Wisconsin has among the highest hospital prices in the nation. This bill seeks to help lower them through more transparency

Sarah Volpenhein
Milwaukee Journal Sentinel

A proposal by several Republican state lawmakers would require hospitals to publicly disclose their prices for services, in the hopes of improving transparency into health care prices and ultimately of helping drive down the cost of health care.

The proposal, which has yet to be introduced and is being circulated among lawmakers for co-sponsors, largely mirrors a federal price transparency rule that went into effect more than two years ago. But if passed, the proposal would allow the Wisconsin Department of Health Services to enforce the rule and to levy fines against hospitals that refuse to comply, said state Sen. Mary Felzkowski, R-Irma, one of the authors of the draft bill.

"It’s time that the state stepped up and started looking out for our constituents around the cost of health care," she said at a press conference Wednesday announcing the proposal, where a member of the Wisconsin Institute for Law and Liberty, a conservative law firm, also spoke in support.

Wisconsin has some of the highest hospital prices for commercially insured patients in the country. A recent study by the RAND Corporation found employers and private insurers paid Wisconsin hospitals more than three times what Medicare would have paid for the same services, the fourth highest rate of any state in the country.

“For millions of Americans, tremendous fear comes with any medical procedure that they may be requiring. This fear comes not from the potential risk of the surgery or the medications they may be put on afterwards, but rather from the mountain of debt that will inevitably follow with almost no clue as to what the total will be," said Will Flanders, research director at Wisconsin Institute for Law and Liberty. 

Price transparency efforts have supporters in both Democrats and Republicans, with the latter seeing it as a way of injecting competition and choice into the health care system and of supporting business owners overburdened by rising health care costs.

State Sen. Mary Felzkowski, R-Irma, is shown during the state Senate session Tuesday, March 16, 2021, at the Capitol in Madison, Wis.

Goal is to give patients the ability to shop around

The proposal is meant to empower health care consumers by providing more visibility into previously undisclosed hospital prices. In this way, patients can shop around when scheduling a non-urgent procedure, and employers can design health benefits for their employees in a way that reduces cost, Felzkowski said.

Like the federal rule, the proposal would require hospitals to post a digital file with a list of prices for hospital items and services, including charges negotiated between the hospital and individual health insurers. It would also require hospitals, as does the federal rule, to display the prices for hundreds of "shoppable services," or non-urgent services that patients commonly receive and can schedule in advance, including certain blood tests, CT scans and mammograms.

Nationwide, most hospitals — as many as six in 10 — still do not comply with every requirement of the federal rule, according to a January article in the Journal of General Internal Medicine. While most hospitals have posted lists of prices, many are still missing data or are not laid out clearly, according to a recent review of hospital compliance by Patient Rights Advocate, a nonprofit that pushes for price transparency in health care.

Felzkowski felt the requirements should be implemented at the state level because federal regulators aren't always quick to enforce the federal transparency rule. The draft bill would require the state health department to check whether hospitals are making the price information public and if they are not, to take certain steps, including issuing a warning, asking the hospital to submit a plan for posting the correct information or imposing a fine.

"The point of this bill is not to be punitive," she added. "The intent of this bill is to get the transparency out there and the cost."

Wisconsin Hospital Association says proposal is unnecessary

In a statement, the head of the Wisconsin Hospital Association said the draft bill is not necessary and that the vast majority of Wisconsin hospitals are already mostly or fully compliant with the federal price transparency rule.

"Bottom line, our hospitals are ahead of the curve and new, publicly available price and quality transparency tools are emerging every day making this legislation unneeded in a leader state like Wisconsin," Eric Borgerding, president and CEO of the hospital association, said in an emailed statement.

According to rankings by Turquoise Health, a price transparency platform, nearly two thirds of 130 Wisconsin hospitals have completed all the requirements of the federal rule.

Borgerding said state requirements would create confusion among hospitals already working to be in compliance with the existing federal rule.

The proposal circulating among state lawmakers would require hospitals to submit their list of prices to the state Department of Health Services at least once a year and would also allow the department to say how hospitals should format their lists, said Joanne Alig, senior vice president for public policy at the Wisconsin Hospital Association.

But Felzkowski said by complying with the federal requirements, hospitals would comply with those in the state proposal, too.

"There might be slight differences but nothing drastic," she said.

Federal rule to disclose prices took effect in 2021

Federal regulators began monitoring and enforcing the price transparency rule in January 2021, but the process to bring hospitals into compliance can be slow and generally has taken several months.

Prices for the same procedure can vary dramatically from hospital to hospital or even within the same hospital, depending on the insurer paying.

As of last month, the Centers for Medicaid and Medicare Services had issued more than 730 warning notices and nearly 270 requests for hospitals to submit a plan for coming into compliance, according to a press release. The agency has imposed fines on only four hospitals for noncompliance, none of them in Wisconsin. There are more than 6,000 hospitals across the country.

CMS just recently announced it was stepping up its enforcement of the price transparency rule, in part to bring hospitals into compliance more quickly.

Supporters of the price transparency efforts hope it will help not only patients, but also employers save money on health care. While employees bear the cost of higher health care costs through higher premiums and deductibles, employers also pay more for health care, money that they otherwise might spend on higher wages and retirement benefits, said Willard Walker, CEO of Walker Forge, a steel plant in Clintonville.

"Price transparency is very important ... to employers across the state because it's our second or third largest expense," Walker said at Wednesday's press conference. "It's necessary if we are ever to have any semblance of a free market for health care."

Price transparency is only one tool for addressing rising health care costs, and likely is not enough alone. In highly concentrated hospital markets, hospitals have more leverage in negotiations with health insurers and can charge higher prices. Other policy tools that states can implement to help lower costs include confronting anticompetitive conduct by insurers or health systems, placing limits on payments for out-of-network health care and implementing a public option, according to the RAND study.