When it comes to healthcare price transparency regulations, questions abound
Putting price transparency to use requires deciphering an avalanche of data that isn’t always presented consistently and converting it to relevant information for consumers.
A new era for healthcare price transparency has been underway for almost two years, but the potential impact remains murky.
Price transparency requirements for hospitals were drafted by CMS during the Trump administration and went into effect Jan. 1, 2021. A companion rule for health plans was set to begin a year later, but the Biden administration delayed enforcement until July 2022 to allow for more time to comply.
The requirements are meant to help patients become true consumers of healthcare “so that they can lead the drive toward value,” as stated in the initial CMS regulations on hospital price transparency.
So far, the benefits haven’t measured up to the stress and strain being imposed on stakeholders. Issues that still need to be addressed throughout the industry, experts say, include erratic compliance, the impracticality of the information for consumers and the potential for the data to affect contract negotiations.
“You talk to everyone and there’s a ton of dialogue around it, and frustration,” said Govind Goyal, executive vice president with Panacea Healthcare Solutions.
Goyal’s colleague Joe D’Onofrio, senior solution adviser with Panacea, sees indications that the rules are starting to have an intended effect in one way: Hospitals are curbing price increases.
“A lot of hospitals that have just continued to raise their prices every year [by] a certain amount across the board are now looking at it and saying, ‘Well, we have to publish these prices. We have to be able to justify these,’” D’Onofrio said.
Higher prices certainly still may be defensible for services where a hospital is best-in-class.
“But this is going to put that pressure on them to lower the prices on things that they’re high on that they shouldn’t be,” he said.
Scattershot hospital compliance
According to an August 2022 report from PatientRightsAdvocate.org, only 16% of 2,000 surveyed hospitals were in full compliance with the regulations.
Fines have been levied on two hospitals, both from a single system in the Atlanta area. Those hospitals were penalized a combined $1.1 million in early June but had come into full compliance by July 1, with pricing files that are “complete and exemplary, demonstrating the efficacy of enforcement,” according to PatientRightsAdvocate.org.
After those fines came down, “My mailbox was jammed up,” Goyal said, meaning clients and prospective clients were clamoring for guidance on how to avoid penalties. “The fines really worked because [before that] everyone was calling CMS’s bluff.”
Descriptions of low compliance may lack context. Assessments tend to err by taking a binary approach, said Marcus Dorstel, vice president of operations with Turquoise Health.
“There’s certainly a gradient of compliance that we’re seeing,” he said. “So, 16% makes it sound like the other 84% just didn’t do anything, but that’s really not the case.”
Turquoise Health evaluates 60 different aspects of hospitals’ machine-readable files. Of 5,000 hospitals, 70% have files that received a four- or five-star rating for completeness, Dorstel said, indicating that among other things, they include service rates as negotiated with each of their health plans. And even hospitals that received two or three stars are contributing to transparency.
“It’s not the whole picture, but it’s some of the picture, which is still valuable data,” he said. “If I only know your cash rates, I’d love to know your negotiated rates too, but the cash rate alone is still valuable data.” (See the sidebar below for the categories of information that need to be included).
Additional fields should be mandated to ensure uniform comparisons from one facility to the next, Goyal said. Users should be able to better gauge the specifics of negotiated arrangements between hospitals and health plans to avoid comparing, for example, a bundled rate at one hospital with per-unit fees for the same services at another.
“It can be very dangerous to start making comparisons without knowing that going into it,” he said.
Price transparency regulations: the basics
Hospitals must post their standard charges in two ways:
- A single machine-readable digital file containing the following information for all items and services: gross charges, discounted cash prices, payer-specific negotiated charges and de-identified minimum and maximum negotiated charges.
- A display of prices for at least 300 shoppable services (or as many as the hospital provides if less than 300) that can be scheduled in advance. The display must contain plain-language descriptions of the services, grouped with applicable ancillary services. Required information for each service is the same as for the machine-readable file, minus gross charges.
Note: The shoppable-services requirement can be waived if the hospital maintains an online price estimator tool that meets certain criteria.
Health plan price transparency requirements are being implemented in three phases:
- As of July 1, health plans must be posting machine-readable files containing rates for all covered items and services as negotiated with in-network providers; and allowed amounts for, and billed charges from, out-of-network providers.
- For plan years beginning on or after Jan. 1, 2023, health plans must provide an Internet-based price comparison tool allowing individuals to receive an estimate of their cost-sharing responsibility for at least 500 items and services as delivered by any provider or providers.
- For plan years beginning on or after Jan. 1, 2024, the requirement expands to include all items and services.
Where hospitals are struggling
Ideally, electronic health record (EHR) vendors would produce the required machine-readable files on behalf of client hospitals, said Allison White, assistant director of revenue integrity with Cone Health in Greensboro, North Carolina. But her organization’s vendor hasn’t gone to such lengths even though the vendor’s EHR houses contract terms and rates for all of Cone Health’s patients.
