Hospital Price Transparency Rule Compliance Is Inconsistent

April 13, 2021 - Many hospitals are not complying with the CMS price transparency rule more than four months after its passage, according to a new KFF analysis that calls for data standardization.

Put into effect on January 1, the federal rule aims to improve price competition by revealing how much health plans pay hospitals for health services. Hospitals must post prices (including the hospital gross charge, discounted rate, and payer-specific negotiated rates) in two formats prominently on their website.

First, the rule requires hospitals to provide a machine-readable file for healthcare stakeholders to compare prices across providers. Second, hospitals must outline pricing information through a consumer-facing tool that allows patients to search for lower-priced care without inputting personally identifiable information.

The study, which analyzed data from the two largest hospitals in each of the 50 states and the District of Columbia, found that most hospitals are not complying with the CMS price transparency rule.

Although around 80 percent of hospitals provided gross charge information on the consumer tool and via a machine-readable format (78 and 81 percent, respectively), many did not provide the public with payer-specific negotiated rates.

Just 35 of the 102 hospitals displayed payer-negotiated rates in a machine-readable file, however it is unclear whether all participating insurers were included in these files. Only three of the 102 hospitals provided consumer tools to view payer-negotiated rates without requiring a patient to provide personally identifying information (such as insurance plan details).

What’s more, the researchers found that even when hospitals were compliant with the price transparency rule, lack of data standardization made comparing prices accurately across hospitals near impossible.

For instance, some hospitals include professional fees in the listed prices and other hospitals do not, but this is often not specified in the pricing resource.

Additionally, many of the hospital machine-readable files are inconsistently formatted and do not provide key information, such as the full range of plan options and payers within a particular region. In some machine-readable files, hospitals provided payer names but did not include actual negotiated rates from those payers.

The researchers also found that many hospitals lack discounted rates on their online price transparency resource. For example, hospitals often offer services at a discounted rate for the uninsured. A hospital may provide a flat 30 percent discount off the gross charge for an uninsured individual.

However, just 56 percent of hospitals listed discounted rates for services on their consumer tools, and only 42 percent had that information on their machine-readable files. By not including this data, hospitals could be deterring uninsured people from seeking care. While these individuals may not be able to afford the full out-of-pocket cost for the service, they may have been be able to afford the discounted rate.

The KFF researchers noted that while the price transparency data does not allow for trustworthy hospital price comparison yet, it may help reveal price variation within a hospital.

Using rates from ten hospitals, they found significant variation in the price of common services. For example, the price of a lower back MRI at a New Mexico hospital ranged from $221 to $2,142 depending on the payer.

“The lack of standardization in both the definition of ‘price’ as well as the format of machine-readable files across hospitals makes it impossible to reliably compare prices across hospitals,” the KFF researchers noted.

“We found significant inconsistencies in how the files are formatted, the level of detail in payer names and markets, which billing codes are used, and what the measurement of price is. Anyone attempting to make comparisons across hospitals using these data should therefore exercise caution,” they explained.

To make price transparency data actionable for healthcare stakeholders and consumers, CMS should enforce data standardization.

“For price transparency data to be useful in making comparisons across hospitals, data in the files would need to follow a set template, such that all hospitals use consistent file formats, billing codes, service descriptions, and insurer and market naming formats,” the researchers wrote.