees in their estimates because state law bars hospitals from billing for physician services.
In addition, Emerson criticized the study for trying to assess compliance with both the state law on price transparency and the law that caps prices for low-income patients. She explained, "Hospitals do not provide estimates based on discounted fees because the discounts are only applicable to patients who meet specific financial criteria" (HealthLeaders Media, 12/2).
Emerson did not provide a reason for the low hospital response rate to the letters (Sacramento Bee, 12/2). However, she noted that most of the billing information requested by RAND is available online through California's Office of Statewide Health Planning and Development (San Francisco Chronicle, 12/2).