“It’s been pretty manual,” she said. “They can produce some data for us, but then we’ve got to run it through our enterprise data warehouse to get it in the right format of columns and rows. And then somebody on my team is going in and validating the data, adding the missing rates.”
“Getting the data together has been a challenge because it doesn’t exist in one place,” she added, noting that intervention from the vendor would be required to create a single source.
D’Onofrio said some hospitals are skirting the requirement to post negotiated rates derived from contract data. They may use claims data instead because contracts often are presented in formats such as PDFs that leave data to be manually entered into the price transparency fields every time a contract is renewed.
“If you’re not using contract data, then you’re not complying, and we can’t get anything useful out of it,” D’Onofrio said.
An inundation of information
The health plan rules could make a greater splash than the hospital regulations because they offer a more direct way to compare prices across a market.
But the sheer volume of data makes the payer files unwieldy. For example, Humana’s listing of in-network rates comprises more than 455,000 JSON-format files that, combined, include an estimated 400 billion prices for individual services as negotiated with individual providers. Sifting through all that data to compare rates could drain IT resources even for large companies.
Compared with hospital data, the files are “a lot more buttoned-up and they’re more structured, which is great,” Goyal said. “But simply accessing them and trying to find what you’re looking for becomes a problem.”
Taking the example of one employer’s pricing file as posted by Blue Cross Blue Shield of Michigan, Goyal said: “If you’re just focusing on the in-network negotiated files within that file, you have a thousand different links, and they just say, ‘Click file.’ If you wanted to compare Hospital A to Hospital B, you don’t really know where Hospital B is located in those thousand files. It’s a hunting-and-pecking game.”
In general, Dorstel said, compliance seems to be better among health plans than it was among hospitals in the early stages of those rules. Turquoise Health has yet to rigorously assess the completeness of health plan files, however.
Who actually benefits?
The primary audiences for the hospital and health plan machine-readable files are the third-party vendors and technology companies that specialize in crunching massive amounts of data. And employers can use the health plan files to make sense of their medical spend and understand where they’re overpaying, Dorstel noted.
For consumers, the key component is the price estimator tools that health plans are required to offer starting in 2023 and that hospitals have had the option to offer in lieu of posting price data for 300 shoppable services.
Cone Health tracks the number of patients who use its tool and has found traffic to be “minimal,” said Mike Simms, vice president of revenue cycle.
Many patients “really don’t care” about prices, he said. “All they care about is getting the healthcare that they need. The other thing is they don’t understand [how the pricing system works].”
Sandy Lood, vice president of revenue cycle with Cottage Health in Santa Barbara, California, said her organization has received “maybe a handful of reach-outs” from consumers trying to understand inconsistencies they’ve found in listed prices between, for example, an X-ray scheduled in the emergency department versus the same screening in an outpatient setting.
Such disparities stem from differences in “the resources, the acuity, the urgency” involved in the care delivery, Lood noted. But those nuances are hard for consumers to understand.
The PatientRightsAdvocate.org report asserts that the price estimator tools fall short because they offer nonbinding estimates, with disclaimers that allow hospitals to avoid accountability for discrepancies. But given how much can change during a care episode, stakeholders say, offering binding prices is never going to be realistic.
One issue to address is that some hospitals have been hiding their tools behind a paywall or requiring users to register before accessing them. As Dorstel noted, the regulations prohibit such practices.
On the health plan side, the tools could be a game-changer.
“[Consumers] can actually have one-stop shopping,” Goyal said. “They won’t have to go to different hospital websites or call different numbers to get an out-of-pocket estimate.”
Although few if any stakeholders dispute the need for improved price transparency, the potential indirect consequences make some hospital leaders nervous.
“I think they have concerns about payers getting too much information [and being able] to negotiate down reimbursement rates,” said Amber Thomas, JD, vice president for regulatory compliance and audit at R1 RCM.
Leaders say no such trend is evident yet. But being flexible and willing to engage in a give-and-take with health plans is likely to become even more important.
“I do think, as an organization, we need to be prepared to have those conversations and start to get a little bit more creative with how we want to partner with payers,” said Lood of Cottage Health.
D’Onofrio said hospitals’ poor compliance with the transparency regulations is to their collective detriment because it inhibits the ability to compare negotiated rates. With complete market data in hand, many hospitals could gain leverage without having to navigate through the payer files.
Regardless, the data in both sets of files only goes so far.
“There’s more to reimbursement than just what these machine-readable files show,” Goyal said, citing stop-loss and lesser-of provisions as examples that are left out.
Such complexities indicate why genuine price transparency was always going to be difficult to attain.
“At best, I think what we’re hoping for is an 80% true comparison,” D’Onofrio said. “Getting to 100%, you’re going to get into the crazy nuances of reimbursement.”