Hospital Price Transparency – Boon or Bust?

Price Transparency – it’s something we expect in almost everything else we consider purchasing, right? So why shouldn’t we expect hospital price transparency as well? That is undoubtedly what members of Congress thought when they enacted Section 2718(e) of the Public Health Service Act as part of the Affordable Care Act in 2010. It took a while, but CMS finally published regulations in November 2019 to implement the law. The price transparency rule was then updated in 2021.

In this Article …

• • Basic Requirements of the Hospital Price Transparency Rule
  • Results of the Hospital Price Transparency Rule
  • What About Hospital Compliance with the Price Transparency Requirements?
  • CMS Updates its Price Transparency Rule Enforcement Efforts
  • So What to do Now Regarding Your Hospital’s Compliance with Price Transparency?

 

Basic Requirements of the Hospital Price Transparency Rule

The price transparency requirements of the Rule are fairly straightforward for each hospital operating in the United States:

• A hospital must establish, update, and make public a list of all standard charges for all items and services online in the form and manner specified in this section.
• Each hospital location operating under a single hospital license (or approval) that has a different set of standard charges than the other location(s) operating under the same hospital license (or approval) must separately make public the standard charges applicable to that location. The digital file and standard charge information contained in that file must be digitally searchable.
• Required data elements: A hospital must include all of the following corresponding data elements in its list of standard charges, as applicable:
  • The gross charge that applies to each individual item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
  • The payer-specific negotiated charge that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting. Each payer-specific negotiated charge must be clearly associated with the name of the third-party payer and plan.
  • The de-identified minimum negotiated charge that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
  • The de-identified maximum negotiated charge that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
  • Discounted cash price that applies to each item or service when provided in, as applicable, the hospital inpatient setting and outpatient department setting.
  • Any code used by the hospital for purposes of accounting or billing for the item or service, including, but not limited to, the Current Procedural Terminology (CPT) code, the Healthcare Common Procedure Coding System (HCPCS) code, the Diagnosis Related Group (DRG), the National Drug Code (NDC), or other common payer identifiers.
• Format: The information described in paragraph (b) of this section must be published in a single digital file that is in a machine-readable format.
• Location and accessibility:
  • A hospital must select a publicly available website for the purposes of making public the standard charge information required under paragraph (b) of this section.
  • The standard charge information must be displayed in a prominent manner and clearly identified with the hospital location with which the standard charge information is associated.
  • The hospital must ensure that the standard charge information is easily accessible, without barriers, including but not limited to ensuring the information is accessible:
    • Free of charge;
    • Without having to establish a user account or password;
    • Without having to submit personal identifying information (PII); and
    • To automated searches and direct file downloads through a link posted on a publicly available website.
• The digital file and standard charge information contained in that file must be digitally searchable.
• The file must use the following naming convention specified by CMS, specifically: <ein>_<hospital-name>_standardcharges.[json|xml|csv].
• Frequency of updates. The hospital must update the standard charge information described in paragraph (b) of this section at least once annually. The hospital must clearly indicate the date that the standard charge data was most recently updated, either within the file itself or otherwise clearly associated with the file.[84 FR 65602, Nov. 27, 2019, as amended at 86 FR 63998, Nov. 16, 2021]

Results of the Hospital Price Transparency Rule

As federal regulations go, this is fairly short and relatively clear! So what has been the outcome of all this price transparency data becoming available to individual healthcare consumers? Has price data for common health services resulted in lower healthcare costs? Has information on discounted cash prices made a difference in healthcare markets or influenced negotiated prices for hospital services?

There is precious little research about the effects of price comparisons on healthcare consumer behavior. A study at the University of Pennsylvania published in 2011 concluded introducing publicized hospital prices shifted the market share of hospital outpatient services. Hospitals with lower-than-median prices gained market share at the expense of hospitals with greater-than-median prices. The effect was greater among patients with fee-for-service health plans, compared to managed care plans. So this outcome lends credence to the theory that publicizing hospital prices will promote competition and enable patients to benefit from the hospital price transparency rule through their ability to compare prices.

