Assessing Progress on the Hospital Price Transparency Rule

What is the Price Transparency Rule?

The price transparency rule requires hospitals to publish the costs of their items and services on a publicly available website in two ways.

First, hospitals must have a single machine-readable digital file with standard charges for all their items and services. Standard charges include gross charges, discounted cash prices, payer-specific negotiated chargers, and de-identified minimum and maximum negotiated charges.

Hospitals must also display standard charges of at least 300 shoppable services that consumers can schedule in advance. That information must be displayed in a consumer-friendly format that includes plain language descriptions. Hospitals should also group the services with related ancillary services.

Hospitals may offer an online price estimator tool instead of publishing standard charges for the most common shoppable services. According to CMS, the price estimator tool must provide estimates for as many of the 70 CMS-specified shoppable services that the hospital offers and any additional shoppable services to reach a total of 300 services.

In addition, the tool must allow consumers to receive an estimate of the amount they will have to pay for a given service. Hospitals must display the price estimator tool on their websites and make it accessible to the public for free. Consumers also need to be able to access the tool without creating a user account.

CMS established an enforcement plan to ensure hospitals comply with the price transparency rule. The agency planned to evaluate complaints made by individuals or entities, review analyses of noncompliance, and audit hospital websites. However, more than one year after the regulation went into effect, hospitals are still not complying with the price transparency rule.

Price Transparency Rule Compliance

The price transparency regulation received immediate pushback from hospital and provider groups. Before the policy went into effect, the American Hospital Association (AHA) sued HHS over the rule, stating that it would confuse consumers and increase prices.

In addition, AHA and fellow hospital and provider groups submitted an emergency stay of enforcement motion in December 2020 to pause the audits and fines that would result from noncompliance. The groups said the CMS enforcement actions would force hospitals to divert resources that hospitals needed to respond to COVID-19.

Since the rule was implemented, these concerns have perhaps been reflected in the high rates of noncompliance among hospitals.

Data from as early as January 2021 revealed that pricing information was inconsistent and incomplete among the top 20 largest hospitals in the country. The hospitals published some form of pricing information but not all complied with the price transparency requirements, including posting prices for 300 shoppable services.

The Kaiser Family Foundation (KFF) analyzed data from the two largest hospitals in each state and the District of Columbia and found similar trends. For example, 80 percent of the hospitals provided gross charge information on a price estimator tool and a machine-readable file, but only 35 of the 102 hospitals displayed payer-specific negotiated rates.

Moreover, research from Manatt Health found hospitals were more likely to comply with the shoppable services requirement than the machine-readable file requirement.

According to an Insights analysis from Xtelligent Healthcare Media, hospital networks frequently had inaccessible machine-readable files and shoppable services. In addition, many hospitals required patients to provide personally identifiable information in exchange for pricing data and had machine-readable files that lacked the required charges.

PatientRightsAdvocate.org has been tracking hospital compliance with the price transparency rule since May 2021. Between May and July, the organization found that out of 500 randomly selected US hospitals, only 5.6 percent were compliant with the rule.

Between December 2021 and January 2022, the organization reviewed 1,000 more hospitals and found that only 143 complied with all aspects of the price transparency rule.

Why Are Hospitals Not Complying?

Under the 2022 Medicare OPPS rule, CMS shared the penalties for not complying with the price transparency rule. Hospitals with less than 30 beds would receive penalties of $300 per day, while hospitals with 31 or more beds would receive a $10 per bed per day penalty, with a maximum daily fine of $5,500.

However, hospitals have not received any penalties for noncompliance as of February 2022. CMS has sent around 345 warning notices to noncompliant hospitals since the rule went into effect, the agency told Becker’s Hospital Review.

The threat of financial penalties does not seem to be enough to ensure compliance, though.

Shortly after the rule took effect, noncompliant hospitals said they were not fully complying due to resource constraints and a limited understanding of the rule. Some hospitals also mentioned that they were waiting to see how their competitors responded to the rule before achieving compliance.

More than one year later, in April 2022, financial leaders expressed similar concerns regarding compliance. Revenue cycle leaders told KLAS that a top barrier to achieving compliance was the confusing and complex regulations included in the rule.

Price transparency compliance also requires significant investment in software and outside resources, the KLAS report noted. As hospitals and health systems struggle financially due to the COVID-19 pandemic, investing in price transparency software may not be a top priority.

In addition, revenue cycle leaders reported experiencing difficulties with the software used to publish machine-readable files and a master list of prices online.

Until CMS starts delivering monetary penalties for noncompliance or adjusts the regulation to reduce the financial burden for health systems, hospital compliance with the price transparency rule will likely remain slim.