PatientRightsAdvocate.org misinterprets CMS rules in low estimate of hospital price transparency compliance

In February, PatientRightsAdvocate.org (PRA) published its Fourth Semi-Annual Hospital Price Transparency Report, which states that only 24.5% of hospitals are compliant with federal price transparency regulations. This is a vast contradiction of CMS’s own compliance findings, which show 70% overall compliance during the same timeframe, as published in a Health Affairs blog on Feb. 14.

PRA is a “nonprofit fighting for systemwide healthcare price transparency,” according to its website.

PRA’s compliance report seems to be more of the group’s “wish list” than actual regulations, deviating significantly from regulations and guidance laid out by CMS.

Here are three areas of notable disparities between CMS’s price transparency regulations and the group’s interpretations:

48.8% of the hospitals (975 of 2,000) did not publish all payer-specific negotiated charges “clearly associated with the names of each third-party payer and plan” as required.

My Take: CMS mandates hospitals must identify all payers and plans for whom they have negotiated rates for their services. However, the PRA report assumes that when a hospital negotiates rates with a payer, it automatically secures negotiated rates with all plans under that payer’s umbrella. This assumption is both incorrect and leads to PRA overstating noncompliance in 48.8% of hospitals. This discrepancy may help to account for the significant difference between PRA’s analysis and CMS’s reporting for the same period, which indicates 70% of hospitals are compliant with price transparency requirements.

46.2% of the hospitals (923 of 2,000) did not publish a sufficient amount of negotiated rates.

My Take: In its  review of published negotiated rates, PRA doesn’t seem to be aware of CMS’s August 2021 guidance to providers, which recommends hospitals use a single indicator throughout the machine-readable file such as “-1” or “N/A” to indicate that a data element is not applicable for the item or service. The agency further asserts that using the mentioned indicators can prevent consumer confusion and mitigate potential compliance issues during a CMS comprehensive review. Instead, the PRA group deems that hospitals using the “N/A” in machine readable files are noncompliant with federal transparency rules.

Furthermore, in this particular section of PRA’s report, it appears the group has independently determined hospitals should be considered noncompliant if there are a “majority of blanks or zeros in the data fields.” However, CMS hasn’t established any completeness standards in its rules, as there are numerous instances where negotiated prices for all items and services in a hospital may not be applicable. In fact, many CDM line items and services are negotiated based on various combinations of line items depending on the patient’s specific service, making it so that negotiated prices do not exist at the individual line-item level.

16.4% of the hospitals (327 of 2,000) did not publish any discounted cash prices.

My Take: PRA’s report creates a misleading impression that the lack of a cash price for an item or service is an indication of noncompliance, which isn’t accurate. While it’s considered a best practice for hospitals to specify when an item or service has no negotiated cash amount, CMS does not require this. Instead, in the event of a CMS audit, the auditor typically verifies with the hospital that no cash price is available and scores compliance accordingly. This approach has been historically followed and validated.

Conclusion

When it comes to measuring how compliant hospitals are with federal price transparency regulations, there’s only one measuring stick: the regulations. PRA’s pronouncement that 74.5% of hospitals are noncompliant is inaccurate, especially when CMS’s analysis shows 70% of hospitals are compliant. That said, HFMA will continue to support and challenge our provider members to be more aspirational than the law itself when it comes to consumer transparency.

Shawn Stack is HFMA’s director healthcare finance policy, perspectives & analysis, and can be contacted at [email protected].