Does price transparency legislation allow the uninsured to shop for care?

Background: The majority of states have enacted price transparency laws to allow patients to shop for care and to prevent price discrimination of the uninsured. In California, hospitals must provide a price estimate to a requesting uninsured patient and cannot bill for an amount greater than the reimbursement the hospital would receive from a government payer.

Objective: To assess the response rate of California hospitals to a patient price request and to compare the price estimates received to Medicare reimbursement.

Design: We sent letters to California acute-care hospitals from a fictional uninsured patient requesting an estimate for one of three common elective procedures: a laparoscopic cholecystectomy, a hysterectomy, or routine screening colonoscopy.

Participants: Three hundred and fifty-three hospitals in California.

Measurements: Hospital response rates, difference between price estimates received, and Medicare reimbursement for equivalent procedures.

Results: Only 28% (98/353) of hospitals responded and their response varied in content. Of the 98 responses, 15 (15%) did not provide a quote and instead asked for more information such as the billing code, 55 (56%) provided a price estimate for hospital services only, 10 (10%) included both physician and hospital services, and 18 (18%) did not specify what was covered. The median discounted price estimate was higher than Medicare reimbursement rates for all procedures: hysterectomy ($17,403 vs. $5,569; p<0.001), cholecystectomy ($14,014 vs. $7,196; p<0.001) and colonoscopy ($2,017 vs. $216; p<0.001).

Conclusions: Current California legislation fails to meet its objective of enabling uninsured patients to compare prices for hospital-based health care services.