CMS is proposing to increase the max penalty to $2 million a year for larger hospitals not in full compliance.
More than 94% of the nation's hospitals are still not in full compliance with the price transparency rule according to a PatientsRightsAdvocate.org report. Of the 500 randomly sampled hospitals, only 5.6% were found to be in compliance.
Implemented on January 1, the rule is intended to make hospital pricing information more accessible to patients so they can compare costs and better inform their care. This means hospitals are required to display files on their websites containing gross charges, payer-specific negotiated charges, discounted cash prices, and deidentified minimum and maximum negotiated charges. All hospitals also must display at least 300 shoppable services that a healthcare consumer may schedule in advance.
Researchers identified a hospital as noncompliant if it omitted any of the five standard charge criteria imposed by the rule, if data fields were blank, if it did not post all negotiated payer rates, or if the hospital’s price estimator tool did not show both the negotiated rates and discounted cash prices.
The Centers for Medicare and Medicaid Services included a provision in the proposed 2022 Outpatient Prospective Payment System (OPPS) that includes a per-bed monetary penalty for larger hospitals (30+ beds) that would raise the maximum penalty to $2 million a year, a sharp increase from the current max penalty of only $109,500 a year.
Another way CMS plans to encourage compliance is by releasing names of hospitals if they are issued penalties for noncompliance. Public scrutiny from CMS and perception issues from communities and consumer groups could cost noncompliant hospitals market share, if patients and employers view competitors as more transparent.
CMS has been auditing hospitals’ websites and complaint submissions since the rule went into effect and in April, the agency sent its first wave of warning letters to hospitals breaking federal rules. Hospitals that received the warning are given a 90-day window to address shortcomings outlined in the letter.
As we noted in a previous post, these are some of the reasons why hospitals are not compliant:
- Penalties are negotiable: Many experts believe that the minimal fee for noncompliance ($300 per day) is too low; a large hospital is more concerned about the loss of revenue due to employers potentially using the pricing information to remove high-cost providers from their networks, or patients finding less expensive services at another facility.
- Resource Constraints: Aggregating all the pricing information and compiling it in a manner compliant with the rule’s requirements is a major project. CMS itself projected that it would require 150 hours at an estimated cost of about $12,000, on average, in the first year. With COVID still lingering and hospital finances already being stretched thin, finding the resources needed to undertake and complete such a monumental task is not a priority.
- Ambiguity in the rule language: This has been a major source of frustration for many hospital executives, many saying they are trying to adhere to the rule and are just looking for some guidance and clarity from CMS. Some also say their issues with the rule are chiefly with the machine-readable file requirements rather than the price transparency component.
- Varying charges: Hospitals can charge vastly different amounts for the same service, even in the same hospital, as the rates can differ depending on whether the patient is covered by Medicare, Medicaid or private insurance.
- Lack of overall compliance: It is difficult to make meaningful comparisons within a single region of competitors and across markets in the U.S. with no central repository for all the data, forcing researchers to hunt and peck around thousands of hospital websites to find the information.
Simply meeting the minimum compliance requirements can be onerous and costly. With the right approach and partner, the price transparency rules become more than just a compliance exercise, they become an opportunity to improve the patient experience—and intake rates—for shoppable services.
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