This Tuesday, I had the pleasure of presenting the webinar sponsored by the Southern Medical Association (SMA) representing 17 states. The participants were med students, residents, fellows, physicians, and other healthcare professionals.
The webinar’s title is “PRICE TRANSPARENCY IN HEALTHCARE: An Important Legislation That Every Medical Student, Resident, Fellow, and Physician Should Know”.
The participants engaged enthusiastically and asked many good questions and it seems there is a lot of interest in this topic.
Moreover, according to KLAS, the price transparency survey respondents cited challenges around the regulation expectations, needs, and deployment.
So, through this newsletter, I want to educate the Hospital administrators, insurance leaders, physicians, nurses, nursing leaders, residents, fellows, medical students, allied staff, employers, media, advocacy groups, technologists, and all other healthcare stakeholders on price transparency regulation. Many of you are aware of the legislation, but there are some intricacies that need clarification.
For the purpose of this newsletter, I am covering the compliance related to the three price transparency regulations. Price transparency stakeholders will be covered in the following newsletters.
Why did the American Healthcare System need Price transparency legislation?
Americans have no idea how much each healthcare service will cost them. The healthcare system is completely inefficient with no transparency.
- Patients face a 3-fold to 25-fold variation in prices for the same procedure across hospitals.
- Approximately 150M Americans are either underinsured or uninsured
- 67% of Personal bankruptcies are due to medical debts.
- According to KHN 100 Million People in America Are Saddled With Health Care Debt.
1 in 5 delays seeking care because of unknown costs.
- In 2020, total US out-of-pocket expenditure was $388.6 billion while annual health expenditure stood at over $4 trillion.
- Employers struggle to offer insurance to their employees because of increased premiums and out-of-pocket expenses for their employees.
- Employers depend on third parties for contract negotiations with providers. Employers are placed in the dark because of a lack of pricing information. Most employers end up getting raw deals.
While in every other industry, price transparency is the norm.
You will not shop on Amazon if it doesn’t show the prices and reviews for comparison. You will not visit a supermarket if you don’t see the prices.
But with healthcare, Americans have to make such critical choices with no clarity of how much it will cost.
For every aspect of our lives, we consider how much something costs and how much value it brings. But in healthcare, it’s left up.
Even if someone asks for the cost of service, many times, they hear “I don’t know” from the front desk staff. We will bill your insurance and you’ll receive the bill.
Healthcare Price Transparency- Is It Really A New Concept?
The concept of transparency in Healthcare is not new. In fact, it existed 100 years ago. Yes, it’s true.
The Florence Daily News published the hospitals’ pricing data 100 years back.
The Eliza Coffee Memorial (ECM) Hospital, located in Florence, AL, and 11 other hospitals, published their hospital prices in Florence Daily Newspaper on May 22, 1921.
The Eliza Coffee Memorial Hospital proudly says “OUR” hospital is a great and useful institution for the use of all classes of people. That shows how much they cared for their people 100 years back.
The Florence Daily newspaper published prices are not clear, hence I have added them in the table below for your perusal.
Provider Name | Private Room/WK | Double Room/WK | Wards | Operating Room | X-rays Doctor | X-rays |
Eliza Coffee Memorial Hospital | $30-$35 | $21 | $15 | $5, $10 | $1, $50 | $25 |
Belmont Sheffield | $30 | $25 | $25 | $10 | $5 | $40 |
Benevolent Society Hospital, Albany-Decatur | $25 | $20 | $14 | $10 | N/A | N/A |
Huntsville Infirmary | $25-$30 | $25 | $14 | $10-$15 | No Machine | |
Baptist Memorial, Memphis, TN | $25 | $21 | $14-$17 | $5, $10 | $5 | $25 |
St. Joseph, Memphis, TN | $20 | $12-$18 | $10 | $5, $10 | $3 | $35 |
St. Thomas, Nashville, TN | $25 | $20 | $15 | $5, $10 | $5 | $50 |
St. Vincent’s, Birmingham, AL | $35 | $24-$30 | $21 | $5, $10 | $5 | $25 |
What measures did the United States government take to address the high cost and no transparency situation?
