On January 1, 2021, the Federal Hospital Price Transparency Rule went into effect requiring hospitals to disclose certain pricing information. Specifically, the Rule requires hospitals to provide pricing information:
- in a “single machine-readable digital file containing the following standard charges for all items and services provided by the hospital: gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges” and
- display “at least 300 ‘shoppable services’ (or as many as the hospital provides if less than 300) that a health care consumer can schedule in advance. Must contain plain language descriptions of the services and group them with ancillary services, and provide the discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges.”[1]
In July 2021, PatientRightsAdvocate.org, “a nonprofit, non-partisan organization that provides a voice for consumers — patients, employees, employers, and taxpayers — to usher in healthcare price transparency” conducted a review of 500 randomly selected hospitals to check for compliance with the Rule.[2], [3] Here is what it found:
- Only 28 of the 500 hospitals sampled (5.6%) were in complete compliance with the Rule
- 471 hospitals (94.4%) did not post a complete machine-readable file of standard charges
- The most significant area of non-compliance was a failure to post all payer-specific and plan-specific negotiated rates
- 258 hospitals (51.6%) did not post any payer negotiated rates
- 96 hospitals (19.2%) displayed the 300 shoppable services in a consumer-friendly manner
CMS began issuing warnings to non-compliant hospitals in April and, as of mid-July, had sent out 165 warnings.[4] Non-complaint hospitals currently face penalties of up to $300 per day. However, CMS has not imposed a monetary penalty on any hospital to date and has announced that it will be holding off on penalizing hospitals to allow them time to adjust to the Rule.[5]
At the same time CMS is holding back on penalizing hospitals, it has proposed a new rule that would increase the penalties. The newly proposed rule would penalize non-compliant hospitals as follows:
- $300/day for hospitals with 30 beds or less;
- $310-$5,500/day for hospitals with 31-550 beds; and
- $5,500/day for hospitals with more than 550 beds.[6]
Comments on the proposed rule are due by September 17, 2021 and are scheduled to go into effect on January 1, 2022.
Perhaps a stiffer penalty will increase compliance. However, even with the increased penalties, hospitals will likely calculate the cost of the penalty compared to the value of concealing the pricing information. $5,500/day or $2,007,500/year is nothing compared to the average net patient revenue of $334.5 million for U.S. hospitals (more than 50 of which have net patient revenues exceeding $1.6 billion).[7]
Will the threat of penalties prompt compliance? Only time will tell, but simple math suggests it is unlikely.
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[1] cms.gov/hospital-price-transparency/hospitals
[2] patientsrightadvocate.org/our-mission
[3] Semi-Annual Hospital Price Transparency Compliance Report, July 2021, PatientsRightsAdvocate.org.
[4] revcycleintelligence.com/news/cms-holds-off-on-hospital-price-transparency-noncompliance-penalties
[5] Id.
[6]Federal Register, Vol. 86, No. 147.
[7] definitivehc.com/blog/revenue-trends-at-u.s.-hospitals