Additional requirements are needed to make healthcare price transparency worthwhile, report states

Updates to price transparency regulations should address compliance and formatting and incorporate new data elements.

Steeper penalties for noncompliance will help strengthen hospital price transparency mandates, but policymakers also should consider other steps, according to a recently published analysis.

“Many hospitals are not yet complying with the new transparency requirements, and the data they have posted has in some cases been hidden from web search engines or provided in a format that makes analysis difficult,” wrote authors with the Center on Health Insurance Reforms at Georgetown University.

The analysis was developed from a meeting of more than 20 healthcare researchers, purchasers and insurance regulators and sponsored by the Robert Wood Johnson Foundation. The authors sought to explore the opportunities and challenges that have become apparent in the first year of federal transparency requirements for hospitals.

Potential benefits of price transparency

Meeting participants thought consumers would be unlikely to benefit from hospital price information “given limited success of existing tools for consumer-level price shopping and the fact that most consumers select hospital and other providers entirely or partially based on the recommendation of their treating health professional,” the authors wrote.

At best, “Hospital and other pricing data could be fed into decision-support tools for clinicians to be used when making referrals, but to date, interventions attempting to get physicians to consider cost in healthcare decision-making have not been very successful.”

Even if consumers don’t benefit directly from price transparency data, meeting participants said, the information could be used to set policies that address cost drivers. In addition, employers can use the data in negotiations with providers, possibly phasing out third-party administrators in the process.

Recommendations to improve transparency

Issues with price transparency in its first year include:

• Widespread noncompliance
• Poor uniformity and quality of posted information

One recommendation from the convened experts was to increase the penalty for noncompliance. In the 2022 final rule for Medicare outpatient payments, CMS announced a penalty increase from $300 per day for all hospitals to a sliding rate based on bed count. Hospitals with 550 or more beds will be docked the maximum $5,500 per day, amounting to $2 million over a year.

Another viable step would be to reduce the flexibility granted to hospitals on how to display the data. Specifically, “federal regulators could publish guidance for hospitals (and health plans) that spells out granular reporting and display requirements,” the authors wrote, citing insights from the meeting. And “such requirements should not be a heavy lift, as ‘the infrastructure on both sides’ exists to enhance price reporting.”

CMS also should consider:

• Creating a centralized repository with a standardized collection format for all hospital price information
• Providing better guidance to hospitals on presenting data, perhaps using a template
• Requiring the posting of Medicare payment rates and quality-related data

Given that “transparency may be a necessary predicate to more muscular cost containment measures, improving access and usability should be a priority,” the authors concluded.

Looking ahead

A separate price transparency rule kicks in next year for health plans, which in 2022 are required to begin posting rates negotiated with in-network providers and historical allowed amounts and billed charges for many out-of-network items and services. The regulations take effect Jan. 1, but CMS has said it will delay enforcement until July 1.

Some policy watchers foresee the potential for significant confusion stemming from disparities between the price information posted by providers on the one hand and insurers on the other.