Are Hospitals Really Flouting Federal Requirements?

A new report by PatientRightsAdvocate.org claims that only 5% of US hospitals are fully compliant with disclosing their prices as required by the CMS. A summary of their report was featured in The Washington Post and has brought several questions from hospitals around the country.  You can read The Washington Post article here

The detailed report can be found here.

We took a close look at the report’s findings and concerns – and have put together our own observations and considerations.

First, we find the overall compliance rate of 5% exceptionally low. While there has been agreement that hospitals have not fully complied with all aspects of the new requirements, this research seems particularly biased and had a lower sample size of 500 hospitals.  Our own research found 29% compliance when evaluating approximately 3,400 hospitals.  We believe our compliance rate aligns with other national organizations evaluating the transparency disclosures.  For example, other key research groups found the following compliance rates:

  1. Kaiser = 33%
  2. Health Affairs = 22%
  3. Milliman = 68%
  4. Guidehouse = 45%

The report says, “We identified a hospital as noncompliant if it omitted any of the five standard charge criteria required by the rule, if it posted blanks or zeros in the data fields, if it did not post all negotiated payer rates associated with specific plans, or if the price estimator tool did not show both the negotiated rates and discounted cash prices to provide pricing for all healthcare consumers, including the uninsured and those desiring to pay cash directly.”  However, there are several flaws with this approach:

  1. Discounted cash pricing – some hospitals do not have established cash-pay prices.  While CMS requires this to be posted if the hospital has developed cash pricing, this group should not assume the exclusion of this information means the hospital has determined not to post it.  In CMS hospital audits, if this data is not present CMS has asked for validation.  We believe best practice would be to disclose if this pricing has not been developed to avoid confusion.  Still, an assumption of guilt is not fair and is a contributing factor to the lower overall compliance rate.
  2. Blanks/Zeros in data fields – there are numerous examples where a hospital could have a zero or null value for standard charge elements.  Again, to assume that the hospital is non-compliant for this reason alone is outside of the CMS requirements and does not reflect an understanding of industry practices.  Further, some examples of “compliant” hospitals on their list contained these values in their files.  This inconsistency in review casts a large shadow on the credibility of the report.
  3. Payer/Plan – the report found the biggest issue in this piece that “403 hospitals (80.6% of the 500) did not publish payer-specific negotiated charges ‘clearly associated with the names of each third-party payer and plan’ as required by the rule.”  However, their review of the files again appears to be lacking industry knowledge.   We see from their list of noncompliant hospitals that it appears they have assumed that all hospitals will have multiple negotiated rates for each payer.  While this is common it certainly can’t be assumed to exist for ALL payers.  The rule requires NEGOTIATED rates to be disclosed.  So, if there is only one Aetna plan that has been negotiated than the hospital would only need to list Aetna once.  This group seems to be assuming noncompliance based on not finding multiple entries for Aetna.

At the end of the day, the only group judging compliance that truly matters is CMS.  While there is still some ambiguity around who CMS has deemed compliant in their reviews we do know that some of the elements this group has utilized do not align with the CMS requirements.  Our opinion is that this report was primarily created to generate a headline and to promote their four proposed actions:

  1. Stricter penalties for noncompliance and vigorous enforcement of the rule
  2. Enhanced requirements for the list of 300 shoppable services
  3. Requirements for actual prices, not estimates  **Here the group would like to see guaranteed price quotes instead of price estimates in the shoppable tool
  4. Requirements for clear pricing data standards

As for these four proposed actions, stricter penalties could be on the way due to language in the OPPS proposed rule (read our summary here).  We also believe CMS will standardize reporting requirements in the future as this was also brought up for comment in the proposed rule.  As for requiring price guarantees, hospitals are essentially doing this through many shoppable tools today.  We’re not sure if this group is unhappy with the legal language that many tools have suggesting that a patient’s experience at the hospital could require care outside of what is being presented in the results?  To convey patient care variability, our tool provides ancillary procedures that are commonly done in conjunction with the selected service and how that would impact their financial obligation.  We believe this approach covers the needs of the hospital and the patient. 

In sum, we find the report to be lacking industry experience, inconsistent in its application of review criteria to the sample, and intended primarily to paint hospitals in a negative light with proposed actions that are already being considered or implemented.  If you have additional questions on price transparency you can watch our free summit here, or contact us here.

How Are Hospitals Complying to Price Transparency Requirements?

As we continue our research into Price Transparency (you can see our full Spring Summit on the topic here), one of the things we wanted to know is are hospitals complying and, if so, how?

We conducted a survey of hospitals and took a close look at their approaches to the new Price Transparency requirements. Here’s what we found.

Our Methodology

A breakdown of our research group, 137 health systems with 10+ hospitals.

Our research reviewed 137 health systems with 10+ hospitals within the health system itself, which represented 3,358 hospitals in total. We used the health systems webpage and their search engines to look for the Price Transparency files. We searched basic keywords such as machine readable, pricing transparency, pricing, standard charges, and charges.

Of those 137 health systems we found that 100 of them offered a dedicated system level website for pricing transparency. Our observations for the two reporting requirements – a machine-readable file and a consumer-friendly disclosure are as follows:

Machine Readable Results

Our major finding was that 40 of these systems met CMS’ Price Transparency requirements, meaning their files included all of the required charge criteria.  Of the 137 health systems, we did find significant variation in what standard charge elements were being disclosed:

  • 85% represented the gross charges within their machine-readable file
  • 48% provided the discount cash price policy
  • 40% provided the deidentified MIN/MAX values of the payer-specific charges
  • 36% disclosed payer-specific charges
  • 15% did not post any information at all

We only found 4% of those files represented some level of employed professional charges. This may be because there is still some confusion as to the definition of employed within the rule.

