Hospital price transparency is clearer, but gaps persist

Hospital price transparency has gotten clearer following updates to federal requirements earlier this year, but there is still room for improvement, according to a recent analysis from the Peterson-KFF Health System Tracker. 

CMS updated hospital reporting requirements at the start of this year, combining an updated schema with new guidance on data formatting. These changes aim to clarify how hospitals encode rate information, including providing rates as dollar amounts whenever a final rate can be determined prior to service and encoding allowable amounts when a rate is expressed as a percentage or an algorithm. 

The updates took effect in January 2026, with enforcement starting in April. But KFF researchers conducted a preliminary review of rates for two common admission codes across several local markets using data from Turquoise Health. They identified persistent issues that still complicate price comparisons -- the primary goal of having hospitals disclose their pricing information. 

While some of these issues could be resolved through additional guidance, others may be harder to address, the researchersnoted. 

Where there's room for improvement 

The analysis identified five main issues that complicate federal price transparency provisions. 

First, researchers found continued ambiguity between base and final rates, which the January 2026 reporting revisions sought to address. Base rates are initial rates that can be adjusted later by a percentage or formula, depending on what occurs during a service, whereas final rates are the actual amount paid to a hospital, accounting for all factors that can affect reimbursement. 

The hospital reporting updates push hospitals to encode final rates as actual dollar amounts rather than rely on ambiguous percentages and algorithms. But the analysis revealed that the data element used to encode base and final rates is the same, leaving users to manually review free text or notes to determine which type of rate is reported. 

Additionally, the analysis suggested an unintended consequence of the reporting revisions. The revisions introduced new required fields for median/percentile allowed amounts and payment counts, but these new data elements often come up empty in hospital price transparency files. 

Hospitals may not have received any payments for the specific service under any arrangements in the prior year. But researchers said this points to a larger issue: a significant number of rates are never paid.  

This also raises questions about how to interpret dollar rates paired with a zero-payment count, they said. 

Two other issues are also related to the reporting revisions: inconsistent use of the algorithm and notes fields and inconsistent encoding of stop-loss and other outlier payment arrangements. 

CMS has issued separate guidance to standardize how hospitals use the algorithm and notes fields in their files, as well as how to report stop-loss and outlier arrangements. But the analysis found hospitals still handle the reporting of this data differently despite updated instructions. This makes price comparisons especially difficult for algorithm-encoded rates, which need additional payment data for interpretation that notes-encoded rates do not. 

Finally, the analysis identified a potential structural quirk of how rate arrangements get reported.  

Rate arrangements can be reported as multiple rates for the same hospital-payer combinations, especially when there are per-diem and set-set combinations. The researchers explained that this can create a false impression of multiple distinct rates for a single service. 

Hospital price transparency continues to evolve 

Hospitals have had to report pricing data since 2021, but how they do so has evolved over the years to make the process more seamless. Still, issues remain with making these massive files readable for hospitals, researchers and, ultimately, consumers. 

CMS has attempted to address many of the issues identified by KFF researchers, but the analysis underscores how updates have yet to fully resolve the problems with price comparisons.  

The researchers also emphasized that this is a preliminary examination of updated reporting requirements, suggesting hospitals are still adapting and some issues could be growing pains as hospitals work through compliance challenges. 

Still, CMS has already signaled the next steps for hospital price transparency. The agency issued a request for information this summer on how to strengthen machine-readable file standards, including reducing reporting variability for complex arrangements and standardizing formatting rules. 

Insurers are also facing their own price transparency reporting requirements, which CMS updated earlier this month. The Transparency in Coverage rule dictates what plans must publicly report, but the requirements have faced usability issues. 

The latest update stops insurers from reporting "ghost" rates, or negotiated rates for services a provider never performs, and mandates dollar-and-cents pricing for in-network rates for most services. 

Improving healthcare price transparency has been a top priority for the Trump administration, which finalized both hospital and insurer price transparency rules during the President's first term. The administration now seeks to refine the original requirements to promote market competition and end surprise medical costs. 

Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy, and health IT since 2016.