Major Hospitals Still Not Complying with Price Transparency Rule

Many of the largest hospitals in the country are still not complying with a new price transparency rule that went into effect on Jan. 1, 2021, according to a new analysis.

Nearly two-thirds of the 100 largest hospitals in the US by certified bed count did not meet all the requirements of the new rule, including posting payer-specific negotiated charges on their websites, by early February 2021, researchers from Hilltop Institute, a nonpartisan research organization at the University of Maryland, recently reported in the Health Affairs blog.

What’s more, just 22 percent of the hospitals in the analysis appeared to be fully compliant with the rule’s requirements, with some even exceeding the regulation in terms of the amount of pricing information they shared on public websites.

Researchers deemed hospitals compliant if their files were machine-readable and contained the gross charge, discount cash price, payer-specific negotiated charges, de-identified minimum and maximum charges, and descriptions of, and codes for, the items and services provided by hospitals—all requirements of the hospital price transparency rule.

For the payer-specific negotiated charges, hospitals also had to reveal both the name of the payer and plan to be compliant with the price transparency rule.

Most non-compliant hospitals (82 percent) either did not include the payer-specific negotiated rates with the name of payer and plan clearly associated with the charges or were in some other way non-compliant.

The remaining 18 percent of non-compliant hospitals did not post any files at all or the facilities provided links to searchable databases that were not downloadable.

This could leave a significant portion of major hospitals at risk of fines. CMS has stated that it will audit hospital websites to ensure compliance with the rule and it could penalize hospitals up to $300 a day for noncompliance.

CMS has said the hospital price transparency rule will lower healthcare costs by enabling consumers to shop around for high-quality, affordable care while also increasing competition among providers.

While there were several challenges of assessing compliance—uncertainty around whether hospitals included all items and services provided to patients and prices for all payers it works with, for example—the findings spell trouble for hospital price transparency effectiveness moving forward, researchers said.

“We are troubled by the finding that 65 of the nation’s 100 largest hospitals are clearly non-compliant with this regulation. These hospitals are industry leaders and may be setting the industrywide standard for (non)compliance; moreover, our assessment strategy was purposefully conservative, and our estimate of 65 percent non-compliance is almost certainly an underestimate,” they wrote in Health Affairs.

Hospital groups have been fighting to prevent price transparency rule compliance since HHS finalized the rule in 2019. The American Hospital Association (AHA) even led a lawsuit challenging the rule’s requirements, which was eventually thrown out by an appeals court.

Most recently though, hospitals have been calling on HHS to exercise enforcement discretion with respect to the price transparency rule because of the ongoing COVID-19 pandemic.

Hospital groups have said that enforcing the rule right now “will force overburdened hospitals to divert resources that hospitals desperately need to respond to the surge of COVID-19 cases.”

Previously, groups reported that aggregating all the pricing information and compiling it in a manner compliant with the rule’s requirements would be a major data project. HHS itself projected that the project would require 150 hours at an estimated cost of about $12,000, on average, in the first year.

However, researchers at Hilltop Institute said compliance should not be “insurmountable,” and the fact that 22 percent of hospitals in the analysis did comply suggests that “structural barriers are not preventing hospitals from posting their standard charges.”

“As the final rule notes at several points, hospitals already have all of this information in their electronic medical record and claims processing systems; while assembling and posting these required files entails some costs,” they explained. “Moreover, hospitals were already granted a one-year extension for this regulation. Given the 13 months between the finalization of the ruling (November 27, 2019) and the implementation date (January 1, 2021), hospitals should have had sufficient time to comply.”

Research has shown that price transparency in healthcare has led to lower prices for consumers. But industry leaders have criticized the hospital price transparency rule and, specifically, its requirement that hospitals publish payer-specific negotiated rates because they say it could actually increase prices by reducing competition in the market.