Not All Hospitals Complying with New Price Transparency Rule

January 21, 2021 - Hospitals are struggling to comply with new price transparency requirements from CMS that took effect on Jan. 1, 2021.

A new analysis from healthcare consulting firm ADVI found inconsistent and incomplete pricing information on the websites of the top 20 largest hospitals in the US according to number of beds.

All 20 hospitals published some type of pricing information, but not all facilities had completely complied with new price transparency requirements as set by CMS, the analysis found. For example, some of the hospitals failed to show pricing information for 300 shoppable services.

CMS now requires hospitals to publish on their website a consumer-friendly list of prices for 300 shoppable services – generally, non-emergency services that patients can choose – in addition to an overall list of prices for every item and service the hospital provides.

The small-scale analysis also identified other common hospital price transparency compliance issues, including data not being able to be downloaded in a usable format, hospitals not providing HCPCS codes for services, and variability in hospital terms for the pricing information.

ADVI said the findings of the analysis are consistent with a previous study of a skinnier hospital price transparency rule from CMS that required hospitals to publish chargemasters on their websites. The study published in September 2019 found similar compliance issues, the consulting firm reported.

“While transparency in hospitals’ pricing may be beneficial to the average consumer and healthcare researchers, the implementation of this policy by hospitals has many hurdles to overcome before it can be useful,” the firm stated in the most recent analysis.

Hospital price transparency as laid out in CMS rules may not be as useful as policymakers thought though, according to a new study by the Peterson-KFF Health System Tracker.

The study found that patients still face significant barriers to shopping for common healthcare services despite new price transparency requirements designed to support price comparisons. For example, many services, especially if they are related to emergent conditions like heart attacks, cannot be planned for in advance, researchers explained.

Awareness of price transparency tools is also still low among consumers, they stated.

Furthermore, the listed prices for healthcare services may not tell patients their financial responsibility, including out-of-pocket costs if providers must deliver unexpected, additional services during a procedure.

Additionally, the study found that prices for common healthcare services identified as shoppable under the CMS price transparency rule significantly varied by geographic region. The average price of a lower back MRI in Oakland, California, for example, was $853, over 244 percent higher than the average price in Orlando, Florida where it was $349.

Prices even varied within the same region. For instance, a knee or hip joint replacement in the Houston, Texas area costs consumers between $28,815 and $45,775 depending on where they go for care.

Hospital groups have criticized new price transparency rules, citing the ineffectiveness of such requirements in reducing costs for consumers. Hospitals have even argued that the requirements could have the opposite effect – increase prices for consumers – because competitors will be able to see the rates a provider has negotiated with private payers.

Regardless of price transparency effectiveness in healthcare, hospitals must still comply with new CMS requirements or face monetary penalties.

CMS announced in December that it will audit a sample of hospital websites to ensure compliance with price transparency requirements. Failure to comply could result in a fine of up to $300 per day, the agency stated.

Leading industry group the American Hospital Association (AHA) has urged HHS just this month to exercise enforcement discretion with the hospital price transparency rule in light of the ongoing COVID-19 pandemic.

“Hospitals’ ability to comply with the rule at this time is particularly challenged by an increase in the volume of COVID-19 patients and the need to distribute multiple vaccines,” AHA said. “Both of these events are straining hospital and health system resources at a critical time in the course of the pandemic sweeping the nation.”

“These strains are further compounded by the considerable gaps in federal guidance creating compliance uncertainty and recent legislation placing new price transparency requirements on hospitals,” the Association continued. In light of these exigencies, we urge you to exercise enforcement discretion until the end of the public health emergency.”

AHA has also urged the new Biden administration to reconsider enforcement of the requirements. The administration has yet to respond publicly to the Association.