Less than one-fourth of hospitals were fully compliant with federal price transparency regulations in early 2021, according to new data.
A study by University of Minnesota School of Public Health faculty found that only 23.7% of hospitals reported all required data on service rates in both machine-readable and consumer-shoppable formats. CMS' Hospital Price Transparency Rule, which went into effect on Jan. 1, requires hospitals to publish information about the prices they charge for inpatient and outpatient services, as well as the rates negotiated with various private insurers.
Jean Abraham, the lead author of the study and professor in the division of Health Policy and Management at the University of Minnesota, said the research team focused on whether or not hospitals published all prices for their services in a machine-readable format and gave a list of 300 "shoppable services" for consumers to access in a simple format like an interactive price estimator tool.
The study ran from Jan. 13 to Feb. 3 and looked at a nationally representative sample of 470 hospitals.
Around 25% of hospitals reported all required data elements in a machine-readable format, and 73.5% reported data in a consumer-shoppable format.
System affiliated and private, not-for-profit hospitals were more likely to provide data in a consumer-friendly format than independent and public hospitals. For profit-hospitals were more likely to comply with the rule than public hospitals.
Payer-specific negotiated rates, which are the prices hospitals agree to charge individual insurance companies for patient care, were the least likely to be publicly disclosed by hospitals in the study.
"That's not so surprising. That's by far the most sensitive information [and] the product of a negotiation between an insurer and a hospital," Abraham said. "[It] has typically been closely guarded and private until now."
The industry fought the rule from going into effect.
Lovisa Gustaffson, vice president for controlling healthcare costs at Commonwealth Fund said hospitals wanted to protect pricing rates from patients, employers, researchers and other members of the public, possibly to give themselves a competitive advantage.
While transparency is government-mandated, Rick Kes, a healthcare partner at RSM US consulting firm, said many hospitals understand it is mainly driven by consumer interest.
"You hear a lot of people say, 'When I go into a restaurant, they don't tell me what the price of a steak is after I eat it, they tell me before I eat it,'" Kes said. "'Why is that not happening in healthcare?'"
He said given the layers of complexity of payment and how healthcare's financial model has worked for years it is not as easy as it seems to switch over to a model of price transparency.
Due to the pandemic and other administrative burdens, Kes said some healthcare systems chose to become compliant with the rule later in the year so as to not jeopardize their operations.
"It wasn't necessarily that they didn't want to comply with price transparency ... it just wasn't on the top of their list to comply with, given that the penalty if assessed wasn't really that significant," he said.
An AHA spokesperson said in a statement that it has provided information and guidance to the healthcare industry on how to implement the price transparency rule requirements.
"Hospitals and health systems are working to help patients access useful information about their costs, including through the use of price estimators and other tools," the spokesperson said. "Some parts of the rule require significant staff resources that have at times needed to remain directed at the COVID-19 response."
In an email, a CMS spokesperson said the agency is conducting audits of hospital websites, reviewing complaints and issuing warning letters to hospitals not in compliance with requirements, which it began in April.
Upon receiving a warning letter, hospitals have 90 days to address its findings of noncompliance. If noncompliance has not been addressed in the 90-day window, the hospital may be sent a second warning letter or a request for a corrective action plan.
The federal rule also states that hospitals found not in compliance may be fined $300 daily, up to around $100,000 a year. In total, only around 5% of hospitals were missing all regulation requirements Abraham said.
Generally, hospitals seem more inclined to provide pricing on nonurgent services, like an MRI or therapy appointment, where consumers would have time to look at prices, she said.
"CMS, I think, wants to encourage reporting," Abraham said. "They seem willing right now to partner with hospitals and [give] them the opportunity to make a plan for how they're going to produce the data and put it online."
"I hope the government stays the course of pushing this agenda," said Dr. John Cherf, Lumere's chief medical officer. "It's one of the better opportunities to control healthcare costs."
Cherf said price transparency will likely affect different institutions in both positive and negative ways and help providers better understand their cost structure.
Big hospitals will take on the most risk with price transparency, he said, while private practice and ambulatory settings will be considered "winners" in this scenario.
Eventually, he would like to see more price transparency on a physician level and in freestanding outpatient facilities like imaging facilities or ambulatory surgery centers, and procedure centers.