Report: Large sampling reveals 30% of hospitals haven’t complied with any aspect of the new price transparency requirements

• Nearly a third of hospitals haven’t complied with any aspect of the new price transparency requirements, according to a report.
• Hospitals have had an easier time posting the required price information for consumer-friendly shoppable services than for all the services in their chargemaster.
• The process of complying with the requirements from a technical standpoint may be out of alignment with the language of the regulation.

Lack of compliance with new price transparency rules is fairly widespread among hospitals thus far, according to a new report, with about 30% falling short of fulfilling any part of the requirements.

Federal rules that took effect Jan. 1 require hospitals to post five standard charges on their websites in each of two files:

• A comprehensive machine-readable file that contains all items and services in the hospital’s chargemaster
• A listing of 300 “consumer-friendly shoppable services” (including 70 designated by CMS)

As described in a new report, Guidehouse scanned the websites of more than 1,000 providers across 27 states. If either of the two files was present and included any of the standard charges, a provider was considered to be compliant for that file.

The share of compliant hospitals was found to be 60% for the consumer-friendly shoppable services file and 48% for the machine-readable file. About 70% of hospitals were compliant with at least one set of requirements.

“Hospitals that are not compliant have expressed they either have significant resource constraints (COVID-19 or otherwise), a lack of understanding of the ruling, and/or are waiting to see what their competitors are doing,” the report states.

It should be noted that CMS has a more stringent standard for compliance, requiring hospitals to include all five charges in both files. Only about 25% of the surveyed hospitals would be deemed officially compliant.

“If you only did one [file] or the other, you would still be at risk of noncompliance,” said Jeff Leibach, a partner at Guidehouse and a co-author of the report. “But our goal here was to see what are the different ways hospitals are being compliant or not, and how is that different across the two files? And then what are we seeing within those files?”

Hospitals that fail to comply with all requirements are subject to a penalty of $300 per day. That may not be steep enough to inspire widespread compliance, although CMS has said it also will publicize those hospitals.

“Especially in systems of size, the $300 a day likely wouldn’t even cover the labor that it would take to become compliant for a lot of our clients,” Leibach said. “So this was really about, ‘What are the risks I’m going to face from payers, from media, from consumers and from employers compared to the level of effort?’

“Ultimately, a lot of our clients who decided to be compliant did so because they believe in price transparency, and they want to be on the right side of it.”

Although noncompliance may bring the possibility of negative publicity, compliance could have a downside as well. In the same week that the Guidehouse report was released, the Wall Street Journal published an article with the headline “How Much Does a C-Section Cost? At One Hospital, Anywhere From $6,241 to $60,584.”

Compliance with the ‘shoppable services’ file appears to be easier

Not surprisingly, large hospitals and health systems were more likely to be compliant, the Guidehouse authors found. Many are taking advantage of the option to use existing price-estimator tools to present the data for the consumer-friendly shoppable services file.

The availability of those tools partially explains why a larger share of hospitals have complied with the requirement to post prices for consumer-friendly shoppable services than with the requirements relating to the machine-readable file. Many health systems had easy access to such tools thanks to operating software they already had on hand.

“This was maybe the push they needed to activate that and get it going, or to accelerate that process or to make an investment decision on that if they hadn’t,” Leibach said.

As presented on hospital websites, the machine-readable file may not be especially helpful to users in its current form.

Among hospitals that have complied with that aspect of the transparency requirement, “There is a general lack of consistency in format and content, making it difficult for anyone (e.g., CMS, providers, payers) to scan, consolidate, and derive insights without significant data transformation and enhancements,” the Guidehouse report states.

Leibach also noted that if anything, the analysis may be “a little generous” in its assessment of compliance related to the machine-readable file.

“What we’re showing here is that there is a machine-readable file on the web,” he said. “It is not a code-level compliance review of each machine-readable file that we saw on 500 websites.”

Technical issues affecting compliance

Improved compliance by providers can be anticipated over time “as resource constraints lessen with the help of further clarity, standardization, and/or automation,” the Guidehouse report states.

In the early stages of the initiative, there has been an evident dissonance between the rules as conceived and the task of implementing the requirements from a technical standpoint.

Leibach cited the example of a hospital that is paid on a percent-of-charge basis. To generate a DRG-level bundled price for the shoppable services file, the hospital likely would rely on historical data.

However, CMS has deemed such an approach noncompliant.

In that instance, “We have to prioritize one element of compliance over another,” Leibach said. “Are we going to listen to them and say we’re not going to use historical information or averages in terms of utilization? Or are we not going to provide a package price in the format that they’re looking for?”

Such ambiguity naturally leads to inconsistent compliance, he added.

“We’re hopeful that coming out of this year, once CMS and others see the level of variation that’s out there and the reasons for it, that we’ll be able to circle on a set of standards for the future that can make it both a little easier on the hospitals to produce and easier for the consumer and the public to use,” Leibach said.

How the new administration could handle price transparency

As HFMA has reported, hospital advocacy groups have been lobbying President Joe Biden’s administration to withdraw the price transparency rules. The administration has not indicated whether such a move is in the offing. In fact, Biden has yet to announce his nominee for the CMS administrator role.

The administration may not prioritize broader policy and regulatory issues such as price transparency until the nation has gotten through the worst of the COVID-19 pandemic.

“That’s where the fact that the penalty is low for this year actually works in the administration’s favor,” Leibach said. “If they choose to deprioritize this while they’re focused on the pandemic, they can waive the penalties [or] they can issue corrective action plans well ahead of issuing fines.”