Most large hospitals are noncompliant with CMS price transparency rule

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Most of the nation's largest hospitals are noncompliant with the Centers for Medicare and Medicaid Services' price transparency rule that went into effect at the start of 2021, according to research posted in Health Affairs.

When looking at the top 100 largest hospitals determined by certified bed count, the researchers found 65 were "unambiguously noncompliant" and only 22 were deemed compliant.

Of the 65 noncompliant hospitals, 12 had not posted any pricing files, or provided links to searchable databases that couldn't be downloaded by the researchers. Fifty-three of the noncompliant hospitals either failed to clearly post payer-specific negotiated rates with the name of the payer and plan or in some other way failed to follow the rule.

The researchers collected price transparency files from the hospitals between January and February 2021 to determine the extent to which they were complying with the CMS rule.

"To be compliant, hospitals' files need to be machine-readable and should contain the gross charge, discount cash price, payer-specific negotiated charges, de-identified minimum and maximum charges, and descriptions of, and codes for, the items and services provided by hospitals. For the payer-specific negotiated charges, hospitals must reveal both the name of the payer and plan," the researchers said.

Compliant hospitals included Massachusetts General Hospital, which posted 3,669,193 observations covering more than 65,000 items and services for 19 payers and 54 plans, and Riverside Methodist Hospital of Ohio, which had data for more than 120 payer-plan combinations covering more than 98,000 items and services.

WHY THIS MATTERS

The researchers said their compliance determinations were "purposefully conservative" to account for the obstacle of posting prices for every service a hospital provides during the pandemic.

Because of industry opposition to the price transparency rule, including a lawsuit from the American Hospital Association, the researchers suspected compliance to be lacking.

Still, they were "troubled" that 65% of the hospitals were noncompliant with the rule over a month since its implementation, especially since these large hospitals are industry leaders and could be setting a precedent for noncompliance, the researchers said.

Opponents of the rule argue that the publication of payer-specific negotiated rates will chill negotiations between hospitals and insurers. Some hospitals are skeptical that disclosing prices leads to lower costs, because the posted charges don't represent patients' actual out-of-pocket costs. They also fear that the time it takes to comply with the rule could get in the way of spending time with patients, according to court documents from the AHA suit.

In line with those concerns, the AHA has asked the Department of Health and Human Services to exercise enforcement discretion for the rule as hospitals continue to deal with the pandemic.

Noncompliant hospitals could face a fine of $300 per day if they aren't compliant, according to CMS.

THE LARGER TREND

Before the price transparency rule, hospitals were required to post their chargemaster rates, but these prices are used in payer price-setting negotiations and don't reflect the real price.

CMS finalized the rule in November 2019, giving hospitals 13 months to comply.

Provider organizations attempted to push back the start date, saying the COVID-19 pandemic placed too much burden on hospitals to disclose pricing information.

ON THE RECORD

"We are troubled by the finding that 65 of the nation's 100 largest hospitals are clearly noncompliant with this regulation," the researchers said.

"These hospitals are industry leaders and may be setting the industry-wide standard for (non)compliance; moreover, our assessment strategy was purposefully conservative, and our estimate of 65 percent noncompliance is almost certainly an underestimate."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org