Components disclosed in the files

File Types (this is going to be a sub heading in the final)

We also found that there’s wide variation as far as what file types hospitals are using to display their Price Transparency information. The types of files used in posting the transparency files were:

  • 38% Excel,
  • 28% CSV,
  • 12% JSON
  • 11% Web/Tool
  • 8% TXT
  • 3% XML

Congress recently sent a letter to the Department of Health and Human services calling out format specifically. They wrote, “some hospitals… are providing the data in a non-usable format or failing to provide codes for items and services.” We believe CMS could be referring to that 11% of hospitals using the web tool format as cause for their concern.

Consumer Shoppable Results

Of the 137 systems we looked at, 119 of them disclosed information for the consumer shoppable requirement using either a web-based tool (113) or a downloadable file (6).  Of the 119, we found that 15 likely would not be deemed compliant by lacking an uninsured option or creating some significant barrier to access.  Per accessibility, we found 90% of all web-based tools used CAPTCHA security coding, and several facilities had a member login as well as a guest user access for the tool itself. MyChart used this particular strategy. Many web tools asked for emails, but only a few required it. As far as the spirit of the rule, the goal should be to make the information accessible as possible to the customer, with the fewest barriers to entry.  In general, accessibility was something addressed in the CMS CY22 OPPS Proposed Rule which contained additional transparency comments.  You can find our summary of the transparency components of the rule here.

Language and Authorizations

In nearly half of the hospitals we looked at, the disclosures were behind some kind of authorization or use-agreement. We had to agree that we understood their terms before we could see the data. In one case, a health system made the user watch a video on the CDM and how pricing is determined before the user was able to access the file. Some hospitals included language urging patients to reach out if they did not understand the information provided or the format of the data.

It is clear that many hospitals and systems are concerned that patients may not fully understand the data, or be able to navigate it with confidence, and are worried that these patients will make a complex decision about their medical care on this limited understanding. For this reason, these disclaimers may be helpful, though we don’t know how patients react to this language or if they integrate it into their decision-making process.

As more hospitals become compliant and researchers aggregate data, we look forward to getting a better perspective on all these issues.

Summary

Our review suggests that a more limited number of hospitals/health systems are complying with the full set of machine-readable requirements (29%) but a far greater number are disclosing consumer shoppable information (87%).  The CMS CY22 OPPS Proposed Rule (summary here), seeks to increase the number of compliant hospitals by significantly raising the civil monetary penalties associated with non-compliance. 

If you have questions about your hospital’s strategy, please contact us here! If you would like to see a deeper dive into this data, and all our research on Price Transparency, check out our Spring Summit here.

How Does the CY22 OPPS Proposed Rule Change Price Transparency?

As new Price Transparency regulations went into effect this year, most hospitals quickly adjusted to become compliant under the new rules. However, many were confused on some points, and some decided not to post their prices, choosing instead to see how CMS would approach enforcement and what, exactly, it regarded as compliance.

The new proposed CMS rule (CY 2022 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS-1753-P)) clarifies several of the points where hospitals had questions, but it also emphasizes the importance of compliance and the seriousness of penalties. They stated, “CMS expects hospitals to comply with these legal requirements and is enforcing these rules to ensure Americans know what a hospital charges for items and services.”

The Penalty

First of all, they’re increasing the penalty amount for some hospitals.

The minimum penalty remains $300 per day but would apply to small hospitals (bed count of 30 or fewer). For hospitals with more than 30 beds this would include a penalty of $10 per bed per day, maxing out at a daily penalty of $5,500.

This means, for a year of noncompliance, hospitals are looking at a total penalty amount of $109,500 and a maximum penalty of $2,007,500 per hospital.

Clearly CMS is doubling down on its enforcement of the letter of the rule. However, this may change, as CMS is seeking comments on alternative or additional criteria that could be used to scale the penalty. Other options include:

  • Hospital Revenue
  • The nature, scope, severity, and duration of noncompliance
  • The hospital’s reason for noncompliance

File Access

We’ve seen several articles pointing out the difficulty in searching for machine-readable files. The rule proposes a requirement that the machine-readable files can be accessed by automated searches and direct downloads. Furthermore, CMS plans to update the list of what it considers barrier to access.

CMS also clarified that, should a hospital use an online price estimator tool, it must take the patient’s insurance information into account. The estimate must show the amount the hospital expects the patient to pay for the shoppable service, absent unusual or unforeseen circumstances.

Finally, CMS has also made itself open to public comments on several transparency issues, including best practices for price estimator tools, improving “plain language” descriptions of shoppable services,” ways to highlight exemplar hospitals, and improvements to the standardization of machine-readable files.

The rule would go into effect January 1, 2022. You can read CMS’ summary here.

To comment, go to regulations.gov, search for the CMS CY2022 Proposed Rule, and click on the Comments tab. The deadline is September 17, 2021.

As the rule evolves and we receive more information, we’ll pass it along. If you have any questions or concerns for your hospitals, let us know!

Cleverley + Associates covered the new Price Transparency regulations in depth in our spring summit. You can view the whole thing for free here.