Recent Publicity Over Hospital Prices Could Fuel Calls for Regulation
May 15—Recent publication of a database of hospital prices by the Centers for Medicare & Medicaid Services (CMS) will have minimal impact on the credit quality of hospitals and health systems for the time being, according to Moody’s Investors Service—but the wide range of pricing for similar services, noted by CMS, is likely to strengthen the hand of those calling for greater regulation of hospital pricing and billing practices, which could be a credit negative for the industry.
Moody’s notes that most insurers and purchasers of healthcare services already understand that prices bear little relationship to actual negotiated rates with payers, which are substantially discounted from prices. However, there is substantial risk that the persistence of unexplainable differences in hospital prices for similar services will invite greater regulation of the industry, Moody’s says in a report.
Possible changes in regulation include states requiring additional disclosure on actual prices paid, inviting greater federal or state scrutiny of the industry, according to Moody’s. In the future, it is conceivable that hospitals and health systems will adopt price transparency as a marketing strategy, Moody’s says.
Publication Date: Wednesday, May 15, 2013