In order to empower Americans with healthcare prices, the Trump administration implemented the Hospital Price Transparency mandate. President Trump thought the move will give patients more control and allow them to shop for healthcare prices at lower prices.
President Donald J. Trump is Putting American Patients First by Making Healthcare More Transparent
“We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs down.”
Ex-President Donald J. Trump June 24, 2019
President Biden double downed on further transparency in healthcare.
President Biden’s executive order requires hospitals to comply with the price transparency rule and directs HHS to support the Hospital Price Transparency Rule.
The four departments that need recognition for implementing the transparency laws are Health and Human Services, Centers for Medicare and Medicaid Services, the Department of the Treasury, and the Department of Labor.
Courtesy: US Govt.
THE PRICE TRANSPARENCY REGULATIONS
The Hospital Price Transparency Mandate
As of January 1, 2021, the Centers for Medicare & Medicaid Services (CMS) Hospital Price Transparency Rule mandates hospitals to post their standard charges publicly on their websites.
Hospitals need to make their prices available online in two forms:
- A machine-readable file of charge master data and
- A consumer-friendly 300 shoppable services or a patient estimator tool.
Part 1: Machine-Readable Format
The machine-readable format should include the standard charges of all individual items, services, and service packages provided by the hospital. (45 CFR § 180.20)
Hospitals must provide five “standard charge” amounts for each procedure:
(1) gross charge, or the amount on the hospital chargemaster for the item, service, or service package; (the list rate)
(2) the discounted cash price;
(3) the payer-specific negotiated charge for each third-party payer and health plan with which the hospital contracts, including Medicare Advantage, plans;
(4) the de-identified minimum negotiated charges; and
(5) the de-identified maximum negotiated charges.
It should have billing codes like DRG, HCPCS, and CPT and a description of all items and services provided, including supplies, procedures, room and board, facility fees, and professional charges, and if they are inpatient or outpatient services.
The naming convention of the comprehensive file should be:
<ein>_<hospitalname>_standardcharges.[json|xml|csv]
8 Steps to a Machine Readable File of all Items and Services
Part 2: Consumer-friendly shoppable services list
The consumer-friendly shoppable services list aims to provide pricing information for the general public. Hospitals need to publish standard charges for 300 shoppable services provided by the hospitals.
The 300 shoppable services include 70 CMS-specified shoppable services and 230 hospital-selected shoppable services. If the 70 shoppable services are not available, should say NA and add more additional services to make it to 300. If a hospital has less than 300 services, they should provide the list of all services. The requirements to post consumer-friendly prices include:
- Discounted cash prices (use gross charges if cash prices are not available)
- Payer-specific negotiated charges,
- De-identified minimum negotiated charges
- De-identified maximum negotiated charges.
10 Steps to Making Public Standard Charges for Shoppable Services
PATIENT-ESTIMATOR TOOL (Alternative to Shoppable services)
- Provides estimates for as many of the 70 CMS-mandated shoppable services + 230 additional hospital-selected shoppable services for a combined total of at least 300 shoppable services
- Consumers obtain an estimate of the amount they will be obligated to pay
- Is prominently displayed on the hospital’s website
- Accessible to the public with no charge and no need to register or establish a user account or password.
Hospital Price Transparency Requirements Quick Reference Checklists
Hospitals that satisfy all these requirements will comply with the CMS price transparency rule. And those who do not comply, have to pay a penalty of up to $300/day for hospitals with 30 beds, and hospitals with above 30 will be charged $10/bed/day not to exceed $5500/ day.
CMS Penalties for Different Hospitals
No. Of Beds | Penalty Per Day |
Less than 30 beds | $300/day |
Above 30 beds | $10/bed/day not to exceed $5500. |
CMS has been auditing hospitals for compliance starting in January 2011.
For hospitals that do not comply, CMS may:
- Issue a warning notice
- Request a corrective action plan
- Impose a civil monetary penalty, and
- Publicize the penalty on a CMS website
As of June 2022, according to Health Affairs, CMS has issued 352 warning notices and 157 corrective action plan requests to hospitals.
The CMS penalized the following first two hospitals with Civil Monetary Penalty (CMP) for non-compliance. The penalty includes violations for 2021 and 2022.