Resource Constraints Trouble Hospital Price Transparency Compliance

About 30 percent of hospitals are not complying with a hospital price transparency rule that went into effect on Jan. 1, 2021, according to a new analysis from Guidehouse.

Researchers at the consulting firm deemed hospitals non-compliant with the rule if they had not met any requirements based on publicly available data from their websites.

Per CMS, hospitals are required to publish on their websites five standard charges, including payer-specific negotiated rates, in a machine-readable format as well as a consumer-friendly display of at least 300 “shoppable services,” such as a new patient office visit or a comprehensive blood test.

To analyze how hospitals are faring with the new rule, Guidehouse scoured websites for over 1,000 providers across the country. The analysis found that while most hospitals have at least a file present and some form of the standard charges, compliance with the rule significantly varies.

Only about half (48 percent) of hospitals analyzed had standard charges in a machine-readable format, and slightly more (60 percent) had a consumer-friendly file present on their websites.

Larger hospitals and health systems were also more likely to fully comply with the price transparency rule and they leveraged existing tools (i.e. MyChart) to meet the requirements related to the consumer-friendly shoppable services file.

There was more variation across hospitals posting a machine-readable file per the rule’s requirements. Researchers noted a “general lack of consistence in format and content,” which led to difficulties scanning, consolidating, and deriving insights from the data.

Hospitals cited resource constraints and limited understanding of the rule as reasons why they are not fully complying with the new rule.

Additionally, some hospital leaders said they are waiting to see what their competitors are doing around compliance before fully comply themselves.

“Price transparency will continue to be a challenge for providers, government agencies, consumers, and payers to master,” researchers stated in the analysis.

“For providers, there will be improved compliance as resource constraints lessen with the help of further clarity, standardization, and/or automation to become compliant,” they continued. “However, having a strategic plan to mitigate risks and capitalize on the benefits of appropriate compliance is key. Risks include price scrutiny and pressure from payers, media, consumers, and competitors, such as if current pricing and rates are rational and defensible. On the flip side, positive press and a commitment to transparency increases visibility and consumer trust.”

Providers are also risking real dollars if they do not comply fully with the hospital price transparency rule.

CMS has stated that it will audit some hospitals to ensure compliance with the rule. Any hospitals found not complying could face a monetary penalty of up to $300 per day, the agency stated.

Hospitals have opposed the price transparency rule since CMS proposed it in 2019. The providers have argued that mandatory disclosure of negotiated rates would not reduce healthcare costs as intended but would, in fact, harm competition and impose an administrative burden on hospitals.

The American Hospital Association (AHA) and other national organizations representing hospitals went so far as to challenge the rule in court. However, an appeals court threw out the case in December 2020, affirming a lower court’s decision to uphold the rule.

AHA is now asking the Biden administration to hold off on implementing the rule in light of the COVID-19 pandemic.

“Hospitals’ ability to comply with the rule at this time is particularly challenged by an increase in the volume of COVID-19 patients and the need to distribute multiple vaccines,” the group said in a December 2020 letter to HHS. “Both of these events are straining hospital and health system resources at a critical time in the course of the pandemic sweeping the nation.”

“These strains are further compounded by the considerable gaps in federal guidance creating compliance uncertainty and recent legislation placing new price transparency requirements on hospitals,” the letter continued. “In light of these exigencies, we urge you to exercise enforcement discretion until the end of the public health emergency.”

The Biden administration has yet to comment on its plan for enforcing the hospital price transparency rule finalized under the previous administration.