Why U.S. healthcare pricing laws will fail without real penalties – Healthcare Blog

Chinelo Grace Chigozie

There is a health care cost issue in the United States that everyone knows, but no one talks about it publicly. The same amount of medical costs has been different for decades. Hospitals on each other’s streets may charge five times more or less for exactly the same thing. Patients cannot find out the actual cost in advance. Even many insurance companies don't know the actual rate. Two recent laws have tried to resolve this issue. The hospital price transparency rule will come into effect in 2021. The “No Surprise Act” will come into effect in 2022. These laws have two main objectives. First, they need healthcare providers to share their actual prices. Second, they aim to stop some unfair billing practices.

On the surface, these measures should have changed the market. Patients will “shop” for cheap care. Providers will compete to lower prices. The insurance company will negotiate with actual market benchmarks. But for three years, the impact has been dispersed and superficial. Inconsistent compliance. The prices of ordinary consumers are still incomprehensible. In some markets, transparency even leads to higher prices. The main problem is that there is not enough punishment in the law.

Transparent Phantom

CMS is a government agency. It checks whether hospitals comply with hospital price transparency rules. If the hospital violates the rules, the hospital can fine between $300 and $5,500 per day. The fine depends on the size of the hospital. This sounds serious before considering the size: The average fine in 2022 accounts for about 0.49% of hospital revenue. This is a rounding error for large systems with a multibillion-dollar budget. Many hospitals can easily afford small fines and continue to violate the law. Many people do this. The April 2023 CMS report shows that 70% of 600 hospitals followed the rules. But independent audits show different pictures. A review of 2,000 hospitals in July 2025 found that 24.5% of the hospitals were fully eligible for 36% of the hospitals.

A November 2024 study found that 46% of hospitals did not comply with all rules. The pattern is the same everywhere. Hospitals share incomplete data. They create machine-readable files that are difficult to use. They hide the list of “shopping services” in the website folder. Search engines cannot find these folders. The No Surprise Act aims to block surprise bills for certain off-network care. But it works pretty well. The law has stopped millions of surprise bills. However, the case of the dispute process (IDR) goes beyond its management.

From early 2023 to mid-2024, 1.24 million disputes were filed. 41% of these cases are still awaiting decision. Providers win most emergency disputes, about 85% of which. They are usually more rewarded than the insurance company initially offers. This increases the cost of health care for everyone. The system requires severe penalties for insurers who pay slowly or refuse to pay. Without these penalties, the system will be blocked forever.

No pain punishment

Healthcare is subject to easier penalties than other industries. In the banking industry, anti-agricultural violations could make up billions of dollars. Companies can fine companies more than $50,000 per day because they unsafely dispose of waste. Violators can also face prison time. Annual violations of HIPAA data breaches can cost $1.5 million a year, as well as additional legal costs. The fine for healthcare price transparency is smaller, slower and more negotiable. After CMS violates regulations, it will take several months for CMS to refine the hospital. At the end of 2024, only 14 hospitals were fined. This is true even if thousands of hospitals violate the rules. No hospital lost its license. No hospital has lost Medicare funds for breaking transparency rules. Any CFO can do math. Hiding prices saves more money than they may pay for. National efforts demonstrate the appearance of law enforcement. Non-compliant hospitals in certain debt collection practices in Colorado. California fined pharmaceutical companies more than $70 million. These fines are due to failure to produce cheaper drugs to release. But these steps are not common and do not comply with federal rules.

How to eat the law

Hospitals don't have to break the rules to neutralize them. Many hospitals follow the rules on paper. But they violate the real purpose of these rules.

They put the pricing documents online. The format used by these files does not work properly. These files are usually inconsistent, incomplete, or incorrectly labeled. This makes it impossible for patients to compare prices.

Hospitals block search engines from finding their pricing pages. This means that only those who really work hard can find them. List the “ghost” rates for services they don't offer, on averages and benchmarks.

Some hospitals request personal information before displaying prices. This violates the rules that say prices should be made public. But this practice is difficult to stop and stop.

For consumers, this means confusing spreadsheets with hard-to-understand code. They don't have a clear price to compare. Researchers and policy makers require standard data. This data will help them track cost changes. This will also help them study the competitiveness of the company. But the lack of consistent standards makes this impossible.

