Savvy healthcare delivery organizations are working hard to comply with the new price transparency requirements. But compliance alone won’t be enough. Many need help to meet the requirements two years into a federal rule requiring hospitals to provide helping information online. Hospitals that fail to do so face civil monetary penalties.
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What is the rule?
Hospital price transparency regulations are a critical step toward a healthcare system where consumers have the information they need to participate actively in their healthcare. These rules make it easier for consumers to compare prices, support price transparency efforts by researchers, and promote competition across the healthcare industry. The rule requires hospitals to publicly post standard charges and payer-specific negotiated rates for at least 300 common services in two ways: a consumer-friendly display and a comprehensive, machine-readable file. Hospitals must also provide a tool that allows patients to calculate their approximate out-of-pocket costs.
A recent study found that private insurers pay substantially different rates for the same procedures; on average, they are more than double what Medicare pays. But for consumers, understanding these differences is challenging. Research has shown that most consumers don’t even know their insurance provider’s negotiated rate, and many struggle to find the data they need when they do.
What are the requirements?
Hospitals must make a considerable volume of new data on standard charges and negotiated rates available to the public. These new data are intended to help consumers, researchers, and entrepreneurs understand how prices vary within markets and across different payers. As part of this effort, hospitals must post these data on their websites and in a machine-readable format compatible with the CMS template. While most hospitals have met both the consumer-friendly display requirement and the machine-readable file requirement, many still have a long way to go. Compiling and presenting pricing information upfront requires time and resources. As the COVID-19 crisis wreaked havoc on hospital budgets, some organizations prioritized their compliance with the price transparency in healthcare, hospital price transparency requirements over other revenue-cycle functions and organizational improvements. Moreover, the sheer scale of this endeavor took a lot of work; most hospitals incurred millions of dollars in costs to collect and organize their data.
What are the penalties?
In the year since the rule took effect, hospitals have received hundreds of warning letters from CMS. But as of early December, the agency has only imposed two civil monetary penalties for noncompliance.
According to a recent study, the number of compliant hospitals is slowly climbing. However, most hospitals still haven’t made their prices easy to find for patients, thwarting consumers’ ability to make informed shopping decisions.
The variation in compliance estimates reflects hospitals’ incentives to “quasi-comply,” posting prices that few individuals can locate, which may also prevent them from being fined by CMS. Characterizing this quasi-compliance phenomenon is an important direction for future work.
How do I know if my hospital is compliant?
Although CMS has been increasing its enforcement of the hospital price transparency rules, no hospital organization reported that financial penalties significantly impacted its strategy. This is surprising since fines for noncompliance can add up to more than $2 million a year for some large employers and insurers. As a result, many hospitals still need to implement the new price transparency requirements. The first year of the rule’s implementation showed that only about 27 percent of hospitals fully complied with the condition to post their standard charges in machine-readable formats.
These files must include the hospital’s regular charges, payer-specific negotiated rates, reduced cash prices for shoppable services, and de-identified minimum and maximum negotiated rates. The machine-readable file must also follow the data standards and formatting guidelines given by CMS. This should make it easier for outside parties to get the files. Additionally, it makes it possible to compare hospital pricing data more precisely.