On the other hand, managed care health plans have used incentives for years to steer patients to specific providers in their networks. Health Plans have used variable co-payment levels for in-network vs. out-of-network care to shift patients among providers. While patients often chafe at the restrictions this practice places on their choices, if anything, this practice has expanded over the years.

What About Hospital Compliance with the Price Transparency Requirements?

The initial impact on hospitals was the effort to compile lists of shoppable services and payer-specific negotiated charges, posting this information in a machine-readable file on a website. Many hospitals set up a price estimator tool vs. posting machine-readable files.

Over the past two years, CMS has been monitoring hospital compliance with the price transparency rule, and the results are mixed at best.

CMS says it has three main avenues for monitoring and assessing hospital compliance:

1. Evaluating complaints made by the public;
2. CMS’s review of individuals’ or entities’ analysis of noncompliance; and
3. Internal audits of hospitals’ websites.

In its review activities, CMS prioritizes “egregious” violations, such as a hospital that doesn’t publish a machine-readable file or a mechanism for obtaining price estimates.

As of April 2023, CMS has issued 730 warning notices to hospitals about their noncompliance with the hospital price transparency rule, and 269 requests for corrective action plans. CMS has also issued notices of the imposition of a civil monetary penalty (CMP) to four hospitals. The monetary penalties ranged from $102.6k to $883k.

And a reading of the notices of the penalties reveals these were egregious cases!

• One hospital took down its machine-readable files and shoppable services information after receiving an initial notice of noncompliance, and never submitted a corrective action plan as required by the initial notice of noncompliance.
• Another hospital failed to submit a corrective action plan and instead said patients could call a “Price Estimate Line” or send an email requesting specific estimate quotes.
• The other two hospitals simply failed to respond to letters or phone calls or did not complete the corrective action plan the hospital had submitted.

CMS Updates its Price Transparency Rule Enforcement Efforts

CMS acknowledges it has taken 195 to 220 days to complete its “case cycle”, so it has issued a notice of changes to its enforcement process.

• The current case cycle consists first of a warning notice with instructions to correct the deficiencies within 90 days.  If a hospital has not come into compliance after 90 days, CMS issues a corrective action plan (CAP) request with a 45-day deadline for hospitals to submit a CAP. An additional 30 to 90 days went by while CMS approved the CAP. So it was easy for 200+ days to go by using this process.
• CMS will continue to require hospitals that are out of compliance with the hospital price transparency rule to submit a CAP within 45 days from when CMS issues the CAP request. CMS will also now require hospitals to be in full compliance with the hospital price transparency rule within 90 days from when CMS issues the CAP request. CMS previously allowed hospitals to propose a completion date for CMS approval which can vary. So no more waiting around and asking nicely for a CAP.
• CMS will now automatically impose a CMP on hospitals that fail to submit a CAP at the end of the 45-day CAP submission deadline. Before imposing the CMP, CMS will re-review the hospital’s files to determine whether any of the violations cited in the CAP request continue to exist and, if violations are found, impose a CMP.
• For hospitals that have not made any attempt to satisfy the requirements (e.g., those that have not posted any machine-readable file or shoppable services list/price estimator tool), CMS will no longer issue a warning notice to the hospital. Instead, it will immediately request that the hospital submit a CAP. Currently, CMS does not issue CAP requests without first issuing a warning notice.

So this is not quite one-and-done, but it is pretty close!

So What to do Now Regarding Your Hospital’s Compliance with Price Transparency?

• Make sure your hospital is in compliance with the price transparency requirements.
• Ensure CMS can find the machine-readable files or price estimator tool on your hospital website.
• Make sure the date of the latest update is obvious, and that it is less than twelve months old!
• Respond immediately to any notices or requests from CMS for a CAP related to hospital price transparency information or compliance with the price transparency rule.

Don’t wind up on the CMS list of hospitals that have received civil monetary penalties for noncompliance!