Are Hospitals Really Flouting Federal Requirements?

Are Hospitals Really Flouting Federal Requirements?

A new report by 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.  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.

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