Price transparency is critical to creating a more efficient and cost-effective healthcare market that gives patients and consumers greater control over their personal healthcare spending. In our March 2025 blog post on price transparency, we identified several ways that the Centers for Medicare & Medicaid Services (CMS) can improve health plans' price transparency data. Here, we describe a few actions that CMS can take to make hospital price data more accurate and consumer friendly.
Even though CMS’s Hospital Price Transparency rules went into effect on January 1, 2021, hospital price transparency remains a work in progress. Hospitals are required to establish and maintain a consumer-friendly display of pricing information for up to 300 shoppable services and a machine-readable file with negotiated rates for every service the hospital provides. Hospitals have voiced frustration with reporting requirements, and CMS’s enforcement actions show that hospitals continue to struggle to respond.
At the same time, a lack of clear data standards, incomplete data, and inconsistent file formats across healthcare organizations make it challenging to create meaningful price comparison tools. President Trump’s executive order (EO) on price transparency, issued on February 25, 2025, mandates actions to address these challenges and gives CMS 90 days—by May 26, 2025—to implement the new requirements for price transparency.
To implement EO’s requirements, considerations of operational feasibility and meaningful usability are paramount to support successful outcomes for consumers, the healthcare system, and government regulators. Refined regulations—and the new processes they will require—will need to acknowledge the technological and operational constraints of pricing hospital services in the market. At the same time, the regulations will need to drive improvements in how consumers, developers, and regulators can easily access and evaluate available information. We discuss how CMS could implement each part of the EO below.
Define “actual prices”
The EO requires “the disclosure of actual prices of items and services, rather than estimates.” A fundamental challenge, however, is to define what “actual prices” means in a consistent and clear manner. Only with a shared definition of “actual prices” will hospitals have a chance of being compliant, consumers be able to actually use price transparency information, and regulators be able to monitor and oversee the requirements effectively.
Experience with price transparency to date suggests that it is challenging to compare data across hospitals in a meaningful way. Even after recognizing that hospitals negotiate different prices for the same service with different payers and plans, there are reasons why a hospital’s “actual price” for a service and patient may vary. For example, prices for services can vary even within specific payer contracts if they are based on algorithms or percentages—such as volume-based discounts—rather than fixed value, and, for hospitals reimbursed by payers on a per diem basis, a patient with no comorbidities may have a significantly shorter length of stay for the same inpatient procedure than a patient with multiple comorbidities.
In addition, many consumers will not understand that, typically, the hospital’s “actual price” is only one part of the total price they and their insurance plan will need to pay. For example, the physicians treating the patient will bill for payment separately. If the hospital has not negotiated the physicians’ prices, it will not have this information.
CMS’s implementation of the current EO must account for the multiple variables and operational barriers that make it challenging for hospitals and health systems to determine and report a meaningful “actual price” for each service. Considerations to improve usability of the information may include requirements to share more context and details within a standardized, clear definition of “actual prices.” Potential options might include the following:
- Defining the list of services included in the price (for example, listing any ancillary services that are included)
- Requiring hospitals to include language with the data that clearly explains what part of the quote is based on the hospital’s prices versus external provider prices (for example, professional fees), and reasons why the price may change
- Defining a time frame for which the actual price is valid or require hospitals to define and share publicly when the price posted is valid and when changes may be expected to that price
Standardize pricing data
The EO requires that CMS issue additional guidance to ensure that “pricing information is standardized and easily comparable across hospitals and health plans.” Data standardization within a clear “actual price” definition is an essential step to making data comparable. Further, prices are most comparable when they are for the same service that includes the same set of components and ancillary services furnished at the same type of facility by the same type of clinicians.
To do this, CMS could collaborate with hospitals, clinicians, and coding experts to specify a standard set of service components, identified by a prespecified collection of Current Procedural Terminology codes, or CPT codes, for a given set of services (for example, the 300 shoppable services) and codify that set of service components in standardized reporting requirements. This set of codes with standard components and “actual price” standardization formulas would be public. Each hospital’s published price would include the standard components, creating a foundation for apples-to-apples comparisons that are currently elusive. Over the past decade, payers and hospitals have increasingly constructed and used episode-based bundled payments for alternative payment models and quality improvement initiatives and could leverage that expertise to build prices that, by bundling a standardized set of commonly combined granular services for a shoppable service, are simpler to interpret and compare.
If a hospital’s service set includes components outside of CMS’s definition of the standard set of services, those could be listed as additional line items, each with a separate price, and added to the total price of the service.
Conversely, if a hospital or health system’s standard offering does not include items that are part of the CMS-defined set of services, those line items could be listed explicitly as exclusions, with each line priced, and those prices subtracted from the price for CMS’s standardized bundle.
Implement robust validation and auditing mechanisms
Finally, the EO requires that enforcement mechanisms be in place to ensure reporting of “complete, accurate, and meaningful data.” CMS already monitors hospitals for compliance with the timelines, processes, and data formats. Yet validating the completeness and accuracy of the pricing data has been challenging, according to the findings of a 2024 U.S. Government Accountability Office report on healthcare transparency. To address the EO, CMS could incorporate additional validation activities into its monitoring and oversight efforts that focus on data accuracy in addition to the identification of missing or incomplete data.
The standardization of data is a prerequisite to implementing data validation. Other federal government healthcare programs (such as implementing Medicare Alternative Payment Models) have successfully deployed validation methods by leveraging the power of standardized data. A move toward a greater bundling of discrete services for each shoppable service would further facilitate compliance monitoring.
Assuming that the data are standardized, CMS can validate the data through cross-entity comparisons as well as comparisons between health plan and hospital prices. CMS would also be able to quickly identify outlier organizations and identify prices that are too high or too low for a given set of services relative to other organizations. To verify published prices, price transparency compliance and oversight protocols could incorporate auditing of outlier organizations and a random sample of hospitals. Stratified randomized sampling can efficiently select organizations to audit: hospitals can first be separated into groups by geography, number of beds, volume of services (that is, different strata), or some combination of these, and then randomly be selected for audits from each group. In addition, audits with targeted investigations could be triggered by stakeholder complaints.
The future of price transparency
Consumers need accurate and valid healthcare pricing data to make informed choices about their care. CMS can deliver on the promise of the EO by creating simpler and better-defined standardized prices that facilitate comparison and robust compliance monitoring. Such actions will move us closer to the day when consumers can confidently use price information to drive informed healthcare decisions.
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