It’s been more than a month since hospitals made big changes in how they publicly disclose prices. The Centers for Medicare & Medicaid Services (CMS) now enforces price transparency rules across five standard charges.
There are two ways hospitals are required to disclose pricing:
A comprehensive machine-readable file: A single file that contains five types of standard charges for all the items and services provided by the hospital.
A consumer-friendly shoppable services file: A set of at least 300 shoppable services, which include 70 CMS-specified services and 230 hospital-selected services. Hospitals may opt to use a patient price estimator tool to fulfill this requirement.
By and large, more hospitals are opting to comply with the consumer-friendly shoppable services file.
To understand how hospitals are faring, Guidehouse recently analyzed compliance for more than 1,000 providers across 27 states. Based on now publicly available data from provider websites, Guidehouse scanned for each of the five standard charges to be present in at least one of the files.
If the file was present and the provider had all or some form of the standard charges, they were deemed to be compliant.
If no requirements were met, they were not compliant.
Overall, most providers were compliant with at least one of the file types, though approximately 30% of providers were not compliant for either. Hospitals that are not compliant have expressed they either have significant resource constraints (COVID-19 or otherwise), a lack of understanding of the ruling, and/or are waiting to see what their competitors are doing.
Larger hospitals and health systems were most likely to be compliant and are using existing tools (i.e., MyChart) to meet the requirements via the consumer-friendly shoppable services file.
For those hospitals that are compliant with the machine-readable file, there is a general lack of consistency in format and content, making it difficult for anyone (e.g., CMS, providers, payers) to scan, consolidate, and derive insights without significant data transformation and enhancements.
Price transparency will continue to be a challenge for providers, government agencies, consumers, and payers to master.
For providers, there will be improved compliance as resource constraints lessen with the help of further clarity, standardization, and/or automation to become compliant. 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.
CMS has the herculean task to audit all providers for compliance and enforce corrective actions (i.e., $300 per day, per hospital), when necessary. As CMS continues to monitor and enforce the ruling, listening to feedback, answering questions, and standardizing the mechanics of files to drive consistency will be critical for such a broad-based auditing.
Additionally, large insurance carriers are already scanning the market to add to their market intelligence of reimbursement relative to key competitors. Specifically, national carriers (e.g., Blue Cross, United Healthcare, Cigna, and Aetna) are particularly interested in this data. This will likely continue to be a focus of their competitive intelligence with increased investment in AI-enabled tools and other resources to mine this data. Payers need to understand how to derive actionable insights from the data.
And finally, consumers will become much more informed around out-of-pocket costs over time. Ultimately, the average consumer of healthcare services will prefer the patient estimator tool to get the clearest picture of what they can expect their out-of-pocket costs to be. The challenge will be how the data are presented to patients to ensure full understanding and/or limitations of the estimates, and how it impacts their choices.
While the Biden administration builds its CMS team, it has not yet commented publicly on the future of price transparency and compliance. That said, the industry should be prepared with a long-term strategy to manage this evolving requirement and its market impacts.