Blog Post

Our take: How hospitals are (and aren't) responding to the price transparency rule

By Lauren RobinsonMadeline Chaillet

April 13, 2021

    Hospitals have adhered to CMS' new price transparency rule to varying degrees. Advisory Board's new analysis reveals the few simple steps hospitals can take to meet the rule's requirements and the remaining hurdles left in store for the rule to meaningfully impact pricing. 

    Background

    Under the new price transparency rule, which took effect on Jan. 1, CMS now requires hospitals to post a machine-readable file (MRF) that includes standard charges for all their items and services and a separate consumer-facing file or tool for more than 300 shoppable services.


    Last year, CMS announced it would conduct audits and fine hospitals $300 per facility per day for noncompliance with the rule's requirements. Although CMS hasn't released its audit results, early research indicates several organizations have yet to fully comply with the requirements outlined in CMS guidelines. 

    Analysis details

    We conducted our own analysis to assess how hospitals are responding to the rule. Unlike previous analyses, our experts evaluated to what extent hospitals adhered to each element of the CMS-designated checklist independently. This methodology allowed us to determine common challenges, easy fixes, and insights beyond assessments of "full compliance." For our analysis, we randomly selected 50 hospitals based on their CMS certification number and examined files listed as MRFs on their websites in March. We were unable to open 12% of the files listed as MRFs and excluded them from our analysis.

    This post is the first in a two-part series unpacking our findings and recommendations for providers as they continue to respond to the new price transparency mandate. In our first installment in the series, we're focusing on what we found hospitals are posting on their websites. Below are four takeaways.

    1. Fifty-two percent of hospitals posted an MRF, but few incorporated all required elements.

    When examining our sample of hospitals, we analyzed their adherence to each element outlined in CMS' MRF checklist in addition to navigation considerations, such as ease of use and time to find.  

    We found that 52% of hospitals posted an MRF, but only 14% posted all required elements. Overall, our findings are comparable to those of a study conducted by Guidehouse, which found 48% of providers had posted some type of MRF. 


    Our analysis also found that MRFs were fairly easy to find, suggesting that hospitals aren't intentionally hiding them and that industry stakeholders should be able to access the files quickly. Our experience was contrary to some early reports that hospitals are hiding files with specific HyperText Markup Language codes. We searched hospitals' websites for 12 minutes before concluding the organization did not post an MRF. Nearly half (48%) of MRFs took less than two minutes to locate. The longest time it took for us to locate an MRF was seven minutes. Most MRFs were posted to a dedicated price transparency page on the hospital website (54%) or a billing and insurance page (42%).

    2. Hospitals met nearly all of CMS' access requirements—except for the easiest requirement.

    We examined all access requirements, including whether the file is publicly posted, digitally searchable, free of charge, in an approved file format, saved in the appropriate naming convention, accessible without a registration process, and available without the submission of personally identifiable information. All the files that we opened met all access requirements—except for the naming convention. Only 46% of hospitals followed CMS' file name convention (<ein>_<hospital-name>_standardcharges.[json|xml|csv]).

    Although the proper file name may seem like an innocuous element of the rule, it's unclear how CMS will consider this element in judging or enforcing compliance. The good news is that following this guideline should be a quick and easy fix.

    3. Hospitals that posted MRFs adhered to most of the data elements outlined by CMS.

    We assessed whether hospitals provided the data elements outlined in CMS' guidance, including hospital location, posting date, service description, associated billing code, gross charge, discounted cash price, payer-specific charges, and de-identified minimum and maximum charges.


    We found that 100% of the 26 accessible MRFs included a service description; 96% included the billing code; 84% included the gross charge, discounted cash price, de-identified minimum; and de-identified maximum, and 81% included payer-specific charges. Surprisingly, hospital location and the date posted had the lowest compliance levels, at 53% and 46%, respectively—more easy changes that hospitals can make.

    Overall, hospitals added the most consequential data elements to their posted MRFs, including payer-specific rates. This is significant because CMS intends to enable third parties to use this information to reveal price variation, fuel consumerism, and place downward pressure on rates. However, our analysis suggests third parties will encounter significant hurdles when using this information, including a lack of standardization across files and missing data elements.

    4. Lack of MRF file standardization may prohibit efforts to aggregate pricing data.

    Third parties who wish to aggregate pricing data will encounter significant obstacles due to differences in layout and data elements across MRFs. Although CMS outlines required data elements, formatting is at the discretion of hospitals. We quickly noticed that no two MRFs looked identical. Files had different fonts, inconsistent alignment, confusing labels and terminology, and variable organization of data elements (for example, horizontal or vertical displays and data on different spreadsheets).

    All the variation in MRFs formats will complicate third-party aggregation of the data. While the current formats may be sufficient for compliance in the near term, CMS could address the problem in future rulemaking. Additionally, we aren't fully discounting third parties' ability to navigate the hurdles and aggregate the data. 

    What's next?

    Our analysis reveals some quick and easy steps hospitals can take to meet CMS guidelines and potentially avoid penalties in the near term. Looking ahead, however, we recommend leaders expand their focus beyond compliance. Instead, you should be asking how you can shift the narrative and your organization's strategy to transform the patient financial experience and improve your competitive position. Check out our next blog post for our perspective on these topics.

    Cheat sheet: The new hospital price transparency rule

    ImageThe new hospital price transparency rule is CMS’ boldest effort to improve price transparency in the health care market place. Download our cheat sheet to learn what U.S. health care leaders need to know about compliance.

    Download now
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