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February 14, 2022

Hospitals are getting better at price transparency, but few fully comply with rule requirements

Daily Briefing

    Just 14% of hospitals are fully complying with CMS' price transparency rule requiring them to publicly post their prices online in clear, accessible formats, according to a new survey of 1,000 hospitals by Patient Rights Advocate.

    Webinar: The price transparency trifecta


    On Jan. 1, 2021, CMS began enforcing a new rule that requires hospitals to post online "a machine-readable file … that includes all standard charges (including gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges) for all hospital items and services."

    Under the rule, hospitals are also required to publicly post "discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges for at least 300 'shoppable' services."

    The rule also finalized methods for CMS to monitor hospital compliance with the requirements.

    Survey details and findings

    One year after CMS' transparency rule took effect, Patient Rights Advocate surveyed 1,000 of the more than 6,000 U.S. hospitals and discovered that about 14% of the surveyed hospitals were fully compliant with the rule.

    In the survey, the most common omission flagged for "noncompliance" was failing to post or incomplete posting of all negotiated prices for each item and service associated with the payers and plans accepted by the hospital, Healthcare Finance News reports.

    Among the surveyed hospitals, around 38%, including those in full compliance with the rule, posted a sufficient amount of negotiated rates. However, more than half of those hospitals omitted key data, including rates broken down by insurer and plan.

    Overall, nearly 86% of surveyed hospitals did not post a complete machine-readable file of standard charges.

    In particular, 62% failed to publish a sufficient amount of negotiated rates, and about 59% did not publish payer-specific negotiated charges that were "clearly associated with the names of each third-party payer and plan." Notably, 26% did not publish their discounted cash prices, and 4% did not post any of their standard charges at all.

    In addition, around 85% of surveyed hospitals failed to list the national drug codes and associated prices for the drugs and pharmacy items they offered.

    The survey also evaluated each hospital's compliance with the requirement to publish 300 shoppable procedures and services in a consumer-friendly list or easily accessible price estimator tool. Researchers estimated that about 29% of hospitals published 300 shoppable services in a consumer-friendly format for their customary charges. Among the 1,000 hospitals in the survey, 216 were not in compliance with the rule because their standard charges files were incomplete.

    However, almost 85% published a price estimator tool. Among these hospitals, 20% did not disclose the discounted cash prices to uninsured patients or those seeking to self-pay—a violation of the requirements.

    Ultimately, the American Hospital Association (AHA) suggested taking the survey results with a grain of salt, Bloomberg reports. "As the sole arbiter of compliance, only CMS' review should be taken into consideration when determining whether and how hospitals are complying," said Ariel Levin, senior associate director of policy for AHA, adding that several studies "have misrepresented hospital compliance" by assessing them differently than CMS would.

    Why some hospitals struggle to comply with the rule

    Researchers and other industry stakeholders have previously noted that hospitals are currently dealing with an unprecedented health care crisis amid the Covid-19 pandemic, which could have an impact on their ability to meet the rule's requirements.

    For instance, AHA—along with other health care organizations—previously filed a lawsuit against the price transparency rule, saying the "subjective, oversimplified analysis" doesn't reflect hospitals' transparency efforts, nor does it recognize their work combatting the pandemic. "The same staff who would be needed to develop the lengthy machine-readable files required by HHS are also the staff who helped hospitals quickly reorient operations…for patients," AHA said.

    Although compliance with the transparency rule may be low, Robert Gilbert, senior manager of the health care advisory practice and accounting firm Baker Newman Noyes LLC, suggested that some hospitals may not be intentionally breaking the rule. "No one wants to be in violation of CMS," Gilbert said. Many hospitals may "want to be compliant but don't know how," he said.

    Further, it may also be more difficult for smaller hospitals to comply since they typically need to contract outside firms or vendors to implement the machine-readable files the rule requires.

    So far, CMS "has been sensitive to the fact that we are in the middle of a pandemic," said Kelly Arduino, industry leader of the health care practice at consulting firm Wipfli LLP.

    The pandemic has placed a strain on many overwhelmed hospitals, adding administrative tasks and record-breaking patient counts. "This was a tough time for such a big ask," Arduino said. (Lagasse, Healthcare Finance News, 2/10; Wingrove/Reed, Bloomberg, 2/9)

    The price transparency trifecta

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    Join us as a panel of Advisory Board experts dive into the hospital price transparency rule, the insurer price transparency rule, and the surprise billing regulations—and unpack why it's vital to view these individual policies as a whole.

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