Merger cancel competition

Perfect punishment may make all hospitals comply with the rules. However, transparency alone still doesn't create fair prices. This is true when only some large hospital systems control most of the market. There are too few hospital choices in almost every American city. In more than 80% of these areas, only one or two hospital groups handle most patients who require overnight stays. In many areas, insurance companies are equally concentrated. In these markets, transparency does not cause competition. Instead, it can work like a price floor. If a leading hospital sees its competitors charge more, it may just raise its own price to match. this is true. Similar effects have occurred in other markets. For example, Denmark saw this after asking companies to share specific prices. The merger trend is getting faster and faster. Private equity firms are buying practices. Physician practice is also adding to larger systems. This provides providers with more bargaining power. It weakens the ability of insurance companies to negotiate. This happens even after the Unsurprising Act.

Patient behavior will not be preserved

The law of price transparency is based on a simple idea. The law assumes that consumers will look for prices before taking care of them. The consumer will then choose the cheapest option. This should reduce health care costs. In fact, only 10-13% of patients seek price information before care. There are clear reasons. Some are obvious – you can’t shop in an emergency. Others are more complicated – the listed prices have not clearly shown what you actually pay. When patients compare prices, they care more about other things. They focus on doctor advice, quality and convenience. The price is smaller for them. Sometimes transparency can make patients choose more expensive doctors. This happens when patients think higher prices mean better care. This explains why the imaging price tool in New Hampshire doesn't work properly. The tool has been successful in some ways. But that hardly changes the price. This only happens in some basic services that are easy to compare.

Why is the real punishment important

If no penalty is changed to the provider's calculations, the transparency rules will remain symbolic. For a hospital, the decision is not right or wrong; it is about risk and reward. A $500,000 fine may sound huge. But consider a hospital system that makes $5 billion a year. The fine is only 0.01% of their money. They can easily pay from their marketing budget.

True deterrence means:

The fine is proportional to income, rather than a static daily fine. For a multi-billion dollar system, this could mean tens of millions of ongoing violations.

Quick and public execution, posting and searchable compliance status. Hospitals that repeatedly violate the rules should face real consequences. They may lose the right to collect debts from patients. They can also be kicked out of the insurance network.

The No Surprise Act should also punish insurance companies. Both hospitals and insurance companies should face real consequences. This happens when they delay payment or act dishonestly.

Some states have tested these ideas in a scattered manner. Federal adoption will require Congress to take action. They also need to stand in strong hospitals and insurance halls.

Political resistance

Industry lobbying is the quiet force that keeps fines soft. The American Hospital Association opposes stricter law enforcement. They call it an “administrative burden.” This will separate resources from patient care, they say. The American Medical Association sued part of the No Surprise Act. They question the dispute resolution process. Private equity groups are supported. They lobby for a total delay in law enforcement. They warn that if the fine damages their business, access will be reduced. Consumers and employers see a clear problem. Without job transparency, employers will not be able to control health care costs. Patients cannot make wise choices, either. Hospitals are usually their largest local employer. This gave them a strong political influence. Consumer groups and other advocates cannot match this force. Therefore, lobbying battles are unfair.

Lessons from other departments

Other industries show how transparency works when supported behind reliable penalties. False reports of financial companies face billions and fines in enforcement prosecution. Environmental polluters face daily penalties for potential bankruptcy violators. In consumer products, incorrect labeling can lead to product recalls and class action lawsuits. The punishment is large enough. Law enforcement is strong enough. This makes the Rules Violation a real risk for the business. Healthcare can replicate other industries. It can be used based on income fines. It may require executives to sign papers that promised compliance. It can post the name of the rule-breaking online for everyone to view. These changes will not promise to reduce costs in a market with few hospitals. But they will stop using fake “compliance” with hidden and incomplete data.

in conclusion

The U.S. healthcare system is not accidental opaque. Prices are kept confidential and help large hospitals. It helps place the doctor group. Sometimes it also helps insurance companies. All of these groups gain more power in negotiations. This happens because the actual rate is kept confidential. Hospital price transparency rules and the No Surprise Act are designed to solve the problem. They are written as corrective measures. But in reality, they work like speed limits, with no police around them. Be careful people follow them. The bold people ignore them. Without actual penalties, the system will not repair itself. These penalties must make the cost of breaking the rules higher than following them. Transparency will remain a conversation point, not a tool. The United States will continue to have the most expensive healthcare in the world. Patients still don't know what they will give. They have to wait until the bill arrives.

Chinelo Grace Chigozie is a writer who explores how health and policy affect daily life.