S.4097A/A.5817 – Hospital Variation

This legislation, S.4097-A/A.5817, would direct NYSHIP to collect health care claims data to issue a report on variation in hospital prices.  The New York Health Plan Association (HPA) strongly supports this legislation.

Meaningful price transparency is necessary to promote greater accountability in the health care system.  Wide variations exist in the prices that hospitals in the same region charge for the same or similar services and not explained by differences in the quality of services, patient complexity, or acuity of an individual’s condition, but rather the market power of certain institutions.  As a recent Congressional Budget Office report found providers’ market power was a key reason for variation in hospital prices.

By requiring NYSHIP to provide information comparing the difference in hospital prices for inpatient, outpatient, and emergency room services, S.4097-A/A.5817 would be an important step toward increased transparency in health care costs.  Additionally, the legislation’s requirement that NYSHIP conduct a comprehensive analysis of the prior five years of hospital prices and expenditures would help provide a greater understanding in trends in the growth in hospital prices.

While the federal Hospital Price Transparency Rule has been in effect since January 1, 2021, according to a February 6 report by PatientRightsAdvocate.org, only a quarter of hospitals studied were fully compliant with a federal price transparency rule. For New York, the report showed only 6% are in full compliance.  The intention of the Hospital Price Transparency Rule was to enable patients to compare prices and promote competition in the health care markets. However, a recent Kaiser Family Foundation analysis of hospital pricing information found that hospital transparency is very opaque and described some of the data hospitals are sharing as “ambiguous, missing, or difficult to find.”

Health care premiums and medical costs are inextricably linked, with the cost of coverage reflecting the prices hospitals and other entities charge for services.  Health care costs in New York already among the highest in the country, making it critical to take steps to establish greater accountability to rein in out-of-control hospital costs that exacerbate the challenge consumers, employers and labor unions face in accessing high-quality, affordable health care.

For all these reasons, HPA supports S.4097-A/A.5817.