Transparency of hospital prices is improving, but CMS compliance is lagging behind

Hospital compliance with the 2021 Price Transparency Act has improved over the past year, but some operators remain reluctant to publish their price data or lack the resources to do so..

As of the end of September, 65% of U.S. hospitals have published rates they have negotiated with commercial insurers, according to data aggregator Turquoise Health. This is a significant improvement from June 2021, when researchers at Michigan State University and Johns Hopkins University found that less than half posted machine-readable files with negotiated prices.

However, many hospitals are not fully compliant, as defined by the Centers for Medicare and Medicaid Services’ 21-item checklist. Hospital and health system administrators say the administrative burden is not worth it and will not achieve CMS goals.

The Hospital Price Transparency Law came into force in January 2021. CMS hoped that data analysts would use machine-readable files to compare prices across hospitals and that patients would scan consumer-friendly documents before they received care. Ideally, data on prices negotiated by hospitals with payers, gross fees, and discounted cash prices for 300 “services available for purchase” would reduce overall healthcare costs and deter high-priced providers. CMS has threatened a maximum annual fine of over $2 million for major hospitals that fail to comply and nearly $110,000 for non-compliant hospitals with fewer than 30 beds.

According to Rebecca Conen, director of the company’s 16-16 revenue cycle, it took about 10 full-time employees in Evansville, Ind., in the Deaconess Health System, as well as the help of a third-party data analysis firm for a year. hospital regional non-profit system.

“We tried to do it on our own, but we didn’t have the bandwidth,” she said. “The question is to keep it up to date. This is a challenging task because our contracts with insurers change over time.”

Konen noted that third-party data aggregators determine what is most beneficial to patients, and CMS compliance standards vary. “Everyone has different views on what meets CMS compliance standards and what is most beneficial to patients,” she said.

But many hospital administrators argue that patients rarely buy medical services. If they do, they are more concerned with out-of-pocket costs than negotiated rates, which do not take into account patient comorbidities and other patient-specific characteristics, providers say.

“While I applaud the policy’s goal of transparency, I don’t think the law is having the desired effect of informing consumers that they will pay when they get to the hospital because it doesn’t take into account their specific clinical variables.” said Dr. Jeremy Kawells, chief medical officer at Sanford Health, a 47-hospital system based in Sioux Falls, South Dakota.

Turquoise data shows that 55% of hospitals were in full compliance with the transparency law at the end of September.

However, a peer-reviewed study published earlier this month in the Journal of General Internal Medicine concluded that only 19% of a nationally representative sample of 64 hospitals met the CMS definition of full compliance, according to an analysis of November data. However, the authors noted that at least 72% of these hospitals complied with key pricing metrics such as publishing contract rates, gross charges, treatment descriptions, and discounted cash prices.

Relatively low match metrics are those that contain less important information, such as adherence to the CMS naming convention, said Ge Bai, a professor of accounting and health policy at Johns Hopkins University. Bai was not involved in the study, but was a co-author of a related study.

While hospitals have made significant progress in implementing key elements of the price transparency law, it has required a lot of work from hospitals, especially smaller facilities that have been hit hard by labor shortages and other financial hardships, she said.

“The federal government should reduce the burden of compliance as much as possible while maintaining data usability,” Bai said.

It added that, in order to improve compliance, the CMS might consider posting a sample template for a machine-readable file with clearly defined columns.

CMS has fined only two hospitals in Georgia. The fines were less than $1.1 million, roughly 0.04% of their collective net patient income in 2021. CMS issued 437 alerts and 263 hospital remedial action plan requests to hospitals that did not address the issues outlined in the alerts, an agency spokesman said.

With the exception of Northside Hospital in Atlanta, GA and Northside Hospital Cherokee in Canton, GA, “every other hospital that has passed the compliance review has corrected its deficiencies or is in the process of correcting them. Therefore, there was no need for CMS to impose fines on any additional hospitals, ”a spokesman for the agency said.

In the future, CMS needs to take a more proactive stance on punishing non-compliant hospitals and systems, Turquoise researchers said in an October report. The agency also needs to define a specific format for hospitals to submit data, they said.

Some hospitals and health systems waited to see if the CMS would strictly comply with the law before complying. Compared to last year, hospitals are putting more effort into compliance, said Tim Gary, healthcare lawyer and CEO of Crux Strategies, a consulting firm that helps hospitals and healthcare systems address compliance issues.

Some hospitals, especially smaller facilities, would like to comply but don’t have the resources, Gary said. However, some health care systems claim they would rather pay fines than publish their prices, he said.​​​​

“It’s like asking the chief financial officer of a hospital for codes to launch a nuclear weapon,” he said. “Suppliers and payers have risen to defend these prices, which is why payer price data is so masked.”

CMS changed the price transparency law for hospitals and insurance companies, with the latest coming into effect on July 1, 2022. The agency required insurance companies to release machine-readable files to the public, including contract prices they pay network providers and allowed rates. for offline providers.

But parsing massive data files requires sophisticated software, and insurers don’t use standardized file formats, confusing potential comparisons.

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