Hospital price transparency enforcement should look at pricing data quality, GAO says

In a report on federal oversight of hospital price transparency regulations, the Government Accountability Office (GAO) says CMS should expand its enforcement purview.

The report rehashes many of the technical and formatting issues that stakeholders have discussed since the regulations took effect in 2021. But it goes a step further by questioning whether guardrails are in place to ensure the thoroughness and accuracy of hospital pricing data.

“CMS does not have assurance that pricing data hospitals report are sufficiently complete and accurate, and CMS has not assessed such risks to determine if additional enforcement actions are needed,” the report states. “Without an assessment, CMS does not know whether the data are usable to help increase competition.”

In its response to the report, CMS agreed with the rationale for examining the “prevalence of inaccuracies and incompleteness” within the files. However, it did not commit to taking any such action beyond saying it will “explore the possibility of conducting an assessment.”

Results of an assessment could trigger implementation of “additional cost-effective enforcement activities,” CMS noted.

The GAO acknowledged that those activities probably would be limited to spot checks or a random sampling of hospitals. A possible step would involve comparing prices in hospital files with those in health plan files that have been posted under the Transparency in Coverage (TIC) rule.

But such an approach would require a more robust mechanism to verify the accuracy of the TIC files, said Shawn Stack, director of perspectives and analysis with HFMA.

“There’s been no evidence of compliance audits, corrective actions or civil penalties against payers, as CMS doesn’t oversee TIC file compliance, and state agencies lack the staff and funding to review payer machine-readable files,” Stack said.

Challenges and opportunities

Issued two years after a request from Congress, the report is a qualitative evaluation based on interviews with CMS, the American Hospital Association and 16 stakeholder organizations representing users of the price transparency data. The groups included insurers, patient advocacy organizations and researchers.

Takeaways from the interviews included technical challenges in gleaning information from the machine-readable files. Stakeholders also mentioned “concerns with prices they perceived to be clearly inaccurate, including services priced at very low or unusually high amounts.” That feedback helped inform the recommendation to take a closer look at the accuracy of the pricing data.

Questions also linger about the extent of price sensitivity for core hospital services, given the vagaries of insurance coverage and patients’ tendency to prioritize quality and provider reputation over cost in many scenarios. Such intricacies help explain why “patients rarely use hospital shoppable-service pricing information or online hospital price estimators,” per the report.

HFMA’s Stack said provisions in the No Surprises Act are more consumer-focused, citing good-faith estimates, protections against balance billing and the pending mandate to provide advanced explanations of benefits for insured patients.

The TIC files also are a potentially better resource for insured patients seeking bottom-line price information.

“HFMA has long maintained that the most meaningful price transparency for a patient is to answer the out-of-pocket price for those who have insurance coverage,” said Rick Gundling, senior vice president for content and professional practice. “For those who don’t have insurance coverage, patients should find out their eligibility for financial assistance for free or discounted care.”  

Interviewed stakeholders for the GAO report described some limited applications of hospital price transparency insights. Health plans and employers can be expected to expand their consideration of the transparency data in contracting scenarios, they noted.

Key changes underway

CMS made substantial changes to the price transparency requirements for July 2024 and January 2025. In January, among several other modifications, machine-readable files must list an “estimated allowed amount” in dollars for instances when a negotiated charge is expressed as a percentage or algorithm.

“However, CMS officials and some stakeholders said they do not expect the updates to address all the usability challenges associated with the complexity of hospital prices, such as comparing prices for services in hospitals that use differing practices for bundling services or have differing units of service,” the GAO report states.

The July changes included a requirement that hospitals attest to the accuracy of their pricing data, a change that can help clarify situations when fields in the machine-readable file are left blank or filled with an “n/a” notation.

Some stakeholders interviewed by the GAO argued that “an affirmation is not a robust enough control to better ensure hospitals provide complete and accurate data.” The July regulations also authorize CMS to seek a signed document by a hospital executive certifying the accuracy of the files if a case enters the enforcement phase. In addition, hospitals can be required to submit documentation of their prices for validation purposes.

CMS told the GAO it already reviews completeness and accuracy “in response to credible complaints alleging potentially egregious issues.” Inquiries may include verification of what an “n/a” notation signifies, for example.

The state of affairs

Regardless of whether CMS moves to assess the quality and accuracy of the data, price transparency enforcement has intensified. The GAO report notes that enforcement actions increased in number from 436 in 2021 and 2022 combined to 851 in 2023 after CMS hired a contractor to assist with enforcement efforts and installed a new IT system that helped streamline the process.

Some members of Congress want to get in on efforts to enhance hospital price transparency.

The Lower Costs, More Transparency Act made it through the House on a bipartisan vote in late 2023 but has not received formal consideration in the Senate. The bill would codify many of the current transparency regulations as the law of the land for hospitals and health plans and would permit increased penalties for noncompliance (e.g., $25 per bed per day for hospitals with more than 500 beds, up from the current rate of $10 per bed per day with a $5,500 daily cap).

While subject to change if the bill proceeds through the Senate, the legislative language does not explicitly include authorization to assess the completeness and accuracy of pricing data. How much momentum the GAO’s recommendations will have after the election also remains to be seen.

HFMA’s Stack reiterated that the objectives of price transparency won’t be achievable without more regulatory scrutiny on the health plan files. Barring such a shift, he said, “There’s no accountability for accuracy, and true comparisons of healthcare market rates remain out of reach.”