Where Hospital Price Transparency Compliance Is Lagging

January 24, 2022 - Hospital price transparency requirements aim to unveil healthcare pricing and support a consumer-oriented healthcare industry. However, hospital price transparency compliance is falling short, particularly around the disclosure of prices in a machine-readable format, new research from Manatt Health shows.

The federal rule required hospitals to post prices for all hospital services, including gross charges, discounted cash prices, de-identified minimum negotiated rates, and de-identified maximum negotiated rates.

In addition, the rule requires the information be published in two formats, a machine-readable file that contains comprehensive pricing data for third parties to compare across hospitals and a shoppable service list which displays specific services offered in a consumer-friendly web display or online price estimator tool.

The study reviewed 32 New York hospital websites in July 2021 to analyze the hospital compliance with  crucial elements of the price transparency rule in the first six months of implementation. Researchers assessed each hospital’s level of implementation instead of looking at overall hospital compliance. 

Each hospital’s level of implementation was categorized as not implemented, partially implemented, or implemented. In addition, researchers evaluated factors based on audiences for machine-readable files versus shoppable services tools to determine implementation level. 

The study showed that hospital implementation of a machine-readable file was lagging compared to the implementation of the shoppable services requirement. 

Only 12 percent of hospitals fully implemented the machine-readable file requirement, with 69 percent partially implementing and 19 percent not implementing it. 

Over 50 percent of the hospitals that demonstrated partial implementation did not provide consumers with information about discounted cash prices, payer-specific negotiated prices, or both.

Researchers noticed hospitals operating at a profit had higher levels of implementation than those operating at a break-even or loss margin. In addition, affiliated hospitals had higher implementation levels than non-affiliated hospitals.

Researchers did not notice a large trend between hospital implementation and hospital gross revenue or size.

Hospitals that effectively implemented the machine-readable file requirement displayed information clearly, allowed users to perform a digital search, included complete data, ensured file and field formats were readily importable, provided data dictionaries, and offered billing information for a thorough assessment of patient cost.

Most hospitals provided an Excel sheet with the necessary information.

“Because of the nature of the file format required for implementation, the target audience for these files may include researchers, academic institutions seeking to analyze hospital pricing data, and data aggregators and/or innovators seeking to develop third-party, consumer-friendly tools and platforms that support price comparisons,” researchers suggested in the study.

“Ultimately, one purpose of requiring a machine-readable file of standard charges is to provide an accessible and complete source of hospital pricing data that can further advance price transparency for the broader public. “

For the shoppable services requirement, 69 percent of hospitals had implemented the requirement by publishing cash price for a CT scan of the abdomen. Of those, 86 percent implemented the requirement by providing a price estimator tool, and 14 percent provided consumers with a display of shoppable services.

However, 22 percent of hospitals had not implemented the requirement, and 9 percent had partially implemented the requirement by providing a display of shoppable services with various required categories missing.

Researchers found that health system-affiliated hospitals had marginally higher levels of implementation than non-affiliated hospitals. Additionally, large hospitals by gross revenue had higher levels of implementation than medium and small hospitals.

Hospitals that effectively implemented shoppable services requirements through an online price estimator tool provided consumers with precise estimates for out-of-pocket expenses, clearly specified the estimated out-of-pocket cost, and had information easily located by consumers. In addition, those hospitals requested users to answer simple questions concerning hospital location, insurance type, and service of interest.

“Several hospitals that implemented an online price estimator tool provided additional information to users beyond the federal requirements—additional disclaimers or information explaining the charges, patient utilization of related services and more,” researchers stated.

“This additional information can enhance the consumer experience and may support a clearer understanding of the information being presented. “

The most effective examples of implementing a consumer-friendly display of shoppable services files included brief language descriptors and well-formatted, clearly labeled columns.

The study suggests that as federal transparency rules for insurers take effect in 2022, there should be more clarity for both insurers and hospitals regarding what they must disclose, specifically in cases where the consumer share of the hospital’s payer-specific negotiated charge is complicated.